Healthcare

• Pharmaessentia Corp (6446 TT) aims to raise around US$412m (TWD12.6bn) via a GDS issuance. The issuance will be a large one to digest, representing 17.6 days of three month ADV.
• The proceeds will be used to accelerate the commercialization, further global clinical trials of BesREMi and conduct R&D in the US for the expansion of the company’s product portfolio. 
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• Indegene Limited (1864095D IN), a healthtech firm focused on life sciences commercialization is looking to raise INR32B through an IPO, comprises of fresh issue and an offer for sale.  
• The IPO funds will be used to repay debt, fund capex, pay for one of the company’s past acquisitions, and pursue any future inorganic growth.
• Amid a large and growing underpenetrated addressable market, Indegene is poised for long-term profitable growth by leveraging on its marquee clientele, long-standing client relationship, and comprehensive offering.  

• ADICON Holdings Limited (ADI HK)  is looking to raise about US$400m in its upcoming HK IPO. 
• Adicon Holdings is one of the top three independent clinical laboratory (ICL) service providers in China in terms of total revenue during the Track Record Period, according to F&S.
• In this note, we talk about our thoughts on valuation. 

• Mankind Pharma (6596876Z IN), a pharmaceutical company, is seeking to raise up to Rs45 billion (US$550 million) in April, according to press reports.
• In Mankind Pharma IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The key elements of the bear case rest on worrying recent developments, FCF burn, rise in inventory days and a steady decline in RoCE.   

• Boryung Pharmaceutical (003850 KS) reported stellar Q4 results, with revenue increasing 21% YoY, driven prescription drugs. 2022 revenue and operating profit surged 20%+ YoY and surpassed guidance.
• Boryung has guided for 2023 revenue and operating profit of KRW810 billion and KRW61 billion, representing growth of 12% and 1%, YoY, respectively.
• Driven by in-licensed drugs and pipeline progress, Boryung’s target of KRW1 trillion revenue and KRW200 billion operating profit by 2026, seems achievable.

• ADICON Holdings Limited (ADI HK) is looking to raise about US$400m in its upcoming HK IPO. 
• Adicon Holdings is one of the top three independent clinical laboratory (ICL) service providers in China in terms of total revenue during the Track Record Period, according to F&S. 
• In our previous notes, we looked at the company’s past performance. In this note, we talk about peer comparison.

The Competition and Markets Authority (CMA) has rejected the remedy proposed by United Health (the bidder) and EMIS to reduce the risks to competition and has announced it is launching a Phase 2 investigation into the acquisition. The bidder and EMIS have confirmed they will proceed with the Phase 2 investigation. Due to the investigation, they have extended the long stop date for the deal and extended the period during which EMIS shareholders will be entitled to dividends by one year.

• We continue to view JUNSHI’s Phase III pipeline, consisting of Senaparib (JS109/IMP4297)(PARP), Ongericimab (JS002)(PCSK9), Bevacizumab (biosimilar) and VV116 (COVID)(RdRp) as unexciting; 
• Phase I/II drug Tifcemalimab (TAB004/JS004)(BTLA mAb) is interesting, but may not last to reach product sales;
• We acknowledge the bad news has already been priced in and raise the TP to HK$21, but JUNSHI still has unfavourable risk reward profile in our opinion.

• UnitedHealth Group Inc.’s first-quarter earnings report might settle lower than anticipated as prices on long-term solutions have softened.
• The company has a rich history of beating earnings estimates, and its cash-based earnings exceeded its accrual-based income in 2022.
• UnitedHealth Group Incorporated (NYSE:UNH) is set to release its first-quarter earnings results before trading opens on Friday, the 14th.

• Mankind Pharma (6596876Z IN), a pharmaceutical company, is seeking to raise up to Rs45 billion (US$550 million) in April, according to press reports.
• Mankind Pharma is India’s fourth-largest pharmaceutical company in terms of domestic sales and second-largest in terms of sales volume in FY22, according to IQVIA.
• The key elements of the bull case rest on a track record of growing brands and market share,  accelerating growth rates, and profitability with margins in a relatively tight range.

• ADICON Holdings is one of top three independent clinical laboratories (ICL) in China based on total revenues. The company offers testing services primarily to hospitals and health check centres.
• The company’s application for a HKEx listing has been approved and according to news media outlets, ADICON plans to raise around US$400m through the IPO.
• Over the last three years, most of ADICON Holdings Limited (ADI HK) ’s growth were driven by Covid-19 related testing services which are likely to see huge decline going forward.

