Healthcare

• Ono Pharmaceutical (4528 JP) is acquiring Deciphera Pharmaceuticals (DCPH US) for $25.60/share in cash through a tender offer. The total equity value of the acquisition is approximately $2.4B.
• Ono is expected to reap the benefit of Deciphera acquisition earliest from FY27. In the short-run, the company’s major problem of loss of revenue will not be addressed.
• Ono needs to stretch its balance sheet to fund Deciphera acquisition. The acquisition will be earnings dilutive for Ono. Pricey valuation of the deal is another deterrent.

• While we are not yet out of the woods, we continue to see evidence that suggests the lows may be “in” for this pullback.
• Last week (4/23/24 Compass) we discussed the possibility that further downside was limited on the S&P 500 due to a multitude of reasons
• We view the latest pullback to 100-day MA on SPX as healthy/normal within the ongoing bull market. Pullbacks to the 100-day provided ideal entry points throughout the 2021 bull market

• Hansoh’s performance in 2023 beat expectations, which was mainly driven by collaboration revenue. Revenue proportion of innovative drug business made breakthrough and has become the major performance driver.
• Ameile’s future revenue growth is critical to Hansoh, but it faces increasing competition. EGFR/c-MET BsAb represents the future trend. If HS-20117 is successful, then the story of EGFR would continue.
• In 2024, Hansoh is expected to receive an upfront payment of US$185 million from GSK. According to the management, revenue is expected to have double digit growth this year.

• In Q1 2024, Novartis delivered robust growth, reflecting in a double-digit sales growth and core margin expansion.
• Sales were up by 11% in constant currency, and core operating income was up by 22%.
• The core margin reached 38.4%, inching steadily towards the set goal of over 40% by 2027.

• On the 18th December 2023, Pacific Smiles (PSQ AU), an operator of dental centers, announced and rejected a A$1.40/share non-binding proposal from Genesis Capital. Genesis subsequently increased its stake to 19.90%.
• Genesis then bumped its NBIO to A$1.75/share on the 19 March and was granted due diligence on a non-exclusive basis. PSQ said it would support the revised terms if firmed. 
• PSQ has now entered a Scheme with National Dental Care at A$1.90/share. The Offer also requires FIRB signing-off. But the proposal is a non-starter if Genesis rejects terms. 

• Indegene Limited (1864095D IN) has set IPO price band at INR430–452 per share. The IPO consists of fresh issue as well as OFS by existing shareholders.
• Considering FY24 annualized post-IPO EPS of INR13.48, Indegene seeks a P/E valuation of 31.9–33.5x.
• Considering niche business focus, proven execution capability, marquee clientele, long-standing client relationship, life science focus, and comprehensive offering, Indegene’s valuation seems quite attractive.

• M3 Inc (2413 JP) reported 4Q and Full-year FY03/2024 results. Earnings missed both guidance as well as consensus due to slowdown in Medical Platform and Overseas businesses.
• Medical Platform’s earnings declined further in 4Q with spending cuts by pharma companies, and it seems that the segment’s earnings will further decline going forward.
• M3’s share price is down 18% YTD, and we do not see many catalysts to drive a rally in the company’s share price.

• Siloam International Hospitals booked a solid set of 1Q2024 results, with sustained QoQ improvements in revenues, EBITDA, and profits, stripping out a one-off write-down for hospitals under development. 
• The company also saw strong improvements in operational metrics including inpatient and outpatient days, with especially strong performance in March due to a dengue epidemic, which also diluted patient intensity. 
• Siloam International Hospitals saw continuing strength in more complex treatments, as it focused on raising clinical acuity in areas such as transplants and cardiology. Valuations remain attractive relative to peers.

While AFT continues to gain commercial traction from Maxigesic/ Combogesic IV sales in the US (launched by partner Hikma in Q1 CY24) and anticipates the launch of Crystaderm in China, a strong R&D pipeline is central to AFT’s long-term growth ambitions. AFT recently announced the seventh addition to its R&D portfolio, a non-invasive topical alternative treatment for keloid and hypertrophic scarring, addressing the limited treatment algorithm for keloid scars (raised, thickened scars). This development collaboration is with Massey Ventures and the Gillies McIndoe Research Institute, and continues AFT’s initial collaboration with these parties from 2022, for the treatment of strawberry birthmarks.

• Intuitive Surgical delivered a healthy first quarter performance with strong procedure growth and solid capital placements.
• However, the company also faced some regional challenges during the quarter.
• Core measures of the company’s operations remained strong, as seen in its robust procedure growth and solid capital placements.

