Healthcare

• The potential high-priced acquisition proposed by Wepon failed. In fact, Wepon is in a vicious circle. So, terminating the acquisition is not a bad thing for Consun Pharmaceutical (1681 HK).
• Consun kept positive momentum and its performance was strong in 22H1. Such growth is expected to continue after China reopens as non-COVID related medical demand returns to normal.
• Considering its solid business performance and large cash balance, Consun is obviously undervalued. In our view, even without Wepon’s deal as the catalyst, Consun still has investment value.

• Mankind Pharma is looking to raise about US$1bn in its upcoming India IPO.
• MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
• In this note, we will undertake a peer comparison with some of the India listed and domestically focussed pharmaceutical firms.

• New Ruipeng is the largest pet care platform in China and second largest globally in terms of no.of hospitals and revenue from pet care services in both 2020 and 2021.
• The company has filed for an IPO in the US and plans to raise at least US$100m through the IPO.
• Though the company’s operations were negatively affected by Covid-19, our analysis shows that intense competition has led to the company losing its market share in the pet care services.

In a positive development for its US commercial strategy, Respiri has announced receipt of its first reimbursement claims from the Centers for Medicare and Medicaid Services (CMS) for its wheezo remote patient monitoring (RPM) programme (through one of its partners, Access Telehealth), making it the first Australian company to receive RPM reimbursement. As a reminder, a key component of Respiri’s revenue model is a monthly annuity (US$10–20/patient) derived from the CMS reimbursement to prescribing physicians and this announcement marks the first recurring revenue inflows, on top of the revenue from device sales. There are 20 patients on the RPM programme and with onboarding ongoing at multiple locations (500 prospective patients have been identified), we expect the claims quantum to rise in the near term, supporting top-line growth. We await further visibility on commercial progress before revisiting our estimates and for now keep our valuation unchanged at A$0.24/share.

• Shanghai Junshi Bioscience (688180 CH) did not receive FDA approval for toripalimab in US, as the agency could not conduct on-site inspection of the company’s manufacturing facility for the drug.
• Toripalimab (branded as TUOYI) is showing decelerated revenue growth rate in China. Besides being approved for small patient population, TUOYI has seen reduction in price after being included in NRDL.
• In May 2022, the company launched adalimumab biosimilar in China. It marks a late entry in a highly competitive market. COVID-19 oral drug should not bode well for the company.

• New Ruipeng Pet Group, a China-based pet clinic operator and provider of pet care services, filed for a U.S. IPO. The company plans to list ADSs under the ticker “RPET.”
• The company’s most recent private round was a $500M venture round led by Boehringer Ingelheim and Tencent at a ~$4.4B valuation in September 2020. 
• We believe investors should think twice before investing in the New Ruipeng IPO as the pet hospital operator struggled to grow revenues, operating losses mounted, and labor costs increased.

• Despite the healthcare disruptions in several key geographies, Edwards Lifesciences delivered a good result surpassing the analyst consensus estimates in terms of revenues as well as earnings.
• In the quarter Edwards made a series of some external investments in several promising early-stage technologies.
• We provide the stock of Edwards Lifesciences with a ‘Hold’ rating and a revision in the target price.

Actinogen’s recent quarterly update confirmed that the company remains on track to start US recruitment in H1 CY23 for its six-month, placebo-controlled Phase IIb portion of the XanaMIA study. The study is designed to assess the safety and efficacy of Xanamem in a population of patients with mild cognitive impairment (CI) and mild Alzheimer’s disease (AD), who at baseline will have been confirmed as biomarker-positive for AD (as determined through elevated blood phosphorylated Tau, or pTau). The company also started enrolment in Q4 CY22 for its XanaCIDD Phase IIa study assessing Xanamem in patients with CI relating to persistent depression despite ongoing treatment with standard-of-care medications. We expect the next material clinical data milestone for the company will be the XanaCIDD results, due in late CY23 or early CY24.

• RemeGen’s revenue declined in 22H2, leading to lower-than-expected performance last year.However, 2022’s low base is good for the growth this year,especially when non-COVID treatment returns to normal after China reopens. 
• We analyzed our revenue forecast on RC48 and RC18. We don’t think there should be big difference between the market value of RemeGen and Akeso. So, RemeGen’s valuation is attractive.
• The sentiment in HKEX has changed this year, so the trading strategy should be different. The pullback could be a buying opportunity, especially for good biotech companies such as RemeGen.