• ADICON Holdings Limited (ADI HK) is looking to raise about US$400m in its upcoming HK IPO. 
• Adicon Holdings is one of the top three independent clinical laboratory (ICL) service providers in China in terms of total revenue during the Track Record Period, according to F&S. 
• Adicon’s revenue growth has been driven by its medical diagnostic testing services segment, during the track record period. However, much of its growth appears to be driven by COVID-19 testing. 

• China TCM’s concentrated TCM granules business improved significantly in 22H2, and the total revenue in 22H2 also increased by 42% YoY, indicating that the decline trend has been significantly curbed.
• Due to its SOE background+ national standard setters with the largest number of national standards filed, China TCM would be the beneficiary of the industry’s transformation during this dividend period.
• Due to low base last year, China TCM’s performance would rebound this year. Considering favorable policies and large growth potential in TCM granules, we’re optimistic about its share price performance.

• Takara Bio Inc (4974 JP) has raised FY23 revenue, operating profit, and net profit guidance by 1%, 5%, and 5%, respectively, due to better-than-anticipated sales of the COVID-19 testing-related reagents.
• Takara Bio is heavily exposed to the COVID-19-related reagent revenue. However, the company is witnessing decline in general research reagent revenue in Japan.
• With the shrinking demand for the COVID-19 testing and slower-than-expected recovery in general research reagent in Japan, revenue is expected to decline 25% YoY in FY24.

• Shineway’s 2022 performance was outstanding.Its TCM formula granules business would seize more market share and maintain strong growth momentum, which would continue to be the main performance driver in 2023.
• Considering obvious policy preferences and lower price reduction of TCM in VBP, we recommend investors to leave a place for TCM company in portfolio, and Shineway deserves investors’ attention.
• Shineway is cash rich. Together with promising growth potential and solid financial performance, Shineway’s share price is expected to perform well, which could be a good trading target for investors.

• Singapore-based SCG Cell Therapy, a biotech firm, has recently raised US$8.1 million at a valuation over US$210 million, according to VentureCap Insights, which tracks regulatory filings in Singapore.
• The lead backer of the fundraise – which was marked as a series C1 round – was Hong Kong-based Smartech Investment Holdings, pouring about US$3.4 million into SCG Cell Therapy.
• The investment firm has also backed other Singaporean biotech firms such as Biocheetah and Lion TCR.

• Shinpoong Pharmaceutical (019170 KS) recorded operating loss of KRW34 billion in 2022 from operating loss of KRW14 billion in 2021 and an operating profit of KRW8 billion in 2020.
• Shinpoong is investing heavily on R&D, which is taking a toll on its financial health. During 2022, R&D expenses accounted for 21% of total revenue, up from 16% in 2021.
• The company is revising phase 3 trial plan for anti-malarial drug Pyramax as COVID-19 treatment. Even if Pyramax succeeds to get approval, the drug is expected to have limited uptake.

• Bundamedik Tbk PT (BMHS IJ) reported 15% decline in revenue in 2022. However, non-COVID business recorded revenue growth of 17%. Contribution of core business to total revenue increased to 92%.
• All the key operating parameters improved significantly from pre-COVID level. Occupancy rate of the existing hospitals improved to 66% in 2022 from 58% in 2021. New hospitals recorded 71% occupancy.
• The company aims to achieve revenue growth of ~17% YoY and EBITDA growth of 23–24% YoY in 2023, supported by the significant development of the company’s core business.

• Otsuka Holdings (4578 JP) reported better-than-expected 2022 result. Revenue increased 16% to ¥1,738B and business profit grew 11% to ¥175B, driven by the four global products and the nutraceutical segment.
• Revenue from four global products surged 26% to ¥619B, representing 54% of pharmaceutical revenue. Otsuka expects the momentum to continue and these products to record revenue of ¥637B in 2023.
• For 2023, Otsuka has guided for record-high revenue and net profit of ¥1,800B (+4% YoY) and 158B (+18% YoY), respectively, driven by increased revenue from growth businesses.

