Healthcare

HilleVax (HLVX US), a novel vaccine developer intends to raise $100 million through an IPO. Its lead program HIL-214, intended to prevent norovirus infection is in phase 2 clinical trial.
The number of shares to be offered and the price range are yet to be disclosed. Post listing, the company will trade under the ticker HLVX on the Nasdaq.
HIL-214’s large addressable market, with huge unmet need, HilleVax’s earlier fund-raising history, and Takeda’s backing are some of the positives of this new offering.

Abbott Laboratories (ABT US): 2022 High Conviction Idea 1Q22 Review- COVID Testing Bonanza Continues

Abbott Laboratories (ABT US) reported better-than-expected Q1 revenue and earnings, due to higher diagnostic revenue led by strong COVID-19 testing revenue. 2022 adjusted EPS guidance remains unchanged.
In Q1, global COVID-19 testing-related sales reached to a record high of $3.3 billion, representing 28% of total revenue. COVID-19 testing revenue guidance was raised to $4.5 billion for 2022.
Medical devices business reported double-digit organic revenue growth in the U.S. as well as international market, showing continued recovery in the elective procedures.

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Apr 20

Health Care: Ramsay Health Care, Hugel Inc, Shijiazhuang Yiling Pharmaceutical, Hygeia Healthcare Group, AllianceBernstein Holding LP, Adidas AG, Bayer AG and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Ramsay Health Care (RHC AU): Indicative Proposal from KKR & Index Implications
Korean Botox Players in Another Round of Patent Fights: Medytox (086900 KS) Sues Hugel (145020 KS)
Shijiazhuang Yiling Pharmaceutical (002603.CH) – Doubts About COVID-19 Drug and the Concerns Behind
Hygeia Healthcare Group (6078.HK) 2021 Results – Solid Business Logic Comes with Policy Risk
Fiduciary Management All Cap Equity Q1 2022 Investment Letter
Oakmark International Fund: Q1 2022 Commentary
KKR Bids $88/Share For Ramsay Health
Oakmark Global Select Fund: Q1 2022 Commentary

Ramsay Health Care (RHC AU): Indicative Proposal from KKR & Index Implications

By Brian Freitas

A KKR led consortium has made a conditional, non-binding, indicative proposal to acquire 100% of the shares in Ramsay Health Care (RHC AU) at A$88/share in cash.
The offer values Ramsay Health Care (RHC AU) at A$20.14bn and is a premium of 36.7% to the last close. The premium is over 30% even using longer term VWAPs.
There will be changes to the S&P/ASX family of indices to maintain the number of index members. We will know more once an indicative timeline is published.

Korean Botox Players in Another Round of Patent Fights: Medytox (086900 KS) Sues Hugel (145020 KS)

Hugel Inc (145020 KS) dominates South Korean botulinum toxin market, with ~50% share. The company already has presence in China and aims to launch its product in Europe this year.
Hugel’s ambitious target to enter into the world’s largest botulinum toxin market, U.S. is facing a big obstacle as Medy Tox Inc (086900 KS) filed a complaint against the company.
Medytox’s U.S. business is uncertain after the ending of its exclusive licensing agreement with Abbvie Inc (ABBV US).

Shijiazhuang Yiling Pharmaceutical (002603.CH) – Doubts About COVID-19 Drug and the Concerns Behind

There are doubts about the efficacy of Lianhua Qingwen to treat mild cases of COVID-19 in China, leading to the plunge of Yiling’s share price.
Fully evaluating the efficacy of Lianhua Qingwen requires larger double-blind randomized clinical trials. Data from other than double-blind controlled clinical trials are hard to be conclusive and can be controversial.
Even if Yiling could escape unscathed from the controversy, Yiling’s achievements since 2020 in capital market may not have sustainability.Together with the potential risks, investors are advised to remain cautious.

Hygeia Healthcare Group (6078.HK) 2021 Results – Solid Business Logic Comes with Policy Risk

Driven by the development mode of “organic growth + strategic acquisitions + cooperation with hospital partners”, Hygeia Healthcare Group (6078 HK) could rapidly expand nationwide, with solid business logic.
Hygeia’s delicacy management and the strength in operation help the Company to break the limits of the expansion of private hospitals, helping shorten the time it takes to break even.
However, the high uncertainties on policy and State’s attitude towards private hospitals cast shadow on Hygeia’s long-term prospects, but investors could still trade this stock in short term.

