Daily Brief Health Care: Hangzhou Jiuyuan Gene Engineering, Medley, OSE Immuno, Relmada Therapeutics and more

• Jiuyuan is not a typical innovative pharmaceutical enterprise with cutting-edge technology. The current seemingly good revenue/profit performance is actually based on some old products from over a decade ago.
• The risk of VBP could lead to a significant decrease in profit margins at any time. The cyclical changes in heparin industry would put more pressure on Jiuyuan’s performance.
• As Jiuyuan has not yet demonstrated superior clinical data in Jikeqin for overweight/obesity indication, together with fierce competition, we are cautious about the performance in GLP-1s pipeline at this stage.

• Medley (4480 JP) reported better-than-expected 2023 result. Revenue increased 45% YoY to ¥20.5B, EBITDA jumped 77% YoY to ¥3.4B, and net profit increased 152% YoY to ¥2.6B.
• The company expects 2024 revenue of ¥27.1B (up 32% YoY) and EBITDA of ¥3.9B (up 15% YoY). However, net profit is expected to remain flat at ¥2.6B in 2024.
• Medley has established new mid-term targets. The company aims to achieve an EBITDA of ¥20B on revenue of ¥100B in 2029, representing 5-year revenue CAGR of 30%.

OSE Immunotherapeutics has announced a global licence and collaboration agreement with AbbVie to develop OSE-230, a novel monoclonal antibody, for the treatment of chronic and severe inflammation. The announcement marks a positive milestone and much needed endorsement within a sector hindered by funding challenges. This follows sizable transactions in December 2023 and early 2024, including AbbVie’s foray into CNS (Cerevel for $8.7bn) and entry into immunotherapy (ImmunoGen for $10.1bn), covered in our outlook note. The arrangement provides further external recognition of OSE’s innovative R&D capabilities and early-stage pipeline. Deal terms include an upfront payment of $48m, with OSE eligible to receive up to $665m in additional milestone payments. The market response to the news was highly positive, with OSE’s share price increasing by over 60% on the morning of the announcement.

Key points

• RLMD is a biotech company with a high-stakes binary outcome in 2024 for their antidepressant, REL-1017
• Despite previous phase 3 trial failures, the drug has a validated mechanism of action and promising phase 2 data, leading to a $1.1B valuation
• The stock is undervalued and presents a compelling investment opportunity with significant upside potential, especially through underpriced options for exposure to the outcome in mid-2024

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.