Healthcare

• Mayne Pharma (MYX AU) reported triple-digit revenue growth in branded products division in H1FY23, driven by oral contraceptive Nexstellis, which contributes ~80% of segment sales.
• The company had an encouraging start to H2FY23. Both Nexstellis and dermatology are expected to exit FY23 with a positive run-rate contribution.
• The company has decided to cancel the previously proposed pro rata capital return and intends to use its cash in a better and productive way.

• Leading Chinese drug-ingredients supplier Northeast Pharmaceutical Group Co. Ltd. was fined 133 million yuan ($19 million) for abusing its dominant market position in materials used to make a treatment for kidney dialysis patients.
• The market regulator in northeastern China’s Liaoning province conducted a three-year investigation of Northeast Pharmaceutical’s monopoly in the market for ingredients to make levocarnitine.
• The medicine is used to treat dialysis patients for a lack of carnitine, a substance that helps the body convert fat into energy

Edison Investment Research is terminating coverage on Doctor Care Anywhere (DOC). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.

OSE Immunotherapeutics has announced that the data from its earlier Phase I study for OSE-127/S95011, initially released in 2019, has been published in the Journal of Immunology. The study, involving 63 healthy volunteers, was a first-in-human, randomised, double-blind, placebo-controlled trial that demonstrated a promising safety and tolerability profile for OSE-127. This candidate is a monoclonal antibody therapy being assessed as a treatment for primary Sjögren’s syndrome (pSS) and ulcerative colitis (UC) in two ongoing Phase IIa studies (NCT04605978 and NCT04882007). Patient enrolment for the pSS trial was completed in Q422, with updates expected in H123; readouts for UC are expected in FY23. While we caution read-across between studies, we believe the high target occupancy observed in the Phase I study, along with a favourable safety profile, support the ongoing clinical programmes involving OSE-127.

Respiri’s H123 report summarised an eventful period, marked by commercial traction (six client wins; patient onboarding commenced at four centres) and recognition of the first remote patient monitoring (RPM) revenue from the Centers for Medicare & Medicaid Services (CMS). H123 revenues were A$0.6m (primarily R&D tax credits), lower than A$0.7m in H122, but we expect (wheezo-related) product sales to ramp up with increased patient onboarding and associated annuity income. The partnership-based US commercial strategy, along with tight checks on expenses, benefited operating performance, with the adjusted EBITDA loss improving 15% y-o-y to A$2.3m. The end-H123 cash balance of A$0.2m was bolstered by the A$1.9m post-period equity raise, which we estimate will provide runway into Q124. We adjust our estimates to reflect H123 performance and FX changes, which resulting in revising our valuation to A$165.5m or A$0.20/share (from A$189.1m or A$0.24/share previously).

Edison Investment Research is terminating coverage on Abliva (ABLI). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.

• There’s no need to imagine that biotech can cover each hospital department/each field comprehensively just like Innovent/BeiGene has done in PD-1 era, which is the dividend of a special era.
• When PD-1 sales are gradually approaching the ceiling, the extra or fewer several hundred million yuan of PD-1 sold by Innovent wouldn’t have a fundamental impact on its market value.
• IBI362 would be a product at billions level,which means revenue would be doubled. It takes time for Innovent to turn losses into profits,but sales forecast of RMB10 billion is achievable.

• Dr. Reddy’s Laboratories (DRRD IN) entered into a definitive agreement to acquire the U.S. retail generic prescription product portfolio of Mayne Pharma (MYX AU) for $105M.
• The deal will add approximately 85 approved generic products and four pipeline products. For the fiscal year ending June 30, 2022, this portfolio generated revenue of $111M.
• Considering the revenue potential, the acquisition price seems to be reasonable. Being a high margin and limited competition portfolio, the acquisition will be earnings accretive for Dr. Reddy’s.

• Although the pipeline has characteristics, Gracell’s R&D progress cannot catch up with the speed of the transformation of global CGT investment climate. Its commercialization performance could be much lower than expected. 
• There’s “practical obstacles” for the use of CAR-T, which cannot solve the actual clinical needs at this stage. Doctors would choose other solutions. So, the actual market space is small.
• Investors can do short-term trade when Gracell’s valuation is lower than peers, but due to the highly uncertain long-term prospects of this company, we do not recommend long-term hold.

• BeiGene (BGNE) reported C4Q22 top line missing our estimate by 13%. Main reason for the miss is weaker than expected BRUKINSA and Tislelizumab sales in China; 
• While China growth does appear to be a drag, international sales is robust and has potential. Consensus is also reasonable with gross margin having upside;
• We cut TP from US$225 to US$219 and maintain BUY. Reliance on international sales heightens BGNE’s political risk.