Context Therapeutics has announced that two patients enrolled in the Phase II OATH trial (ONA-XR+anastrozole in advanced endometrial cancer) have achieved partial response (tumor shrinkage) to the treatment. This translates to an overall response rate (ORR) of 22% (two of nine evaluable patients) and strengthens the previously announced positive data from the study (four-month progression free survival (PFS) rate of 77.7%). Management expects to report additional data from the study in Q223 and similar results from a wider cohort should further validate the therapeutic potential of the combination treatment, in our opinion. The beginning of 2023 has been eventful for Context and we expect heightened investor interest given anticipated data readouts from multiple ONA-XR studies (including the SMILE and ELONA trials in breast cancer) later this year.

• Stryker managed to deliver an all-around beat in its recent result despite facing inflationary challenges and unprecedented supply chain challenges.
• The company saw growth in organic sales and interestingly, the international organic growth rate exceeded the company’s U.S. growth rate, demonstrating its globalization progress.
• The great progress of Stryker’s Mako offense resulted in strong growth of its installed base and continued utilization increases.

• In this insight, we take a look at the potential index changes for the Hang Seng Index (HSI INDEX) in March 2023.
• We believe Healthcare names could be given top priority when selecting additions for the upcoming rebalance.
• The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.

• Unlike ADC, there’re still doubts on the outlook of whole bispecific antibody mechanism. Alphamab Oncology doesn’t actively promote related head-to-head trials, which makes people doubt the competitiveness of its products.
• Investors’ trust in Alphamab Oncology continues to decline, mainly because the Company often missed the guidance/milestones it announced before. This will greatly affect the credibility of Alphamab Oncology.
• The current valuation is expensive and has basically priced in all the positive factors. The Company is more suitable for short-term trading to capture the rebound rather than long-term holding.

• M3 Inc (2413 JP) reported 3QFY03/2023 earnings today. Revenue increased 12.6% YoY to JPY64.6bn (vs consensus JPY62.6bn) while OP decreased 3.0% YoY to JPY22.0bn (vs consensus JPY22.8bn).
• In line with our expectation, m3 has mentioned that it expects pharma marketing revenues to slow down with pharmaceutical companies cutting down their budgets.
• Though m3 has made a large no. of M&A deals to pursue growth, we have not seen extraordinary growth in overseas biz and think there is significant downside risk.

• Lotus Pharmaceutical (1795 TT) ended 2022 on a strong note. Full-year 2022 revenue grew 15.7% YoY to NT$14.6B. 2022 was the third consecutive year that Lotus achieved double-digit annual growth.
• The export markets outside of Asia grew 28% YoY, largely contributed by the launch of multiple myeloma drug lenalidomide in a number of markets around the world, including the U.S.
• In December, Lotus took over the Eli Lily’s Alimta business in Taiwan for $62M. Alimta is a first-line treatment for NSCLC with high brand loyalty.

• Mismatch between blood products supply and demand is intensifying, but there’s little way to increase production capacity in short time, which offers a good time to invest blood products companies. 
• Investors should not be too greedy in front of every rally and rebound, but the proportion of medical expenditure and pension expenditure in China’s GDP would still increase.
• CanSino Biologics Inc (688185 CH) intends to IPO in Swiss. We think share price of CanSino would bounce back. It’s time to keep an eye on CanSino again. 

• New Ruipeng Pet Group (RPET US) is looking to raise at least US$100m in its upcoming US IPO. 
• New Ruipeng Pet Group (Ruipeng) is a pet services platform, primarily offering pet care services, supply chain services and local services, covering the entire lifecycle of pets.
• In this note, we will talk about the not-so-positive aspects of the deal.

• Q & M Dental Group (Singapore) (QNM SP) is the largest listed pure dental play in Southeast Asia. For the 9M2022, core healthcare revenue increased 3% to S$125.9M.
• Comparison of the numbers over five quarters to mitigate any impact of changes in the economic and business environment shows core healthcare revenue exhibits a secular uptrend.
• During 9M2022, Q&M added seven and four dental clinics in Singapore and Malaysia, respectively, bringing the company’s total number of clinics to 106 in Singapore and 45 in Malaysia.

• SK Biopharmaceuticals Co Ltd (326030 KS) is reporting continued stellar performance of its flagship drug Xcopri (cenobamate) in the U.S., with 9M2022 sales rising 137% YoY to KRW119B.
• Since its launch, Xcopri maintained strong momentum in US in terms of prescription volume. Xcopri reported 1.8x higher launching TRx than recently launched competitive anti-epileptic drugs (AEDs).
• The company plans to launch cenobamate in the Middle East and Africa this year, following launches in the U.S., China, Japan, and major countries in Europe.

