Daily Brief Health Care: Alkem Laboratories Ltd, China Shineway Pharmaceutical, Immix Biopharma Inc, OSE Immuno and more

• Alkem Laboratories Ltd (ALKEM IN) is flying high on strong Q2 numbers. The shares rallied 23% since the company announced Q2FY24 result in early November, widely outperforming Nifty Pharma index.
• In Q2FY24, revenue grew 12% YoY, and gross margin expanded 380bps to 61.4% backed by lower raw material cost and lower intensity of price erosion in US market.
• For the U.S. business, Alkem is looking at high-single-digit growth in dollar terms for FY24. The company has reiterated FY24 gross margin guidance at 59.0–59.5%.

• Shineway’s performance growth in 23Q1-Q3 slowed obviously. The big decrease in sales growth of injection products and TCM formula granule products would drag down the overall revenue growth in 23H2. 
• Due to TCM formula granules VBP, the 60%-75% gross profit margin level is hard to sustain. TCM formula granules business would enter an era of low profits but high sales.
• Shineway’s cash balance is RMB5.4 billion, but market value is about RMB5.39 billion. So, Shineway is undervalued. The Company’s two dividends next year could reach RMB50 cents per share.

Immix presented encouraging new data at the American Society of Hematology (ASH) 2023 meeting for its Nexcella subsidiary’s lead CAR-T asset, NXC-201, in amyloid light chain amyloidosis (ALA) patients. The update corresponds to 10 ALA patients treated with NXC-201, for which the overall response rate (ORR) stands at 100% (10/10). NXC-201 also maintains its competitive safety profile among this group, including no cases of neurotoxicity and only low-grade cytokine release syndrome associated with short onset and duration. The results to date are supportive of NXC-201 potentially becoming the first outpatient CAR-T therapy, in our view, offering a potentially desirable treatment option for a fragile patient population. While the current data come from the NEXICART-1 trial based in Israel, with the Investigational New Drug (IND) application in ALA patients recently accepted by the FDA, we believe the enrolment of patients at US trial sites (NEXICART-2) will be a key milestone for the clinical progression of NXC-201. Management has communicated that it intends to submit a Biologics License Application to the FDA once 30–40 ALA patients have been treated.

OSE Immunotherapeutics (OSE) has shared a positive update on the FIRsT clinical trial assessing FR104/VEL-101 (an anti-CD28 monoclonal antibody) as a maintenance therapy for kidney transplant patients. Long-term maintenance therapy in kidney transplant patients remains an ongoing medical need that has seen little progression in the last 20 years. Although OSE is in the early stages of clinical development, we believe there could be a significant opportunity. Encouragingly, the results show no safety concerns with FR104/VEL-101 treatment (seven patients for 12 months post-transplantation, and one ongoing at four months) and no cases of acute rejection, both of which are key objectives for this Phase I/II trial. While the FIRsT study involves a relatively small group size (eight evaluable patients), we believe the update is encouraging, and note that Veloxis Pharmaceuticals (OSE’s partner for this programme) is already preparing for a subsequent Phase II trial involving a larger patient population. We expect full results from the FIRsT study after all patients have completed the 12-month treatment protocol, most likely in H224.