Fiduciary Management All Cap Equity Q1 2022 Investment Letter

The Fed Funds Rate went higher than the inflation rate to tame it, the Fed Funds rate went higher in the past fifty years.
The Fed has made some adjustments, are optimistic about the COVID-affected names, and are confident in the lineup we have today.

Oakmark International Fund: Q1 2022 Commentary

Oakmark International Fund returned -8.7% for the quarter ended March 31, 2022.
The fund’s research process is based on a disciplined quantitative and qualitative screening process, says Oakmark.
The firm says it believes businesses must offer significant profit potential and be run by managers who think and act as owners.

KKR Bids $88/Share For Ramsay Health

By David Blennerhassett

Hospital operator Ramsay Health Care (RHC AU) has announced an unsolicited, non-binding Offer from KKR, by way of a Scheme, at A$88.00/share, in cash, a 36.7% premium to last close.
Presumably, Paul Ramsay’s Ramsay Foundation, Ramsay’s largest shareholder, is supportive, otherwise there is no deal.
Due diligence has been granted. If successful, this would be one of the largest LBOs by a private equity outfit in Australia.

Oakmark Global Select Fund: Q1 2022 Commentary

The Oakmark Global Select Fund declined 7.1% for the quarter ended March 31, 2022.
The Oakmark global Select Fund is based on a disciplined quantitative and qualitative screening process, says the firm.
The fund is based in London and London, London, and has a $1.2bn annual fund.

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Apr 19

Health Care: Sino Biopharmaceutical and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Sino Biopharmaceutical (1177.HK) – Three “Golden Eggs” and the Risks Behind

Sino Biopharmaceutical (1177.HK) – Three “Golden Eggs” and the Risks Behind

As the “the king of generics”, Sino Biopharmaceutical (1177 HK) is lucky to have three “golden eggs”(Entecavir, Anlotinib, CoronaVac) to contribute huge performance over the years.
The promotion of VBP and fierce competition make Sino Biopharmaceutical’s products lose pricing power. Due to little revolutionary technology/slow product iteration/weak R&D, it’s unlikely to have another Anlotinib level asset.
The Company’s development mode, the mindset of management, and other concerns could be more serious problems, causing investors to distrust the management level and preventing it from getting high valuation.

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Apr 18

Health Care: Chongqing Zhifei Biological Products, Legend Biotech Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Chongqing Zhifei Biological Products (300122.CH) – WHO’s One-Dose HPV Vaccine Regimen & The Outlook
Legend Biotech Corp (LEGN US): Carvykti Approval Is the Silver Lining Amid Uncertainty of Delisting

Chongqing Zhifei Biological Products (300122.CH) – WHO’s One-Dose HPV Vaccine Regimen & The Outlook

Under the current policy in China, any minor changes to vaccine doses require a series of clinical data support and registration changes. So, WHO’s recommendation won’t affect Zhifei’s short-term performance.
The increasing domestic competing HPV vaccines in the future would be a big threat to Zhifei’s agency business. Its self-developed products may not be strong enough to compensate.
The performance in 2022 is expected to be solid before real challenge comes in 2024. The valuation logic and outlook won’t be brighten unless there’s new breakthrough in agency business.

Legend Biotech Corp (LEGN US): Carvykti Approval Is the Silver Lining Amid Uncertainty of Delisting

Legend Biotech Corp (LEGN US) received FDA approval for its first product Carvykti in February as a fifth-line treatment of relapsed or refractory multiple myeloma.
Label expansion of Carvykti for earlier line of multiple myeloma treatments should expand addressable market, thereby increasing peak sales opportunity to $5 billion from initial expectation of $1.5 billion.
The U.S. Securities and Exchange Commission has added Legend to their delisting watchlist last week. The company needs to release required evidence by May 3 to stay listed.

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Apr 17

Health Care: AllianceBernstein Holding LP and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Fiduciary Management Large Cap Equity Q1 2022 Investment Letter

Fiduciary Management Large Cap Equity Q1 2022 Investment Letter

The war has already had impacts on commodities, intermediate products, and the supply chain.
If higher interest rates and inflation characterize the landscape for the next several years, it likely spells the end of the era of unbridled speculation and high multiples.

