Daily Brief Health Care: Dr. Reddy’s Laboratories, Gracell Biotechnologies Inc, BeiGene, Oryzon Genomics and more

• Dr. Reddy’s Laboratories (DRRD IN) entered into a definitive agreement to acquire the U.S. retail generic prescription product portfolio of Mayne Pharma (MYX AU) for $105M.
• The deal will add approximately 85 approved generic products and four pipeline products. For the fiscal year ending June 30, 2022, this portfolio generated revenue of $111M.
• Considering the revenue potential, the acquisition price seems to be reasonable. Being a high margin and limited competition portfolio, the acquisition will be earnings accretive for Dr. Reddy’s.

• Although the pipeline has characteristics, Gracell’s R&D progress cannot catch up with the speed of the transformation of global CGT investment climate. Its commercialization performance could be much lower than expected. 
• There’s “practical obstacles” for the use of CAR-T, which cannot solve the actual clinical needs at this stage. Doctors would choose other solutions. So, the actual market space is small.
• Investors can do short-term trade when Gracell’s valuation is lower than peers, but due to the highly uncertain long-term prospects of this company, we do not recommend long-term hold.

• BeiGene (BGNE) reported C4Q22 top line missing our estimate by 13%. Main reason for the miss is weaker than expected BRUKINSA and Tislelizumab sales in China; 
• While China growth does appear to be a drag, international sales is robust and has potential. Consensus is also reasonable with gross margin having upside;
• We cut TP from US$225 to US$219 and maintain BUY. Reliance on international sales heightens BGNE’s political risk.

At Oryzon’s recent key opinion leader (KOL) event, management elaborated on the near-term clinical catalysts for its lead assets iadademstat, in oncology, and vafidemstat, in central nervous system (CNS) indications. Following the positive results of the ALICE trial, the company is fast approaching the initiation of the Phase Ib FRIDA study for iadademstat in FLT3+ relapsed/refractory (r/r) acute myeloid leukaemia (AML) patients. Management believes the r/r AML setting may represent a faster route to market for iadademstat, targeting a patient population with currently limited and sub-optimal treatment options. Management originally guided for FRIDA to be initiated by end-2022; however, this delay has been attributed to slower-than-expected trial site activation. Management has communicated that trial site activation is now progressing and that FRIDA could begin imminently. Additionally, interim data analysis from the PORTICO study in borderline personality disorder (BPD) in Q123 represents a significant catalyst for vafidemstat in the company’s leading CNS programme.