• ASRT has setup 2023 with the potential for growth even though Cambia now has generic competition. ASRT had been mentioning the generic competition for more than a year.
• Looking ahead to 2023, ASRT should benefit from having samples of Otrextup available for physicians.
• Indocin remains the primary revenue generator for ASRT. We are expecting greater revenue contribution from Indocin to offset Cambia

• We believe Dentium is an attractive stock to own right now. It has an excellent combination of strong growth in sales and profits and discounted valuations.
• Driven by its strong share price appreciation in the past year, Dentium now has become a strong candidate for a potential inclusion in KOSPI 200 index in 2023.
• There is a growing probability that Dentium could be targeted by corporate activists to pressure the company to cancel treasury shares and provide higher dividends. 

• New Ruipeng Pet Group (RPET US) is looking to raise at least US$100m in its upcoming US IPO. 
• New Ruipeng Pet Group (Ruipeng) is a pet services platform, primarily offering pet care services, supply chain services and local services, covering the entire lifecycle of pets.
• In this note, we will talk about the positive aspects of the deal.

• Takeda Pharmaceutical (4502 JP)  reported 3QFY03/2023 results today. Reported revenue increased 11.2% YoY to JPY1,096.6bn (vs consensus JPY996bn) while OP increased 26.2% YoY to JPY147bn (vs consensus JPY180.1).
• The drop in OP vs consensus was mainly due to the depreciation of the Yen, nevertheless, OPM improved 30bps to 13.4% during the quarter.
• Takeda has not revised full-year forecast, however, we think the company will easily beat its own guidance as it pushes forward with its development pipeline further aided by M&A.

• Shineway released good turnover data in 22Q1-Q3. Due to large market demand for COVID-related TCM, 22Q4 performance would remain strong growth momentum, leading to positive outlook of 2022 annual report.
• With the peak of respiratory disease outbreak past and COVID-19 also begins to be under control, demand for related TCM would weaken. Accordingly, the pullback of share price could begin.
• Strong performance of Shineway’s share price may not be sustainable in long term. Shineway is no longer cheap at current valuation. While short-term catalysts remain, future upside may become limited. 

AFT Pharmaceuticals continues to strengthen its R&D pipeline with the announced in-licensing agreement with Latitude Pharmaceuticals (a US-based contract research organisation) to develop antibiotic eye drops to treat serious eye infections. The formulation is already approved to treat bacterial infections, including those caused by the antibiotic-resistant MRSA bacteria. The IP relates to an aqueous stable formulation of this treatment. Eye care is a key focus for AFT (contributing over 20% of the group’s revenue, per our estimate) and we expect this new asset to complement the existing portfolio. AFT plans to launch around 65 new products in Australasia before 2025 and a robust R&D pipeline will be key to delivering this. The development programme will be covered by AFT’s budgeted R&D expenditure of c NZ$12m per year for FY23 and FY24.

Cash flow figures from Paradigm Biopharmaceuticals’ latest update show that it remains funded past key near-term inflection points. In Q223, management reported a net cash outflow from operating activities of A$7.8m (A$17.8m for the first six months of FY23), including an A$7.4m R&D tax incentive rebate, and no capital expenditure. R&D expenditure increased 54% q-o-q to A$13.2m, corresponding with ongoing recruitment and site identification for the pivotal PARA_OA_002 Phase III trial of iPPS in knee osteoarthritis and an increase in other clinical activities. With cash of A$83.9m at end Q223 and at the current quarterly burn rate (adjusted for the non-recurring R&D tax incentive, A$15.2m), management estimates that operations are funded into 2024 (5.5 quarters), past important clinical milestones in Paradigm’s osteoarthritis programme in 2023.

• For the month of January, four new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$3bn.
• The average premium for the new deals announced (or first discussed) in January was ~28%, which is distorted by the take under for Esso Thailand (ESSO TB).
• This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

Kazia Therapeutics has released its Q223 activity report and provided a business update for the quarter. Q2 was marked by increased preclinical efforts towards exploring the applicability and efficacy of paxalisib in non-central nervous system (CNS) oncology indications such as melanoma and other solid tumors, including breast cancer. Post-period, Kazia announced a A$4.5m fund-raise through a two-stage private placement of 40.9m new shares (25.4m unconditional shares and 15.5m conditional shares) at A$0.11 per share. Management intends to use the proceeds to support its development programs (including the paxalisib GBM AGILE study due to readout in H2 CY23) and working capital requirements. The period-end net cash balance stood at A$4.4m and this, along with the A$4.5m fund-raise, should provide headroom into H2 CY23, based on current burn rates.

