Healthcare

I would like to discuss the issues on several interesting points in the report “Vision for Future Human Resources” compiled by the Ministry of Economy, Trade and Industry (METI).
Both company and employees have seen a gap between the skills they need and the reality, yet neither company nor employees have invested sufficiently. This has led to falling competitiveness.
Companies need to invest sufficiently in human resources to create added value from management that has been so busy cutting costs that it has saved to invest in human resources.

Telix Pharmaceuticals (TLX AU): Illuccix Launched in US; Large Market Opportunity; Potential to Grow

Telix Pharmaceuticals (TLX AU) has launched its prostate cancer imaging product, Illuccix in the U.S. in April 2022. The U.S. total addressable market value is estimated at $750 million.
The U.S. commercial launch of Illuccix is off to a strong start. Illuccix generated revenue of $13.6 million in the U.S. in the ten weeks following first commercial sales.
Telix is progressing marketing authorization applications for Illuccix in Europe and Canada. The company’s partners are advancing toward Illuccix launch in China and South Korea.

Consun Pharmaceutical (1681HK)- High-Priced Acquisition & Good Performance Show Big Upside Potential

After a downturn in 2019,Consun has turned things around and achieved amazing results in 2021. Its core business was not affected by VBP. Consun will continue to make further progress.
Consun is undervalued if compared with industry average, the peers and considering its large cash balance. Share prices have decent upside potential, driven by fundamentals, promising outlook and favorable policies.
Wanbangde’s intention to acquire Consun’s shares at high price would also be a catalyst. We recommended investors to follow Consun closely, which has certain investment value based on our analysis.

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Aug 15

Daily Brief Health Care: Huadong Medicine Co Ltd A and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Huadong Medicine (000963.CH) 2022H1 – Huadong Is Back on Track. If Shares Pullback, Then Be Long

Huadong Medicine (000963.CH) 2022H1 – Huadong Is Back on Track. If Shares Pullback, Then Be Long

Huadong released encouraging 2022H1 results. After a significant decline due to the loss of VBP bid for core varieties, Huadong is out of trouble and back on track now.
The future profit contribution would be on medical cosmetology and industrial microorganisms businesses. For 2022 forecast, revenue YoY growth is below 10%, and net profit YoY growth is above 15%.
Due to unfriendly macro environment, Huadong’s share price could face a correction. But based on its promising outlook, we recommend that investors could take advantage of the pullback to long.

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Aug 14

Daily Brief Health Care: Mayne Pharma, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Mayne Pharma (MYX AU): CDMO Business Sale- A Step Towards Focus Solely on Specialty Pharma
Mandatory Disclosure of Gender Wage Differentials Is Still a First Step

Mayne Pharma (MYX AU): CDMO Business Sale- A Step Towards Focus Solely on Specialty Pharma

Mayne Pharma (MYX AU) is selling its U.S.-based CDMO business, Metrics Contract Services for $475 million. The transaction is expected to close by the end of 2022.
Allowing for reinvestment needs, the net proceeds from the sale will be used to repay the syndicated debt facility and return surplus capital to shareholders.
Combined oral contraceptive Nextstellis remains the company’s most significant commercial opportunity. While Nextstellis was launched in the U.S. in June 2021, Mayne has launched Nextstellis in Australia in July 2022.

Mandatory Disclosure of Gender Wage Differentials Is Still a First Step

There is the problem that a wage gap exists between men and women even among regular employees, and that the percentage of non-regular workers is very high among women.
Issues to be addressed include the creation of a social infrastructure in which workers don’t have to leave jobs due to childbirth or child-rearing, and fair wages for non-regular workers.
Mandatory disclosure is an important step. Managers should also think of employees as partners in creating new value, rather than simply as labor, which will help to eliminate this issue.

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Aug 13

Daily Brief Health Care: Progyny Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Progyny (PGNY US): Q2 Results Ahead of Expectations; 2022 Guidance Raised Second Time This Year

Progyny (PGNY US): Q2 Results Ahead of Expectations; 2022 Guidance Raised Second Time This Year

By Shifara Samsudeen, ACMA, CGMA

Progyny Inc (PGNY US) announced strong Q2 results, with both revenue and EPS surpassing consensus as well as company guidance. Revenue and adjusted EBITDA margin reached to highest ever levels.
The company has raised lower end of its 2022 revenue and adjusted EBITDA guidance second time in this year. Progyny is seeing continued strong employer demand for fertility solutions.
Despite inflation and a potential softening in the economy, Progyny is seeing strong customer demand and is upbeat about new client acquisition for its upcoming selling season.

