Daily Brief Health Care: SAI Life Sciences, BeiGene , Inventurus Knowledge Solutions, Xunfei Healthcare Technology, Newron Pharmaceuticals, Basilea Pharmaceutica Ag, Recce Ltd and more

• SAI Life Sciences (SAILS12 IN) raised around US$360m in its India IPO.
• Sai Life Sciences is a contract research, development and manufacturing organisation providing end-to-end services across drug discovery, development and manufacturing value-chain, for small to global pharmaceutical innovators and biotechnology firms.
• We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.

• 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 include: BeiGene (6160 HK), China Wantian Holdings (1854 HK), and Super Hi International Holding (9658 HK) / Haidilao International Holding (6862 HK).

• Inventurus Knowledge Solutions (IKSINCD IN) raised around US$295m in its India IPO.
• IKS is a technology-enabled healthcare solutions provider, assisting physician enterprises in US, Canada and Australia, with a core focus in the US.
• We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.

• Medical industry characteristics are the seriousness of diagnosis/treatment and the irreversibility of the process, which are the difficulties in implementing technology. The value that AI can provide is limited. 
• Xunfei’s business model is not To C, but To G (government) model. It’s not possible for SOE customers to pay high price for Xunfei’s AI model/products, leading to questionable profitability.
• Pre-IPO valuation has reached RMB8.4 billion. Without sustainable growth and stable profitability, valuation/liquidity of Xunfei after listing wouldn’t be good. We think Xunfei’s valuation could be similar to Yidu Tech.

Newron has entered into a licence agreement with EA Pharma, a subsidiary of Eisai, to develop, manufacture and commercialise evenamide, Newron’s proprietary modulator of the excessive release of glutamate for the treatment of schizophrenia. The transaction covers Japan and other designated Asian territories, meeting management’s target of securing a deal in Q424. Newron will receive an upfront payment of €44m, up to €73m in contributions to development and milestones, and will be eligible to tiered royalties up to a double-digit percentage of net sales for evenamide in the covered regions. We expect the upfront payment to extend Newron’s operating cash runway, enabling it to maintain operations through 2026 at a minimum (versus through H125 previously). We place our estimates under review as we update our model to reflect the terms of the announcement.

Following FDA approval in April 2024, Basilea has announced a much-anticipated partnership agreement with Innoviva Specialty Therapeutics for the commercialisation of Zevtera in the US. Deal terms include an upfront payment of US$4m, as well as tiered royalties on net sales in the high-teens to mid-20s percentage range. In addition, the company is eligible to receive up to US$223m in sales-related milestone payments. We view this as an important milestone and highly favourable transaction for Basilea, while offering an effective new medicine to combat Staphylococcus aureus bloodstream infections in the US. For now, we put our valuation on hold as we review our model and estimates.

Recce received approval from the Indonesian Drug and Food Regulatory Authority, Badan POM (BPOM), to start its registrational Phase III study in Indonesia of RECCE® 327 topical gel (R327G) in diabetic foot infections (DFIs). This was the final hurdle that needed to be overcome before study enrolment can proceed, which is expected to start before the end of 2024. Top-line data from the 300-patient double-blinded Phase III study (with 200 patients in the R327 arm and 100 on placebo) are anticipated in late 2025. If positive, we expect Recce would be able to launch R327G in South-East Asia in H2 CY26, potentially marking the company’s transition to a commercial stage.