Daily Brief Health Care: Eoflow , HealthCare Global Enterprises, Bangkok Dusit Medical Services, Remegen , Recce Ltd, Sunho Biologics and more

• On the 8th of August, Insulet Corp (PODD US) filed a lawsuit accusing Eoflow (294090 KS) of the misappropriation of trade secrets, patent infringement, and trademark dilution.
• The filing was pretty heavy on accusations. EOFlow declined ~11% on the news.
• Undeterred, Medtronic (MDT US) continues to preach all is peachy, suggesting the EOFlow merger is a go, and Medtronic will deal with the lawsuit, as and when.

• Eoflow (294090 KS) shares were up 4.4% on the back of Medtronic Plc (MDT US)’s earnings call comment that it expects the acquisition to close at the end of 2023.
• The bear view is that Medtronic’s messaging remained unchanged as it is still assessing Insulet Corp (PODD US) lawsuit and the potential impact on the timing and/or pricing.
• The bull view is that Medtronic’s comment underscores its commitment to close the transaction. It’s tough to take a call on risk/reward profile – at best it’s a brave buy. 

• HCG’s cancer segment reported decent revenue growth of 14% YoY in Q1FY24. EBITDA margin came in weaker than expected due to a few transient adverse factors.
• HCG is hitting all the right notes to drive growth. It is beefing up clinical talent to attract patients. It is also making strategic tuck-in acquisitions to expand its presence.  
• As cancer treatment is becoming more advanced, the mix of immunotherapy and hi-tech treatment is growing, helping the realization and the profitability to improve.

• Bangkok Dusit Medical Services (BDMS TB) recorded 10% YoY growth in revenue from hospital operations in 2Q23, driven by 22% YoY from international patients, which contributed 26% of revenue.
• Thai patient revenues increased 7% YoY, despite COVID-19 related revenue decreased sharply from year-ago quarter.
• EBITDA margin declined 70 basis points YoY to 22.6% due to lower occupancy rate and economies of scales from a decline in number of COVID-19 patients.

• RemeGen’s 23H1 results were unsatisfactory. We also have concerns about its future sales performance. The core reason behind is the disorganized pipeline layout, leading to inefficient sales system/high cost.
• RemeGen’s core technologies are mostly in-licensed from third parties. At first, RemeGen just hoped to develop drugs/build pipeline through these technologies, without considering the potential challenges of commercialization ahead.
• The anti-corruption campaign could negatively affected RemeGen’s 23H2 performance. The Company could fail to meet management’s guidance for 2023. We lowered our valuation of RemeGen to RMB12 billion-18 billion.

Recce recently reported the completion of its data review from its earlier long-infusion Phase I study of the intravenous (IV) RECCE 327 (R327) formulation, confirming that the drug candidate shows favourable safety characteristics, a robust dose-dependent pharmacokinetic drug concentration response, as well as evidence of increased drug concentration into the urinary tract. The company is proceeding with a Phase I/II study assessing using a more rapid infusion rate, with recent completion of the first 2,500mg cohort of the Phase I part ahead of schedule. Obtaining financing is a near-term strategic priority given the cash at hand (A$1.6m at 30 June 2023), and the company’s current cash runway is short (into late Q3 CY23). Recce has signalled that it is seeking to raise A$12–15m. After rolling forward our estimates and updating forex assumptions, we obtain an rNPV valuation of A$562.4m (or A$3.15 per share), up from A$535.6m previously.

• There is a certain connection between Sunho and Genscript. So, Sunho has a typical style of “CXO switching to biotech” – That is to do whatever is popular.
• For core products, IAP0971 and IAE0972 just completed phase I trials, still with high R&D failure risks. IAH0968 is difficult to become a blockbuster variety due to strong competing products.
• As investors’re already rational about investing in unprofitable Biotech. The companies without commercialized products and with uncertain outlook may not be favored by the market. Therefore, high valuation is unreasonable.