At Oryzon’s recent key opinion leader (KOL) event, management elaborated on the near-term clinical catalysts for its lead assets iadademstat, in oncology, and vafidemstat, in central nervous system (CNS) indications. Following the positive results of the ALICE trial, the company is fast approaching the initiation of the Phase Ib FRIDA study for iadademstat in FLT3+ relapsed/refractory (r/r) acute myeloid leukaemia (AML) patients. Management believes the r/r AML setting may represent a faster route to market for iadademstat, targeting a patient population with currently limited and sub-optimal treatment options. Management originally guided for FRIDA to be initiated by end-2022; however, this delay has been attributed to slower-than-expected trial site activation. Management has communicated that trial site activation is now progressing and that FRIDA could begin imminently. Additionally, interim data analysis from the PORTICO study in borderline personality disorder (BPD) in Q123 represents a significant catalyst for vafidemstat in the company’s leading CNS programme.

• Raffles Medical reported 2H2022 and full-year 2022 results today. Full-year revenue increased 5.9% YoY to SG$766.5m (vs consensus $774.7m) and OP increased 61.4% YoY to $195.8m (vs consensus $170m).
• Despite Covid-19 related revenues tapering off and China under lockdown during 2H2022, Raffles’ earnings saw a boost from Singapore reopening borders and recovery in foreign patient volume.
• Consensus forecasts are too conservative and does not reflect the recovery in demand for Raffles’ healthcare services in Singapore and China (post reversing of zero-Covid policy).

• Kalbe Farma (KLBF IJ) revealed an indicative set of 2022 numbers, which fell slightly short of estimates due to product mix changes and inflationary pressure from higher input costs.
• Management guidance for 2023 looks more positive and implies stable margins in the coming year, with strong momentum across prescription drugs, consumer health, nutritionals, and logistics and less inflationary pressure.
• Kalbe Farma looks interesting with more positive expectations for earnings growth in 2023, coupled with valuations below its 5-year average forward PER.

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
• A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
• Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-February 2023.

• Raffles Medical (RFMD SP) reported strong 2022 results, with 6% growth in revenue and 71% increase in net profit. Growth was driven by healthcare services, which contributed 58% of revenue.
• With the reopening of borders and easing of COVID-19 related protocols in H2 2022, RMG saw a return of foreign patients seeking medical treatment in Singapore.
• In view of the company’s strong performance, the Board recommended a dividend of 3.8 cents/share for 2022, representing an increase of 36% as compared to the previous year.

• Lu Daopei Medical Group (1816743D CH) is looking to raise around US$400m in its upcoming Hong Kong IPO. 
• Lu DaoPei Medical Group (LDPM) is a hospital operator focusing on hematology healthcare services. As per F&S, it was the largest hematology healthcare services provider in China by 2021 revenue.
• LDPM has supported its growth through its flagship hospital. However, it is unclear whether the firm will be able to sustainably maintain profitability in the long term. 

• It’s “a wise decision” to out-license CMG901 and receive cashflow in advance so as to focus on more important late-stage products.Keymed’s management is as pragmatic as ever in strategic choices.
• Biotech would find it difficult to promote products by themselves and has to cooperate with Big Pharma to open domestic/foreign markets. But many investors are still “living in the illusion”.
• There would be more BD deals in the future. Our view on Keymed’s valuation remains unchanged – Market cap about RMB8 billion to RMB1.6 billion is the reasonable range. 

• InMode Ltd (INMD US) reported record-high quarterly revenue of $134M in Q4, up 21% YoY, mainly driven by the strong demand for its innovative, energy-based, minimally invasive product platforms. 
• However, quarterly revenue growth is deteriorating since Q3 2021. Q4 2022 revenue growth of 21% is the lowest in last two years or eight quarters.
• Demand for aesthetic procedures in the U.S., which is the core market for InMode is expected to deteriorate in next 6–12 months due to macroeconomic headwind.

• On Monday 20 February, nursing home, nursing and disability care services operator Amvis Holdings Inc (7071 JP) announced it would see a Secondary Offering of 10 million shares.
• It also announced that it would move to TSE Prime on 14 March. 
• This increases Real World Float by quite a bit – about 40% – but it also leads to an end-April TOPIX Inclusion.

