Daily Brief Health Care: Sinocelltech Group , Dentium, TSE Tokyo Price Index TOPIX, AFT Pharmaceuticals, Oryzon Genomics, MariMed, OSE Immuno and more

• The real value of Sinocelltech Group (688520 CH)’s pipeline will be greatly discounted because in the current context of fierce homogeneous competition, the commercialization performance of latecomers will be bleak.
• Through frequent capital operations, in two and a half years, valuation of Sinocelltech was successfully raised by nearly 300 times. However, the Company’s owner’s equity is negative, with delisting risk. 
• The SSE STAR Market has been full of bubble if compared with HKEX. Sinocelltech has been severely overvalued. We think the reasonable market value of Sinocelltech is around RMB15-20 billion.

• Dentium (145720 KS) earns more than 50% of its total revenue from China. The company’s revenue from China reported a CAGR of 32% during 2018–2022.
• Despite concern over China slowdown and lower ASP due to VBP, in 3Q23, Dentium reported 12% YoY revenue growth in China, similar growth rate reported in 2Q23, driven by volume.
• Economic slowdown is lingering over the global as well as Chinese dental implant sector, especially the premium brands. Dentium is positioned at the upper price portion within the value segment.  

• Since there’s little opposition to the argument that quarterly securities reports should no longer be mandatory, securities reports in 1Q/3Q are almost identical content to the disclosures to TSE.
• To ensure the reliability of the financial statements submitted to TSE, which are replacing current statutory documents, the requirement of review by auditor could be a solution to the problem.
• In this review, the addition of the cash flow statement and segment information in 1Q and 3Q financial statements is very useful and a step forward.

AFT Pharmaceuticals reported solid H124 top-line growth, driven by strong momentum in the Asian and international markets. H124 revenues of NZ$83.6m grew 27.2% from H123, bolstered by 171.4% and 47.8% y o y growth in international and Asian markets. Although margins came in softer than expected (operating margin of 3.9% vs 5.3% in H123) with increased upfront launch, marketing and R&D spending, particularly in the domestic ANZ markets, management expects margins to recover in H2 as the business scales in these newly launched markets. Given the H1 run rate and seasonality (H2-weighted business model), we raise our top-line estimates for FY24 and FY25 but temper near-term operating profit expectations, in line with management’s FY24 operating profit guidance of NZ$22–24m. Longer term, we anticipate a lift from the recent FDA approval of Maxigesic IV. As a result of these adjustments, our valuation resets to NZ$723m or NZ$6.90/share, up from NZ$644m or NZ$6.14/share previously.

Oryzon has secured funding of up to €45m through a revised convertible bond financing agreement with Nice & Green, a Switzerland-based institutional investor, which is anticipated to extend Oryzon’s cash runway to end-FY25. The new agreement supplants the previous €20m convertible bond agreement with Nice & Green, out of which €8m was pending withdrawal. We consider this announcement to be a critical development, especially in light of the overall macroeconomic environment. Management is expected to share top-line readouts from its lead asset (Phase IIb PORTICO trial in patients with borderline personality disorder) in Q124.

• MariMed closed a $58.7 million secured credit facility with a US chartered bank on November 17, 2023.
• The refinancing will result in a $4.7 million reduction to principal and interest expense in the first 12 months and $3.5 million annually for the next four years.
• MariMed estimates its new weighted average cost of debt is now about 8%, down from more than 11% previously.

OSE Immunotherapeutics (OSE) has announced a collaboration with GenDx for the development and validation of a companion diagnostic screening test to support its upcoming Phase III trial for Tedopi, an oncology vaccine for non-small cell lung cancer (NSCLC) in the second-line setting. The simple blood sample and next-generation sequencing test is intended to identify HLA-A*02 positive NSCLC patients who are more likely to respond to Tedopi epitopes. As GenDx is a leading molecular diagnostics company with experience in the human leukocyte antigen (HLA) field, the development of this companion diagnostic test should accelerate the enrolment of eligible patients. OSE’s registrational pivotal clinical trial is to commence in 2024.