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Aug 12

Daily Brief Health Care: Biocytogen Pharmaceuticals (Beijing), Tokyo Stock Exchange Tokyo Price Index Topix, Bridgebio Pharma Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Biocytogen Pharma IPO: Large Drug Pipeline but Negatives Outweighs the Positives
Japan’s Gender Gap Index Remains Low. Power to Change the Existing Structure Is Still Invisible.
Solvency Risk Short Candidates: BridgeBio, Wayfair, Archaea Energy, Enviva

Biocytogen Pharma IPO: Large Drug Pipeline but Negatives Outweighs the Positives

Biocytogen Pharmaceuticals (Beijing) (BCP HK) is a biopharmaceutical and pre-clinical research services company with two core products (YH003 and YH001) and 10 other pipeline candidates.
The company currently does not have any commercialised products and earns revenue through offering pre-clinical research services and antibody development.
Biocytogen’s business model comes with inherent risks such as absence of approved drugs. Hence, we would recommend staying on the side line.

Japan’s Gender Gap Index Remains Low. Power to Change the Existing Structure Is Still Invisible.

In the area of politics, where there is a noticeable lag, there is a system in the electoral system that actually discourages aspiring politicians from becoming politicians.
The social structure of male dominance is nothing more than maintenance of that structure by groups with vested interests, and risk exists that sensitivity to new values will be dulled.
Without the forces at work to change existing social structures, the gender gap index isn’t expected to change much next year, but so far we don’t see such forces now.

Solvency Risk Short Candidates: BridgeBio, Wayfair, Archaea Energy, Enviva

By Eric Fernandez, CFA

This model seeks companies facing dangerously high leverage coupled with negative or declining cash flows. It considers interest expense, capex and short term maturities for additional input.
The companies may not be viable given cash flows and capital structures. These shorts tend to have higher betas and can have strong down moves as the crisis is recognized.
This week we flag: BridgeBio, Wayfair, Archaea Energy, Enviva Inc.

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Aug 11

Daily Brief Health Care: Pharmaessentia Corp, Assertio Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Pharmaessentia Corp (6446 TT): Key Marketed Drug Besremi Is Showing No Sign of Slow Down
ASRT: Low Valuation Growth

Pharmaessentia Corp (6446 TT): Key Marketed Drug Besremi Is Showing No Sign of Slow Down

Pharmaessentia Corp (6446 TT) is on a robust growth path following the U.S. launch of its key drug Besremi for polycythemia vera (PV) in December 2021.
The company has reported July net revenue of NT$348.5 million, an increase of 937% and 26% from July 2021 and June 2022, respectively.
Besremi has further label expansion opportunity as the drug is undergoing clinical trials for additional indications including essential thrombocythemia (ET), myelofibrosis, and chronic hepatitis.

ASRT: Low Valuation Growth

By Hamed Khorsand

Reporting better than expected Q2 results was not enough to keep investors interested after the earnings release
ASRT is in the process of broadening its sales channel for its recently acquired drug, Otrexup. ASRT should begin to generate a return on the drug in 2H2022
Indocin volume rose by approximately 7 percent sequentially. ASRT had increased prices in the second half of last year with investors concerned ASRT could face pushback from hospitals on pricing

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Aug 10

Daily Brief Health Care: Shockwave Medical Inc, Zhangzhou Pientzehuang Pharmaceutical Co., Ltd., Kaken Pharmaceutical, S&P 500, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Shockwave Medical Inc (SWAV US): Recovery from COVID Drove Q2 Sales; 2022 Revenue Guidance Raised
Zhangzhou Pientzehuang Pharmaceutical (600436CH) 22H1- 2022 Is Stressful but Shares Will Bounce Back
Kaken Pharmaceutical (4521 JP): Falling Revenue of Top-Selling Drugs Limit Near-Term Growth Prospect
S&P 500, Nasdaq 100 Testing Key Resistance Levels; Pause Likely; Buying Biotech
Voting Rights that Fulfill Fiduciary Duty Are a Key for Tense Corporate Management Practices

Shockwave Medical Inc (SWAV US): Recovery from COVID Drove Q2 Sales; 2022 Revenue Guidance Raised

Shockwave Medical Inc (SWAV US) had a solid Q2 across the board, with total revenue surging 116% y/y, driven by a 139% y/y jump in coronary products (73% of revenue).
The company raised 2022 revenue guidance to $465–475 million (+96–100% y/y). Revenue guidance was raised for the second time this year.
Shockwave shares gained 28% since I published bullish insight on the company on June 7. I believe further stream is still left.

Zhangzhou Pientzehuang Pharmaceutical (600436CH) 22H1- 2022 Is Stressful but Shares Will Bounce Back

Due to the lockdown/pandemic, Pientzehuang Pharmaceutical’s 2022H1 performance slowed down. Considering the economic downturn and people’s cutting back spending on non-rigid consumption, the full-year revenue growth could be around 10%-20%.
The Company’s key challenge lies in revenue growth. However, it is not easy to increase sales largely due to the scarcity of raw materials, which limits the expansion of production.
Pien Tze Huang is overvalued. Share price could continue to fall,but it will bounce back due to its high moat. 2022 is a good time for bottom fishing this stock.

