Daily Brief Health Care: Amvis Holdings Inc, Torii Pharmaceutical, Luye Pharma, Mannkind Corp, Oryzon Genomics, Respiri Ltd and more

• Amvis Holdings Inc (7071 JP) (AH)’s founder aims to raise around US$250m via a secondary follow-on offering.
• The deal will increase the free-float of the stock and will lead to the stock being transferred to the Prime segment.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• LIM Japan Event Master Fund sent a document to Torii Pharmaceutical (4551 JP) requesting the company to distribute 100% of its surplus to shareholders and conduct a drastic share buyback.
• LIM is of view that Torii has excess cash balances, which is more than the market cap of the company. Inefficient use of capital has led to low single-digit ROE.
• Torii opposes the proposal, as the company thinks it needs adequate cash to pursue business development aka in-licensing of new drugs.  

• The decline in revenue from multiple categories of drugs due to VBP indicates that Luye Pharma (2186 HK) urgently needs a group of new products to reverse the overall weak performance. 
• Without the advantages in R&D efficacy and product competitiveness, the current pipeline would generate little value. It’s hard to convince people that the fundamentals of Luye have truly changed.
• We are not optimistic about Luye’s outlook, which lacks long investment logic. Meanwhile, we think that this Placement is not cost-effective due to more potential downside to valuation.

• Mannkind Corp (MNKD US) has multiple revenue stream, with two marketed products. Flagship drug Afrezza, an inhaled insulin recorded 11% YoY revenue growth to $10.8M in Q3.
• Due to high R&D and SG&A expenses, Mannkind records operating loss. However, gross profit margin is improving, with Afrezza gross margin improving to 81% in 3Q22 from 61% in 3Q21.
• Mannkind’s inhaled clofazimine (MNKD 101) is advancing to Phase 2/3 study for potential treatment of nontuberculous mycobacterial (NTM) lung disease. ~86K people in US are living with NTM lung disease.

Oryzon Genomics has presented headline FY22 financial results, which reflect continued progress on its clinical activities for key assets iadademstat (oncology) and vafidemstat (central nervous system; CNS) across different programmes. Total operating expenses for the year were US$22.9m, up by 13.5% from US$20.2m in FY21 and slightly higher than our estimate of US$20.1m. As expected, the bulk of these costs (c 80%) related to R&D expenses (US$18.1m) as the company continues to focus on advancing its clinical pipeline. The period-end gross cash balance was US$22.7m, which at historical burn rates (€6.92m/US$7.3m in H122) should fund the company into H225, past key clinical readouts. Looking ahead, we see the start of patient enrolment in the FRIDA study for relapsed/refractory (r/r) FLT3+ acute myeloid leukaemia (AML) patients and top-line data from the PORTICO study for borderline personality (BPD) disorder in Q123 as key upcoming catalysts.

Respiri has announced the successful completion of the Michigan Children’s Hospital’s pilot programme assessing the wheezo SAAS (Respiri and partner Access Telehealth) platform. The initial March 2022 agreement enabled pulmonologists to employ wheezo to increase the engagement of paediatric patients with asthma. The hospital will include the wheezo RPM programme in its current standard of care for eligible asthma patients. We expect the paediatric population to be one of the cohorts to find the most utility from the wheezo monitoring protocol (given this population is not always able to self-identify and flag symptoms) and usage feedback from these patients is anticipated to be crucial for Respiri. We also note the Michigan Children’s Hospital is a part of the of the NYSE-listed Tenet Healthcare Corporation (over 60 hospitals across the US) and uptake, if encouraging, can support a broader roll out.