• HCG continues to scale up well as its new centers are maturing. Its mature centers are also growing at a healthy pace.
• Margins are improving across the board led by 1) Realization Improvement 2) Operational Efficiencies 3) Operating Leverage and 4) Improving Mix of Cases.
• FY24 is all set to be a defining year in terms of HCG’s financial performance across growth and profitability.

• Biogen delivered an all-around beat in the last result.
• TECFIDERA generic competition, ongoing interferon declines and some pricing pressure mostly brought on this reduction.
• Based on these positive results, they started the Phase II/III AMETHYST investigation of litifilimab in CLE.

• Zoetis delivered a decent set of results for the last quarter of 2022 meeting analyst expectations as well as the high end of its management guidance.
• Despite the economic challenges, ongoing pandemic recovery, and the political unpredictability brought on by the war in Ukraine, they delivered operational growth for the year in each of their top 13 markets.
• The company’s unique companion animal portfolio drove its 8% operational revenue increase for the year, growing 14% operationally.

• Fangzhou Group (FANGZHOU HK) is looking to raise about US$300m in its upcoming Hong Kong IPO.
• Fangzhou (FZ) is an online chronic disease management (CDM) service provider in China.
• In this note, we will talk about the not-so-positive aspects of the deal.

• Apollo Hospitals Enterprise (APHS IN) recorded 19% revenue growth in Q3. The largest segment, healthcare services, which contributed 51% of total revenue, grew 10%. However, net profit dropped 33%.
• The company’s bottom line bled mainly due to high operating cost of the digital healthcare services platform, Apollo 24/7. Excluding operating cost of Apollo 24/7 EBITDA would have grown 10%.
• The company believes that it is at the peak burn rate for Apollo 24/7 operating cost this quarter and expects losses to moderate from here on.

• Pharmaron’s disappointing 2022 performance is just a start.Its business layout has always been “one step behind”. CGT cannot become the main cornerstone business supporting valuation growth for the next stage.
• The overall environment of CXO is different from that of the past. Even if Pharmaron finally achieves end-to-end integration,whether the prosperity of CXO industry still exists is a question mark.
• Pharmaron may have entered a vicious circle, so that it is very challenging to generate the expected results no matter which direction the Company tries to break through.  

• Fangzhou initially launched online retail pharmacy to address the needs of chronic disease patients, and then expand to online chronic disease management. However,the investment logic of this business is problematic. 
• Due to the low willingness to pay/high acquisition cost of C-end patients, it is difficult to achieve large-scale profits. Developing To B business would be important for Fangzhou’s future development. 
• Either To B business or To C business, the key point is to accumulate/retain large physician resources, but Fangzhou hasn’t had “a panacea” in this regard.

• Fangzhou Group (FANGZHOU HK) is looking to raise about US$300m in its upcoming Hong Kong IPO.
• Fangzhou (FZ) is an online chronic disease management (CDM) service provider in China.
• In this note, we will talk about the positive aspects of the deal.

• In 2022, Eubiologics (206650 KS) reported revenue growth of 41% YoY to KRW55.47B, driven by increased supply of cholera vaccine to UNICEF following the outbreak of cholera worldwide.
• In 2022, more than 29 countries reported cholera cases or outbreaks, up from 20 countries five year ago. Globally cholera vaccine is in short supply.
• Eubiologic’s vaccine manufacturing capacity is expected to go up to 90 million doses after completion of the expansion project this year, which will drive sustainable sales growth.

• It’s necessary for investors to understand the “true secret” of Topchoice’s success, which is impossible to copy. This is also the core reason why we’re not optimistic about the company. 
• The profit margin decline of dental implant and orthodontics businesses is inevitable, not only due to centralized procurement, but also the fierce competition of private dental hospitals in price war.
• Topchoice is now paying for its ambition to deviate from its main business. The overall performance in 2022 may not be optimistic. We think Topchoice’s good times are over.

• AbbVie delivered a mixed result in the last quarter with revenues falling below analyst expectations.
• The company also developed a sizable portfolio of solid tumor and heme assays for oncology.
• Furthermore, AbbVie anticipates strong performance in the ongoing neuroscience segment due to its on-market portfolio of treatments for mental and migraine disorders as well as a promising pipeline for neurodegenerative illnesses.