Kaken Pharmaceutical (4521 JP): Falling Revenue of Top-Selling Drugs Limit Near-Term Growth Prospect

Kaken Pharmaceutical (4521 JP) is reporting declining revenue from its three largest selling products, due to NHI price revision. These products together contribute more than 60% of total revenue.
The company’s newly launched products are growing at a rapid pace. However, the fastest growing product Ecclock contribute just 2% of total revenue.
Kaken guided for just 1% y/y revenue growth and 12% y/y decline in operating profit in FY23. Due to pipeline expansion, R&D expenses are likely to remain elevated.

S&P 500, Nasdaq 100 Testing Key Resistance Levels; Pause Likely; Buying Biotech

By Joe Jasper

The weight of the evidence suggests that the lows for this bear market have likely already been established, but that does not mean it will be smooth sailing from here.
The SPX and NDX are both testing important resistance levels (4165-4180 and the YTD downtrend, respectively), making this a logical spot for the indexes to stall and potentially pull back.
Ultimately, we would expect to see support near their 50-day MAs as the market goes through a bottoming process. We remain neutral overall.

Voting Rights that Fulfill Fiduciary Duty Are a Key for Tense Corporate Management Practices

As discussed in my previous article, when the % of foreign shareholders increases, companies tend not to bring up the continuation of takeover defense measures at shareholder meetings.
The threshold level, so to speak, of the % of foreign shareholders that determines whether or not to continue takeover defense measures is estimated to be in the 30% range.
If other domestic institutional investors follow, threshold level will be lowered and lead to a more tense corporate management, which will have a positive effect on the board of directors.

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Aug 08

Daily Brief Health Care: Mesoblast Ltd, Eisai Co Ltd, Shandong Weigao Orthopaedic and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Mesoblast (MSB AU): Trading Halt; Decreased Net Cash Usage in Q4; Positive Clinical Trial Results
Make Us Consider the Issues on Anti-Takeover in a Company with Reduced Stake of Founding Family
Shandong Weigao Orthopaedic – 2022 Is the Real Test. Short-Term Performance Pressure Is Inevitable

Mesoblast (MSB AU): Trading Halt; Decreased Net Cash Usage in Q4; Positive Clinical Trial Results

Mesoblast Ltd (MSB AU) shares have been put on trading halt on August 4 due to pending announcement on private placement. The company undertook last private placement in March 2021.
Net operating cash usage has been declining over the last six quarters. In Q4FY22, net cash usage for operating activities decreased 33% y/y to $13.9 million.
Last month, Mesoblast announced promising results from rexlemestrocel-L trial in chronic heart failure patients. Rexlemestrocel-L delivered an improvement in left ventricular ejection fraction at 12 months.

Make Us Consider the Issues on Anti-Takeover in a Company with Reduced Stake of Founding Family

Eisai, which had more than 30% of foreign shareholdings, had retained anti-takeover measures while incorporating the opinions of foreign shareholders, and has background of seeking reconciliation through enhancing its governance.
While foreign shareholders had voted against Mr. Naito, president who retained anti-takeover provision, most Japanese shareholders had voted in favor, showing “support” him at the shareholders’ meeting.
It’s likely that Eisai will retain “contingency” anti-takeover, but if the founding family will use it to retain its position, this isn’t consistent with the goal of maximizing corporate value.

Shandong Weigao Orthopaedic – 2022 Is the Real Test. Short-Term Performance Pressure Is Inevitable

Although Weigao achieved solid growth in 2021 after pandemic was under control,the real test will come in 2022. The implementation of centralized procurement will have a significant impact on performance.
After spinal implants are included in centralized procurement this year, all of Weigao’s three major businesses (spinal implants/trauma implants/joint implants) are within the scope. Short-term performance pressure is inevitable.
As a result of the pandemic/lockdown in 2022H1, we lowered our performance forecast on Weigao.

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Aug 07

Daily Brief Health Care: Stryker Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Stryker Corporation: The Vocera Acquisition & Other Drivers

Stryker Corporation: The Vocera Acquisition & Other Drivers

By Ishan Majumdar

Stryker Corporation has faced a challenging macro environment and is undergoing various supply shortages but this did not stop the company from delivering a solid growth in organic sales.
Spine and orthopedics net sales also increased in the quarter in constant currency.
We prove the stock of Stryker Corporation with a ‘Hold’ rating and a revision in the target price.

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Aug 06

Daily Brief Health Care: Vertex Pharmaceuticals and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Vertex Pharmaceuticals (VRTX US): Beat-And-Raise Q2 Results Driven by Strong Uptake of Trikafta

Vertex Pharmaceuticals (VRTX US): Beat-And-Raise Q2 Results Driven by Strong Uptake of Trikafta