• The performance of most TCM formula granule enterprises showed slow growth or even decline due to VBP in 2023. Although VBP will continue, it also brings opportunities for related companies. 
• Customized production, expensive upstream raw materials/production equipment, complex supply chain systems, etc. are all major reasons for the high prices of CAR-T therapy, but we see hope for changes.
• Gan & Lee Pharmaceuticals (603087 CH)’s core insulin business will continue to have decent growth based on positive VBP renewal results. It’s expected that in 2024, performance would further rebound.

• According to Hygeia’s management, the 25% growth in previous guidance for 2024 would be exceeded. 24H1 would maintain a growth rate of 40+%, and the growth in 24H2 would accelerate.
• However, progress of some projects is slower than expected, so a growth rate of 25%+ in performance forecast seems aggressive.After all, downward adjustment of performance guidance again is very uncomfortable.
• P/E of 30-40 is reasonable range in short term. So, Hygeia is undervalued.In long term, revenue growth could fall to 15-20% because the contribution of M&A to performance would decline.

• Astellas Pharma (4503 JP) reported ¥85B revenue increase in FY24 over FY23, while Fx impacted the revenue positively by ¥96B. In local currency terms, the U.S. revenue declined 5% YoY.
• FY24 operating and net profit declined 80%+, due to amortization and impairment loss of intangible assets. Astellas is changing accounting policy to smoothen core operating and net profits in FY25.
• For FY25, Astellas guided for just 3% revenue growth. Core operating profit is expected to decline 10%, while net profit is anticipated to take a bigger hit and decrease 17%.

• SCHOTT Pharma AG & Co. KGaA is experiencing accelerating growth in the pharmaceutical packaging industry due to the increasing prevalence of biologics, GLP-1s, and high value solutions.
• The company’s HVS segment is driving double-digit revenue growth and is expected to account for a larger percentage of total revenues in the future.
• With solid pricing power in an oligopolistic industry, SCHOTT Pharma is well-positioned to benefit from the success of GLP-1s and further expand its market share.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in May.
• The deletion from passive portfolios will lead to a liquidity event at the end of May where passive trackers will need to sell multiple days of ADV.
• Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.

• Daiichi Sankyo (4568 JP) announced better-than-expected Q4FY24 result, with all key parameters exceeding guidance. Q4 revenue increased 30% YoY to ¥429B, driven by 76% YoY growth in Enhertu product sales.
• For FY25, Daiichi Sankyo guided 9% increase in revenue to ¥1,750B. Core operating profit is expected to increase 8% to ¥210B, while net profit to decline 5% to ¥190B.
• In addition to the dividend of ¥60 per share for FY25, Daiichi Sankyo has announced buyback plan of 55M shares (2.87% of issued shares) for ¥200B.

• Samsung Biologics (207940 KS) reported mixed 1Q24 result, with revenue beating and operating profit missing estimates. Despite robust revenue growth, profitability is under pressure.
• With accumulated orders exceeding $12.5B (vs $12B at the end of 2023), the outlook remains strong. A gradual increase in Plant 4 operations is expected to drive sequential revenue growth.
• On April 23, Samsung Bioepis received marketing approval from European Commission (EC) for Pyzchiva, a biosimilar of Stelara, thereby becoming an early mover in a potential €2.5B market.

• Revolution Medicines reported a decent set of earnings call for the fourth quarter and full year of 2023.
• Throughout the year, Revolution made significant strides, such as revealing the preliminary clinical profiles of two targeted RAS(ON) inhibitors, RMC-6236 and RMC-6291, from Phase I/IIb trials.
• According to data from the Triple Meeting and ESMO Congress, these investigational drugs show promise and support continued development.

• Sunho’s pipeline has high risk and there is a long way to go to demonstrate their final clinical value. It’s highly uncertain if Sunho would bring expected return to investors.
• The entities involved in the process of reorganization were all related parties. Investment from Efung Anhe/Efung Ansheng sparked concern from CSRC. Sunho is required to explain whether there’s any benefit transfer.
• Due to the lack of strong fundamentals, there is no reason for high valuation. It’s not surprising if Sunho’s valuation finally falls below HKD1.53 billion (or even below HK$1 billion).  

• Arrowhead Pharmaceuticals is committed to rapidly innovating and developing treatments and plans to grow their pipeline of RNAi therapeutics to a minimum of 20 clinical-stage or marketed products by the year 2025.
• This pledge reflects Arrowhead’s two core goals of maximizing the number of patients aided and the ability to generate enduring value for shareholders.
• Due to the company’s maturing pipeline, Arrowhead is focusing on prioritizing and investing in their internal programs and is actively building late-stage development and commercial infrastructure to focus on the cardiometabolic vertical.