• Sinopharm Group Co Ltd H (1099 HK) reported strong 2022 results, with annual revenue exceeding RMB550B and net profit achieving 10% YoY growth. Growth was driven by pharmaceutical distribution business.
• EPS increased 10% YoY to RMB2.73, ahead of consensus of RMB2.64. The company has increased its final dividend to RMB0.82 per share from RMB0.75 per share in the prior year.
• With favorable industry tailwind and China reopening, consensus expects Sinopharm to report double-digit revenue and EPS growth through 2025.

• As recently as last week and throughout February/March we have recommended shifting to defensives due to our belief that $93 will cap upside on the $ACWI in 2023.
• MSCI ACWI defensive Sectors including Health Care, Utilities, and Consumer Staples are hitting 2+ month RS highs, and are staging bullish price and RS reversals, as are gold miners (GDX-US).
• This confirms our belief that now is the time to be tactically overweight defensives. We highlight buys in Health Care, Gold Miners, and Utilities, with the vast majority from Europe

• PerkinElmer is a major provider of life sciences, diagnostics, and applied services markets across the globe.
• The company had a decent 2022 and their Life Sciences and Diagnostics business experienced organic growth of 9% for the entire year.
• With the introduction of adeno-associated virus or AAV detection kits, the Life Sciences business has continued to innovate in cell and gene therapy.

• Sino Biopharm’s 2022 performance isn’t satisfactory, but the Company is gradually getting rid of the negative influence of VBP. We expect Sino Biopharm to achieve faster performance recovery than Hengrui.
• Most of Sino Biopharm’s innovative drugs are biosimilars and Me-Too products, which will face fierce competition once approved for listing. The revenue target of HK$100 billion by 2030 looks challenging. 
• Corporate governance deficiencies and lack of the next big variety are the reasons why the market is reluctant to offer high valuation. The new CEO needs time to prove his ability. 

• This is our first report on PerkinElmer, a premium provider of life sciences, diagnostics, and applied services markets across the globe.
• The company had a decent 2022 and their Life Sciences and Diagnostics business experienced organic growth of 9% for the entire year.
• With the introduction of adeno-associated virus or AAV detection kits, the Life Sciences business has continued to innovate in cell and gene therapy.

• This is our first report on major lab equipment manufacturer, Waters Corporation.
• Waters’ growth has also been aided by its reinvigorated portfolio and this trend is expected to continue.
• We initiate coverage on the stock of Waters Corporation with a ‘Hold’ rating.

• This is our first report on major lab equipment manufacturer, Waters Corporation.
• Its Pharma has also had decent growth, driven by both large and small molecule applications which has been led by the European markets.
• Baptista Research looks to evaluate the different credit strengths and credit risks of the company as well as a line-by-line analysis of the financial statements of the company for the past four years.

• This is our first report on West Pharmaceutical Services, a major manufacturer of injectable medication delivery and packaging systems.
• West Pharmaceutical reported an all-around beat in its last result and generated about 8% growth in organic sales overall.
• With COVID-19 excluded, West anticipates that its base organic sales growth was in the low double digits, with proprietary product growth in the mid-teens.

• The June 2023 index review results for the Hang Seng index can be expected after the close on 12th May 2023.
• In Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate, we expected some healthcare names to be added but there were no index changes in March 2023. 
• Although the index methodology is highly subjective and predicting index changes is extremely tricky, the HSI is an important index in the region and here are our thoughts for June. 

Paradigm has announced day 168 (six-month) data from the PARA_OA_008 trial, which is evaluating injectable pentosan polysulfate sodium (iPPS) as a potentially disease-modifying treatment for knee osteoarthritis (kOA). Highlights from the interim data include: structural changes in several disease features as measured by magnetic resonance imaging (MRI), potential support for disease-modifying OA drug (DMOAD) activity from trends in biomarker data, and persistent positive responses in WOMAC scores. During the second half of CY23, Paradigm intends to discuss with the FDA and EMA a potential regulatory pathway for DMOAD indication labelling; we believe that the outcome, along with clarification on the Phase III development pathway, could represent a significant catalyst for the company.

• Pegavision Corp (6491 TT) has started 2023 on a weak note. During 1Q23, the company recorded revenue of NT$1,460M, representing YoY decline of ~2% and QoQ decline of ~18%.
• During January and February 2023, Pegavision’s Chairman, Guo Ming-Dong has sold 53K and 66K shares, respectively, thereby reducing his shareholding to ~1.57M from initial ~1.9M.
• Disappointing monthly revenue, coupled with regular insider selling should limit the near-term upside potential of Pegavision. Since end of February, Pegavision shares have corrected 10%.

