Daily Brief Health Care: China Traditional Chinese Medicine, Hangzhou Tigermed Consulting C, Chugai Pharmaceutical, Immix Biopharma Inc and more

• Bloomberg reports that Sinopharm is reviving its interest in privatising China Traditional Chinese Medicine (570 HK)/CTCM. Sinopharm has contacted banks about financing and is considering partnering with other investors.
• Sinopharm’s best bet is to partner with Ping An Insurance Group of (601318 CH) and privatise through a scheme. In this scenario, no disinterested shareholder would hold a blocking stake.
• Due to Sinopharm’s previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding compared to peer multiples.

• We once again heard privatization rumor of China TCM, but China TCM denied it at this stage. We still recommend investors to remain vigilant until receive definite official announcement.
• One important background of privatization is the integration of SOE carried out in recent years. We do not rule out the possibility that Taiji Group would drive this privatization.
• It may not be an optimal time for the proposal of privatization by major shareholders. Other shareholders may not want to give up high-quality stocks, which makes privatization challenging.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight are Hangzhou Tigermed Consulting C (3347 HK), East Buy Holding (1797 HK) and Kingkey Financial (1468 HK).

• Chugai Pharmaceutical (4519 JP) reported 5% YoY decline in core revenue in 2023, due to the decrease in the supply of COVID-19 treatment Ronapreve to the government.
• For 2024, Chugai expects core revenue to decline mainly due to the absence of Ronapreve revenue and decline in Actemra export. However, operating and net profits are expected to increase.
• Hemlibra export and new launches such as Vabysmo, Phesgo, Polivy, and Alecensa are expected to drive long-term growth of the company.

Immix Biopharma has announced a $15m (gross), fully underwritten equity issue. The company will use the proceeds to fund clinical trials for lead CAR-T asset NXC-201, as well as to meet working capital and general corporate needs. Immix had a net cash balance of $19.6m at end September 2023 and we estimate that this capital injection will potentially extend the cash runway to end FY25 or early FY26, past the top-line readouts from its Phase Ib/IIa clinical trials for NXC-201 (NEXICART-1), which, if positive, could pave the way for a partnering deal. We view the release of further rolling data from the trial and first patient dosing in the US (NEXICART-2) across H124 as potentially key upcoming catalysts for the company.