• Pfizer Inc (PFE US) reported 13% operational revenue growth in Q4, driven by strong performance of the COVID products and ongoing launch of Prevnar 20 for adults in U.S.
• Pfizer has provided full-year 2023 revenue guidance of $67.0–71.0B (-31% YoY at mid-point) and adjusted EPS guidance of $3.25–3.45 (-49% YoY at mid-point).
• The company is in the midst of an 18-month period during which Pfizer expects to have up to an unprecedented 19 new products or indications in the market.

• Straumann Holding AG (STMN SW) is the global leader in dental implantology, with ~29% market share. With multi-brand implant portfolio, the company is well-positioned to capture the market opportunity.  
• Straumann raised expectations for 2022 organic revenue growth to the mid-teen percentage range from low double-digit percentage range earlier, versus the strong comparative year (+42% organic revenue growth in 2021).
• Straumann has significantly expanded its addressable market to CHF18B+. To achieve the company’s ambition of CHF5B revenue by 2030, an average organic growth rate of ~10% annually is needed.

• Single product structure is the biggest risk of BCHT. Varicella vaccine is hard to drive BCHT’s performance growth in the future and the sales of influenza vaccine are not ideal. 
• There’re concerns about the protection rate of attenuated zoster vaccine,which won’t be officially sold until 2023H2/2024. It’s not sure whether the situation can be reversed by attenuated zoster vaccine alone.
• BCHT is inferior to CanSino in terms of pipeline quality and R&D capability. The investment value of BCHT is not high. We think its valuation should be lower than CanSino.

• Another milestone for Numinus. Numinus announced today that it has been given the regulatory green light from Health Canada to test the safety and efficacy of whole psilocybe cubensis tea.
• Psilocybe cubensis is the most well- known type of hundreds of hallucinogenic mushroom species that contain psilocybin and psilocin because this species grows easily.
• Back in October 2022, Numinus unveiled a first-of-its-kind psilocybe tea bag (EnfiniTea) it had developed for the upcoming Phase I trial to make it more palatable for use by certain populations, such as people receiving palliative care for serious illnesses who might find ingesting whole mushrooms or pills unappealing.

Edison Investment Research is terminating coverage on Vivesto (VIVE), Diurnal Group (DNL), Palace Capital (PCA), Primary Health Properties (PHP), Silver One Resources (SVE), Induction Healthcare (INHC) and Axiom European Financial Debt (AXI). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website.

• In 2022, Samsung Biologics (207940 KS) posted record-high consolidated revenue of KRW3 trillion and, driven by new orders, efficient plant utilization, and inclusion of Samsung Bioepis as a wholly-owned subsidiary.
• Plant 4 is on track to be completed in H12023, with active pre-sale activities are rapidly locking in capacity. Strong order momentum continued, with 2022 CMO contract amount of $9.5B.
• Samsung Bioepis reported revenue growth of 12% to KRW946B, driven by stable sales of existing products and new product launch. Humira biosimilar launch in the US is the biggest catalyst.

On 27 January, the US FDA approved Stemline Therapeutics’ (wholly owned US subsidiary of the Menarini group) elacestrant (Orserdu) as second-line treatment for ER+/HER2-, ESR1-mutated advanced or metastatic breast cancer (mBC), making it the first oral selective estrogen receptor degrader (SERD) to be approved for the indication and the first-ever approved drug for cases with the ESR1 mutation (~40%of all cases in this category). We see this as a material development for Context Therapeutics, which is currently undertaking Phase Ib trials (ELONA trial in collaboration with Menarini) for its drug ONA-XR in combination with elacestrant for the treatment of second/third-line HR+/HER2- mBC. ONA-XR has previously shown promising preclinical data in combination with anti-estrogen therapy, and improved efficacy, if demonstrated in the ELONA trial, should open the door for partnering prospects and create significant market opportunity for Context, in our opinion.

• Many people aren’t optimistic about CD47 because there is no sufficient evidence to solve blood toxicity. Although I-MAB’s problem-solving idea has no obvious flaws in logic, risks remain.
• CD73 is still at a relatively “shallow level”, which can be understood as a low level of verification. I-MAB has to make a last-ditch effort on CD47.
• At such low market cap, Investors could make an “entertaining bet”. If CD47 is successful, you can earn several times. If not, then admit the defeat.