• Homology Medicines is undergoing a reverse merger with an inflammation and immunology company, providing investors with a valuable contingent value right (CVR) on its legacy assets
• Investors participating in a PIPE concurrent with the merger are paying a premium for the new company, excluding the value of the CVR
• The merger is expected to close in Q1, with investors owning a CVR for Homology’s ownership stake in Oxford Biomedica Solutions and potential proceeds from its gene therapy programs

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Glaukos Corporation reported record fourth quarter consolidated net sales of $82.4 million, representing a 16% increase on a reported basis and 15% on a constant currency basis from the previous year.
• For the full year of 2023, the consolidated net sales of approximately $315 million showed an increase of 11% on a reported basis and 12% on a constant currency basis compared to 2022.
• The company also reaffirmed its full year 2024 net sales guidance range of $350 million to $360 million.

• Haemonetics Corporation showed positive financial results, with a third quarter revenue of $336 million, an impressive 10% growth on both reported and organic bases.
• Earnings per diluted share also grew by 22% compared with the previous year, which Haemonetics attributes to above-market growth and the successful achievement of important long range plan milestones.
• The conference call presentation highlighted the revenue increases across segments, with the plasma revenue growing by 8% in the third quarter and the Hospital business revenue growth skyrocketing by an impressive 22%.

• Guangming District State-owned Assets Supervision and Administration Bureau reached a cooperation agreement with China National Biotec to establish a joint venture, which will become the new controlling shareholder of Weiguang.
• Since Tiantan is already Sinopharm’s subsidiary, there will be horizontal competition issue in the field of blood product business between Tiantan and Weiguang, mainly due to significant business overlap.
• Some spin-offs and integrations are expected between Tiantan and Weiguang. As the reform of SOE enters a new stage, the two companies could end up very different.

• HK inno.N (195940 KS) is expected to see significant improvement in operating profit margin this year to 10.9% (vs. 8% in 2023).
• Growing sales of flagship drug K-CAB, increasing capacity utilization in new IV fluids plant, and improving profitability of health and beauty products segment, will be three important margin drivers.
• With accelerating global presence, HK inno is on track to achieve its target of entering 100 countries by 2028 and achieve global sales of KRW2 trillion ($1.4 billion) by 2030.

• 10x Genomics witnessed good momentum in 2023, achieving a 20% growth in total revenue amounting to $ 619 million.
• The primary contributing factor of this growth was the launch of Xenium that resulted in greater than 250 instrument sales in just its first year.
• The company’s entry into spatial biology was successful with spatial revenue amounting to over $135 million for the year.

• Perrigo Company plc’s fourth quarter and 2023 fiscal year results displayed stable growth in the company’s core operations, with an organic net sales increase of 2% for the year and EPS growth of 25% to $2.58, exceeding the prior year.
• Dimension such as significant growth in Skin Care, nutrition, and women’s health categories, as well as solid progress in the healthy lifestyle sector, underscore the company’s positive performance.
• Also contributing were supply chain reinvention program savings of $40 million and the strategic acquisition of HRA offering synergies of $30 million.

• Halozyme Therapeutics Inc. showcased a strong financial and operating result in the fourth quarter and full year of 2023, fueled by leading differentiating drug delivery technologies ENHANZE and Auto-Injectors, as well as the commercial products XYOSTED and Hylenex.
• For 2023, the company delivered a 26% year-over-year increase in total revenue to $829 million and recorded a $448 million high in royalty revenue, indicating a 24% rise year-over-year.
• Adjusted EBITDA also experienced an increase of 19% to $426 million and non-GAAP diluted earnings per share growth of 25% to $2.77 for the full year 2023.

• Merit Medical Systems Inc, during its Fourth Quarter of Fiscal Year 2023 earnings, revealed relatively positive results.
• The company reported a fourth quarter total revenue of $324.5 million, a 10.6% increase year-on-year.
• The stronger-than-expected revenue growth was mainly driven by a robust organic growth across product categories and contributions from both U.S. and international markets.

• QuidelOrtho reported total revenues of $3 billion for the full year 2023, a decrease of 26% from the previous year.
• The drop was largely attributed to a lower respiratory season in 2023 compared to the prior year, specifically in COVID-19 related testing.
• The company’s non-respiratory revenue segments, however, exhibited a growth of 5% for the year, suggesting potential opportunities in these areas.

Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). 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.

• ACADIA Pharmaceuticals announced its fourth-quarter and full-year results for 2023.
• The company’s CEO, Steve Davis, stated that ACADIA had transformed its business in 2023 by becoming a cash flow positive company with two first-in-class commercial assets.
• These assets include DAYBUE, a drug approved for treatment of Rett syndrome, and NUPLAZID, a treatment for Parkinson’s disease psychosis.