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Apr 16

Health Care: SanBio Co Ltd, Bloom Energy Corp, Lantheus Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

SanBio (4592 JP): Marketing Approval of First Product Expected This Year in Japan
Clearbridge Small Cap Growth Strategy Portfolio Manager Commentary Q1 2022
Clearbridge Small Cap Strategy Portfolio Manager Commentary Q1 2022

SanBio (4592 JP): Marketing Approval of First Product Expected This Year in Japan

SanBio Co Ltd (4592 JP) is expected to receive approval for its first regenerative cell medicine SB623 for treating chronic motor deficit from traumatic brain injury in Japan this year.
SB623, with current and future indication approvals, is targeting a large patient population of more than 50 million in major pharmaceutical markets globally. The indications have large unmet need.
SanBio has a pipeline of five other pre-clinical drug candidates, entailing visibility beyond SB623.

Clearbridge Small Cap Growth Strategy Portfolio Manager Commentary Q1 2022

Small cap growth stocks entered bear market territory during the quarter, buffeted by the prospects of monetary tightening, spiking inflation and the uncertainties wrought by Russia’s invasion of Ukraine.

Clearbridge Small Cap Strategy Portfolio Manager Commentary Q1 2022

Small cap stocks had a rough ride during the first quarter, as increases in market volatility and investor uncertainty from major macro catalysts weighed on performance.
The process of ending a decade of cheap and available capital has begun, creating headwinds that pose a challenge for the market as a whole.

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Apr 15

Health Care: Jinxin Fertility Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Jinxin Fertility (1951 HK): Regulatory Risk and Macro Headwind Jeopardize Growth Prospect

Jinxin Fertility (1951 HK): Regulatory Risk and Macro Headwind Jeopardize Growth Prospect

As China’s leading assisted reproductive service provider, Jinxin Fertility Co Ltd (1951 HK) can be negatively affected by the country’s consistently falling birth rate.
The company performed 27,354 IVF cycles in 2021, 20% higher than that of 2020. However, it is still lower than 27,854 IVF cycles performed in 2019, pre-COVID era.
Concern over the fact that the Chinese government may impose restrictions on the for-profit healthcare service providers, like it did for K12 education sector, is souring near-term sentiment.

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Apr 14

Health Care: US Treasury (10 Yr Generic), Venus MedTech, Jinxin Fertility Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

10-Year Treasury Yield Testing 40-Year Resistance; Upgrading Health Care to Overweight
Venus MedTech (2500 HK): Overcrowded Market, Margin Pressure, Expanding Loss
Jinxin Fertility Co Ltd (1951.HK) – The Outlook Is Not Optimistic Even with Policy Support

10-Year Treasury Yield Testing 40-Year Resistance; Upgrading Health Care to Overweight

By Joe Jasper

We have discussed our expectations for rising rates for quite some time, but the 10-year yield is now testing 40-year downtrend resistance which comes in at 2.80-2.82%.
If there was ever a time for interest rates to move lower, this is where it needs to happen — and it would be fitting, considering extremely bearish bond sentiment.
On the other hand, if the 10-year Treasury is above 2.82% we see a secular reversal where rising rates would be the new normal

Venus MedTech (2500 HK): Overcrowded Market, Margin Pressure, Expanding Loss

Venus MedTech (2500 HK) is facing competition in China TAVR market and its market share has deteriorated to 70% in 2021 from 79.3% in 2018.
Due to declining ASP and low pricing power, the company’s gross profit margin has declined to 78% in 2021 from 86% in 2018.
During 2021, the company’s loss expanded 103% y/y to RMB372 million, mainly due to elevated selling and distribution expenses and R&D costs.

Jinxin Fertility Co Ltd (1951.HK) – The Outlook Is Not Optimistic Even with Policy Support

IVF penetration rate in China is not high and the rate of improvement is very slow. With public hospitals accounting for over 90% market share, Jinxin’s growth space is limited.
Jinxin has extended its business scope to support the entire fertility and pregnancy lifecycle. But it could drag down the overall net profit margin,resulting in lower-than-expected performance in the end.
The breakthrough point is internationalization. If COVID-19 is under control and Jinxin continues to expand overseas markets successfully, it could change its valuation logic and open up upward potential.