• The review period for the March rebalance ends today. We forecast 2 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
• We expect the index committee to continue using a 6-month minimum listing history. The impact on the potential deletes is a lot higher than the impact on the potential adds.
• With 5 changes to the index, estimated one-way turnover is 5.1% resulting in a one-way trade of CNY 4,549m. There is a reasonably large reverse funding trade.

• We provide details of the Osstem Implant tender offer as well as Chairman Choi’s children exchange of CB call options for BWs. 
• We believe that the majority of the minority shareholders in Osstem Implant are not likely to sell their shares at 190,000 won per share but hold on to it. 
• Over a longer time frame, Osstem’s share price could reach higher levels driven by its improving sales and profit growth, deep valuation discount to global peers, and further M&A fight. 

• Concord Biotech Ltd (658823Z IN) is looking to raise around US$250m in its upcoming India IPO.
• Concord Biotech (Concord) is an India-based biopharma firm, which develops and manufactures fermentation-based active pharmaceutical ingredients (APIs).
• As per F&S, it was one of the leading global developers and manufacturers of select fermentation-based APIs across immunosuppressants and oncology in terms of market share, based on FY21 volume.

• New policy about surgical robots was released, which is conducive to the promotion and popularization of surgical robots in China. However, the situation is not as simple as it seems.
• We deep dive the business environment of surgical robots in China.Even with favorable policies, both surgical robot systems and consumables have to reduce price largely so as to be affordable.
• It’s difficult to make profits in China. Medbot could lose money for quite some time.Without solid internationalization, the rally cannot be sustained for a long time only by policy catalyst.

• The acquirer would cancel the deal unless at least 2.394M shares (15.4% of SO) were tendered. This is the minimum purchase quantity condition that will trigger a cancellation.
• If the minimum purchase volume is exceeded, will there be a pro rata allocation risk? The answer is no. The acquirer will purchase all the tendered shares
• The cancellation risk seems slim as only 15.4% of the SO should be tendered, which doesn’t seem to be a challenging target.

• There are 2 trading days left in the review period. We expect 5 changes at the rebalance that will be announced end-February and implemented at the close on 30 March.
• A lot of the stocks were AMFI migrations and Biocon Ltd (BIOS IN) is a potential deletion from the MSCI India Index at the February QCIR.
• The drop in the Adani Group stocks that are part of the index will result in passive inflows on the non-F&O constituents due to capping at 15% of index weight.

• We currently see 1 change for the ASX20, 2 for the ASX100, 4 changes for the ASX 200 and 9 adds/ 6 deletes for the ASX300 Index in March.
• Passive trackers will need to trade over 3 days of ADV on 13 stocks, over 5 days of ADV on 9 stocks and over 10x ADV on 4 stocks. 
• Shorts have been covering positions on stocks where there are expected to be passive inflows and increasing positions on stocks that are expected to have passive outflows.

• Cipla Ltd (CIPLA IN) reported revenue growth of 6% in Q3FY23. Ex-COVID revenue growth was 11%. Despite price erosion and surging R&D investment, EBITDA margin expanded 153bps YoY to 24.2%.
• Ex-COVID India business recorded 11% revenue growth, driven by double-digit traction in core portfolio across therapies and business segments. Branded prescription business reported seventh consecutive quarter of market beating growth.
• US business recorded record high revenue, representing 30% growth in USD terms. Strong traction in respiratory products was further propelled by new launches including peptides. In December, Cipla launched leuprolide.

• Dr. Reddy’s Laboratories (DRRD IN) recorded record high revenue, EBITDA, and net profit in Q3FY23, driven by US business. The company generated healthy cash flow of INR20B during the quarter.
• Revenue from North America surged 64% INR30.6B, driven by new products launches, increase in volumes, and a favorable forex movement. gRevlimid contributed ~34% of North America revenue.
• The company plans to launch ~30 products in the U.S. market in FY24. With the pipeline shifting toward complex products, Dr. Reddy is well-positioned to maintain double-digit revenue growth.

• Pet medical industry is the second largest core industry after pet food industry.Pet hospital,with dual attributes of medical treatment and consumption,represents the direction of consumption upgrading and has huge potential.
• New Ruipeng maintained rapid growth these years, but its business is still in the investment period. The Company is hard to generate high profit/returns due to low gross margin level.
• There’re still technical bottlenecks in China.If New Ruipeng can fill these market gaps in time and provide comprehensive pet medical solutions, its development space and moat will be much higher.