Immix Biopharma’s FY22 results reflected a busy period as management ramped up clinical activity across multiple programs. In a major development, Immix expanded its portfolio with the in-licensing of NXC-201, an autologous CAR-T therapy being investigated for the treatment of multiple myeloma (MM) and AL amyloidosis (ALA) currently in the ongoing Phase I/II NEXICART-1 study. With the increase in R&D activity primarily associated with in-licensing NXC-201, Immix reported an operating loss of $8.2m in FY22 (FY21: $1.4m) and we estimate that its net cash position of $13.4m at end-December 2022 provides a cash runway into Q423. Given the company’s increased disclosure of its arrangement with the licensors and of future NEXICART-I study costs, as well as its communicated strategy to expand clinical studies in the US, we now include NXC-201 in our valuation. We value Immix at $77.1m or $5.5 per share (previously $61.5m or $4.4 per share).

• CSL Ltd (CSL AU) is well-positioned to report double-digit revenue and profit growth through FY25, driven by strong performance of existing business and new growth engines.
• CSL will launch FDA-approved gene therapy Hemgenix for Hemophilia B in the US in 2H23. With estimated global annual peak sales of $2.4B, Hemgenix is a compelling opportunity for CSL.
• During H1FY23, CSL reported record level of plasma collections, with 36% growth in                volume. Current plasma collection is 10% above the pre-pandemic. Higher volume and yield will improve profitability.

• ClouDr had outstanding performance in 2022, which was mainly due to its unique but effective development model – starting from To B business first and then expanding To C business. 
• ClouDr may become the first company to develop a successful profit model of online medical services. The integration of AI and medical care enables ClouDr to enjoy more policy dividends/catalysts 
• ClouDr Group (9955 HK) has high growth potential with big investment value, and it could even surpass JD Health in the future. The Company is undervalued and deserve investors’ attention.

• Insulet Corporation is a med-tech company and one of the largest insulin delivery systems providers in the world.
• Their Omnipod 5 Automated Insulin Delivery System’s complete commercial introduction in 2022 was a major accomplishment.
• Baptista Research looks to evaluate the different credit strengths and credit risks of the company as well as a line-by-line analysis of the financial statements of the company for the past four years.

• This is our first report on a Insulet Corporation, one of the largest insulin delivery systems providers in the world.
• Their Omnipod 5 Automated Insulin Delivery System’s complete commercial introduction in 2022 was a major accomplishment.
• We initiate coverage on the stock of Insulet Corporation with a ‘Hold’ rating.

Oryzon has announced promising results from an interim analysis of the Phase IIb PORTICO study, a trial evaluating vafidemstat as a treatment for borderline personality disorder (BPD). An independent data monitoring committee (IDMC) conducted an analysis of the first 90 patients who completed the treatment and recommended that the trial continue without any modifications to the design. These interim results, along with positive safety data reported in September 2022, are encouraging for the clinical development of vafidemstat in this indication, in our view. Management anticipates that top-line data will be shared in early 2024 and we believe this represents the next most significant catalyst for the PORTICO trial.

• Santen Pharmaceutical (4536 JP) is not seeing any change in competitive landscape of its key drug, Eylea, which contributes 27% of total revenue. No immediate biosimilar launch is expected.
• Approval of bioidentical authorized generic version of Eylea in Japan, label expansion, and potential launch of high dose of the same drug will enable to combat with upcoming biosimilar competition.
• Santen expects China market to revive in FY24. Additionally new products launch and widening geographic presence to drive mid-to-long-term growth of the company.

• Diabetes care growing strongly, with continuous market share gain, now reaching close to 35%
• New chapter of growth has started as Novo makes strides in obesity, a larger market than diabetes.
• Capex for 2023 and beyond is expected to double as Novo prepares capacity to supply a growing demand for its products

• No matter how good a story is, it needs to be supported by sales data.If sales of Toumai cannot scale up, the complete closed-loop of surgical robot+consumables+solution/service would be groundless.
• The commercialization dilemma has become “a dark cloud” for Medbot. Before Medbot makes any breakthrough in internationalization or establishes an effective profit model in China, the Company lacks investment logic.
• The catalyst for stock prices from favorable policies is not lasting. Weaker-than-expected financial performance would quickly throw valuations into correction. As things stand, Medbot is only suitable for short-term trade.