• Blueprint Medicines enjoyed a successful fourth quarter of 2023, rounding off a pivotal year wherein AYVAKIT became their first and only approved medicine for patients with indolent systemic mastocytosis or ISM. In 2024, the company aims to drive longer-term growth by concentrating on three key business areas: the potential of AYVAKIT, advancing their portfolio of approved and investigational programs targeting mast cell mediated diseases, and maintaining a strong financial position.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Remegen’s product revenue fails to cover R&D expenses and its sales profit is negative, which means that RemeGen’s cost control is disappointing, and the main problem is high selling expenses.
• If RemeGen continues to follow the old path, breakeven will be further out of reach. In other words, we don’t think that the A-share placement will materially change the outlook.
• Remegen’s reasonable market value is RMB12-18 billion. If above RMB18 billion, it’s recommended investors take profits in time. If below RMB12 billion, investors could buy and wait for a rebound.

At its recent capital markets day (CMD) and with the support of key opinion leaders, Basilea highlighted the rising need for innovative therapies to address serious fungal and bacterial infections. It continues to make advancements in this specialised segment through the development of opportunistic acquisitions leveraging its anti-infective expertise. Its growth initiatives remain funded through the traction of its commercialised products, Cresemba and Zevtera. FY24 key strategic priorities include the US commercial launch of antibacterial Zevtera and Phase III trial initiation of first-in-class, broad-spectrum antifungal fosmanogepix.

• Innovent is most well-known as the developer of mazdutide in China, however this is overshadowing a strong portfolio of oncology drugs in a very high growth market.
• China’s approach to healthcare is being defined by having the biggest diabetic population, over 4 million new cancer cases per year, and over 100 million living with obesity.
• We expect the valuation gap between the two first-to-market GLP-1 drugs, and competition to close. Oncology drug sales and valuations will continue its growth trajectory.

• We have seen four transactions of MNC acquiring Chinese Biotech companies. However, this does not mean that domestic big pharmaceutical companies will also participate in the acquisition of small Biotech.
• The underlying investment logic of innovative drug is undergoing changes. Non-oncology fields, such as autoimmunity, CNS, endocrine metabolism, and ophthalmology will be the main hot directions of investment and R&D.
• Shanghai Tofflon Science A (300171 CH) is still in downward trend. We’re not optimistic about its 2023 results. We don’t recommend bottom-fish this stock unless there is a major catalyst.

• Xunfei Healthcare Technology (XHT HK) is looking to raise around US$200m in its upcoming Hong Kong IPO.
• Xunfei Healthcare Technology (Xunfei), a iFlytek (Shenzhen-listed) spin-off, primarily provides solutions covering the full healthcare service cycle, with products and services mainly catered towards major stakeholders in the healthcare industry.
• In this note, we look at the firm’s past performance.

• We would see CanSino’s performance pick up obviously in 2024 – Revenue of meningococcal vaccines would up about 50% YoY. Both R&D and SG&A expenses would show a declining trend.
• Starting from 2025, CanSino’s product matrix will become more diverse.Its financial performance will enter a virtuous cycle. Revenue in 2025 may exceed expectations, depending on the approval time of PCV13i.
• CanSino is one of the few domestic vaccine companies that has ability to explore the international market. Mispricing/expectation differences in the market will give investors the opportunity for excess returns.

• Marksans Pharma (MRKS IN) has done well in recent years, growing at 15.2% on a 5Y CAGR.  
• The company has a good balance sheet, strong cash generation and also witnessed a recent uptick on the margins side. UK business especially has been the cash cow.
• However, there are few impairment indicators; few subsidiaries are not audited while bad debts have appeared in the books lately. Company also has few disclosure issues.

• Medikaloka Hermina (HEAL IJ) booked a strong recovery in revenues and profits in FY2023 driven by rapidly rising inpatient and outpatient volume growth with JKN patient share rising. 
• The company also saw significant improvements in working capital in 2023 and will step up its capex and hospital expansion in FY2024E helping to drive growth. 
• Medikaloka Hermina is differentiated by its women & children specialisation, higher JKN exposure, and its doctor partnership model. It trades at a discount to peers with higher growth expectations. 

• In 1Q24, Intuitive Surgical (ISRG US) reported 11% YoY revenue growth to $1.89B, driven by growth in da Vinci procedure volume and an increase in the installed base of systems.
• Worldwide da Vinci procedures grew 16%, matching the higher end of prior guidance range. The company placed 313 da Vinci surgical systems, including eight newly approved da Vinci 5.
• Even after considering blip in bariatric surgery, delayed tender in China, and no benefit of patient backlog, the company has raised 2024 worldwide da Vinci procedure growth guidance to 14–17%.