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Apr 13

Health Care: Samsung Biologics Co.,, Innate Immunotherapeutics, Venus MedTech and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Samsung Biologics: Post-Offering Trading Dynamics on Potential Overhang
Innate Immunotherapeutics (ATX AU): 2022 Is Going to Be a Watershed Year
Venus MedTech (2500.HK) Vs Peijia Medical (9996.HK) Vs CardioFlow (2160.HK) – Dilemma of TAVR Market

Samsung Biologics: Post-Offering Trading Dynamics on Potential Overhang

By Sanghyun Park

Samsung Biologics (207940 KS) has succeeded in a rights offering worth ₩3.2T to the existing shareholders. The subscription rate of the existing shareholders and the ESOP came out at 100.25%.
The size of immediately floatable shares is estimated at 1 million, representing 1.55% of SO and 22.82x ADTV. It is a size that will significantly impact the short-term flow.
There is a sufficient circumstantial probability that the 1M new stocks, currently at a 20% return, will lead to immediate profit realization after listing.

Innate Immunotherapeutics (ATX AU): 2022 Is Going to Be a Watershed Year

Innate Immunotherapeutics (ATX AU) is an Australian pharmaceutical company advancing a pipeline of focal adhesion kinase (FAK) inhibitors for cancer and fibrosis.
The company’s primary focus for 2022 is on initiating phase 2 clinical trials in pancreatic cancer and, in the second half of the year in lung fibrosis.
With latest quarter’s cash burn of AUD0.94 million and cash balance of AUD16.2 million, the company is well-positioned to fund its near-term R&D activities.

Venus MedTech (2500.HK) Vs Peijia Medical (9996.HK) Vs CardioFlow (2160.HK) – Dilemma of TAVR Market

Even starting late,Peijia took the lead in the number of hospitals entered and sales volume in the 1st year after product launch.It could be a dark horse to achieve corner overtaking.
The ceiling of China TAVR market is obvious due to high surgery cost and severe shortage of doctors/qualified hospitals. Future price war due to fierce competition is also a concern.
Related TAVR companies’ high valuation cannot be supported without sufficient incremental markets. So, if companies hope to break the ceiling, they have to develop global markets.

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Apr 12

Health Care: PHC Holdings, Virtus Health, Asymchem Laboratories and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

PHC Holdings IPO Lock-Up – Stock Might Be Cheap but It’s Stuck with a US$1bn Overhang
The Panel Joins CapVest In Virtus’ Corner
CapVest Fights Back with Revised Offers for Virtus
Asymchem Laboratories (6821.HK/002821.CH) – Concerns on Future Growth Momentum

PHC Holdings IPO Lock-Up – Stock Might Be Cheap but It’s Stuck with a US$1bn Overhang

By Sumeet Singh

PHC Holding had raised US$645m in its Japan IPO in Oct 2021, after the deal was downsized and priced at the low-end.
PHC is engaged in the development, manufacturing and sale of healthcare devices and services. The company has three main segments: Diabetes Management; Healthcare Services; and Diagnosis/Life Science.
The pre-IPO shareholders will be released from the lockup today on 11th Apr 2022. Its largest shareholder is KKR, who still owns a 39% stake in the company.

The Panel Joins CapVest In Virtus’ Corner

By David Blennerhassett

CapVest has bumped its Scheme Offer for Virtus Health (VRT AU) to A$8.15/share. More importantly, it has increased the Takeover Offer price to A$8.10/share.
Separately, the Takeovers Panel has made interim orders prohibiting BGH from acquiring on market any Virtus shares above its Bid Price.
Virtus’s Board has unanimously determined that CapVest’s revised Offer is superior to BGH’s Bid.

CapVest Fights Back with Revised Offers for Virtus

By Arun George

Including the A$0.12 permitted dividend (paid on 14 April), CapVest’s revised scheme offer is A$8.27 and the off-market takeover offer is A$8.22. The new offer addresses the capital return issue.
Despite today’s interims orders from the takeover panel, CapVest’s scheme transaction still has virtually no chance of getting up due to BGH’s 19.99% stake.
BGH’s like-for-like off-market offer price of A$8.12 per share is 1.2% below CapVest’s off-market offer, suggesting that there is more life to this takeover tussle for Virtus Health (VRT AU).

Asymchem Laboratories (6821.HK/002821.CH) – Concerns on Future Growth Momentum

The three large orders for COVID-19 small molecule drugs are mostly one-off revenues, and after 2022, Asymchem Laboratories (6821 HK)‘s performance could decline from a high base.
In essence, Asymchem mainly relies on cost advantage of large-scale capacity to obtain orders.Without core leading technology in frontier of medicine, Asymchem is difficult to enjoy sustainable industry development dividend.
Overall, Asymchem’s moat is not strong enough, and the certainty of the Company’s long-term performance growth is also not high. It could be a short-term trade rather than long-term hold.

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