• ASRT issued preliminary fourth quarter 2022 results highlighting the continued growth in revenue. We assume the increase in revenue was due to uplift in Indocin usage in the quarter.
• Heading into 2023, ASRT is carrying a larger than expected cash balance to deploy in making acquisitions
• ASRT is forecasting fourth quarter sales of $49 to $50 million compared to our estimate of $47.1 million

• Amvis Holdings Inc (7071 JP) (AH)’s founder aims to raise around US$250m via a secondary follow-on offering.
• The deal will increase the free-float of the stock and will lead to the stock being transferred to the Prime segment.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• LIM Japan Event Master Fund sent a document to Torii Pharmaceutical (4551 JP) requesting the company to distribute 100% of its surplus to shareholders and conduct a drastic share buyback.
• LIM is of view that Torii has excess cash balances, which is more than the market cap of the company. Inefficient use of capital has led to low single-digit ROE.
• Torii opposes the proposal, as the company thinks it needs adequate cash to pursue business development aka in-licensing of new drugs.  

• The decline in revenue from multiple categories of drugs due to VBP indicates that Luye Pharma (2186 HK) urgently needs a group of new products to reverse the overall weak performance. 
• Without the advantages in R&D efficacy and product competitiveness, the current pipeline would generate little value. It’s hard to convince people that the fundamentals of Luye have truly changed.
• We are not optimistic about Luye’s outlook, which lacks long investment logic. Meanwhile, we think that this Placement is not cost-effective due to more potential downside to valuation.

• Mannkind Corp (MNKD US) has multiple revenue stream, with two marketed products. Flagship drug Afrezza, an inhaled insulin recorded 11% YoY revenue growth to $10.8M in Q3.
• Due to high R&D and SG&A expenses, Mannkind records operating loss. However, gross profit margin is improving, with Afrezza gross margin improving to 81% in 3Q22 from 61% in 3Q21.
• Mannkind’s inhaled clofazimine (MNKD 101) is advancing to Phase 2/3 study for potential treatment of nontuberculous mycobacterial (NTM) lung disease. ~86K people in US are living with NTM lung disease.

Oryzon Genomics has presented headline FY22 financial results, which reflect continued progress on its clinical activities for key assets iadademstat (oncology) and vafidemstat (central nervous system; CNS) across different programmes. Total operating expenses for the year were US$22.9m, up by 13.5% from US$20.2m in FY21 and slightly higher than our estimate of US$20.1m. As expected, the bulk of these costs (c 80%) related to R&D expenses (US$18.1m) as the company continues to focus on advancing its clinical pipeline. The period-end gross cash balance was US$22.7m, which at historical burn rates (€6.92m/US$7.3m in H122) should fund the company into H225, past key clinical readouts. Looking ahead, we see the start of patient enrolment in the FRIDA study for relapsed/refractory (r/r) FLT3+ acute myeloid leukaemia (AML) patients and top-line data from the PORTICO study for borderline personality (BPD) disorder in Q123 as key upcoming catalysts.

Respiri has announced the successful completion of the Michigan Children’s Hospital’s pilot programme assessing the wheezo SAAS (Respiri and partner Access Telehealth) platform. The initial March 2022 agreement enabled pulmonologists to employ wheezo to increase the engagement of paediatric patients with asthma. The hospital will include the wheezo RPM programme in its current standard of care for eligible asthma patients. We expect the paediatric population to be one of the cohorts to find the most utility from the wheezo monitoring protocol (given this population is not always able to self-identify and flag symptoms) and usage feedback from these patients is anticipated to be crucial for Respiri. We also note the Michigan Children’s Hospital is a part of the of the NYSE-listed Tenet Healthcare Corporation (over 60 hospitals across the US) and uptake, if encouraging, can support a broader roll out.

• DexCom’s performance in the quarter was strong, with total revenue increasing by 20%.
• By the end of 2022, the company had over 1.7 million clients worldwide after adding nearly 450,000 new Dexcom users.
• The management delivered an all-around beat and claims to have increased consumer engagement and growth while expanding the scope and effectiveness of its business.

• Keymed is one of the few enterprises we believe have the strength to develop FIC in the future. Keymed’s “pragmatic” in terms of commercialization,which set it apart from other biotech.
• The current valuation is expensive based on our forecast. The expansion potential of future valuation depends on the progress of overseas R&D/commercialization. This is where Keymed really takes off.
• One big reason we’ve been positive about Keymed is because of its founder, Chen Bo. The down-to-earth style of management makes us full of expectations for Keymed Biosciences (2162 HK).

• UnitedHealth Group’s recent drawdown presents a lucrative investment opportunity to value-seeking investors.
• The stock’s year-to-date slump is likely due to the financial markets’ recent risk-on appetite and the anticipation that insurance premiums could suffer from softer pricing in 2023.
• Despite a recent financial market recovery and a comprehensive earnings beat, UnitedHealth Group Incorporated’s (NYSE:UNH) stock finds itself lingering among the year-to-date losers.