Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Zhaoke Ophthalmology Pharmaceutical / Equity Capital Markets

Founded by Lee's Pharma, Zhaoke offers a comprehensive ophthalmic product pipeline. The company is looking to raise up to USD 200m via a Hong Kong listing.We look at the company's two products, namely CsA gel and ZKY001. We are of the view that CsA gel does provide advantage over Restasis, the top selling eye gel for the DED, but the forecast of market growth is too aggressive for the DED market. For another core product ZKY001, while there is no data on the efficacy from Phase I clinical trial, we do note that the licensing parnter's product which uses the same technology but on a different indication, did not meet the primary end point in Phase III clinical trial according to a recent announcement, which raises our concern on the potential of the product candidate. In addition, the company also had a long list of generic referencing top selling glaucoma drugs. The company has an OK management team but strong backing of institutional investors.

Founded by Lee's Pharma, Zhaoke offers a comprehensive ophthalmic product pipeline. The company is looking to raise up to USD 200m via a Hong Kong listing.We look at the company's two products, namely CsA gel and ZKY001. We are of the view that CsA gel does provide advantage over Restasis, the top selling eye gel for the DED, but the forecast of market growth is too aggressive for the DED market. For another core product ZKY001, while there is no data on the efficacy from Phase I clinical trial, we do note that the licensing parnter's product which uses the same technology but on a different indication, did not meet the primary end point in Phase III clinical trial according to a recent announcement, which raises our concern on the potential of the product candidate. In addition, the company also had a long list of generic referencing top selling glaucoma drugs. The company has an OK management team but strong backing of institutional investors. 

Zhaoke Ophthalmic (兆科眼科): Could Be Over-Valued for Pre-IPO Round

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

On December 18th 2020, <a href="https://www.smartkarma.com/entities/lee-s-pharmaceutical-hldgs" target="_blank" data-smartkarma-citation="entities:14616:1" rel="noopener">Lee's Pharmaceutical (950 HK)</a> announced that it had submitted an application to the Hong Kong Stock Exchange for approval to list <a href="https://www.smartkarma.com/entities/zhaoke-ophthalmology-pharmaceutical" target="_blank" data-smartkarma-citation="entities:31495:1" rel="noopener">Zhaoke Ophthalmology Pharmaceutical (ZKO HK)</a> on the main board of the HKEX. It is worth mentioning that, before the IPO, Lee's Pharmaceuticals holds 34.1% shares in Zhaoke, and Zhaoke is the affiliated company of the group. After the spin-off and listing, Lee's Pharmaceuticals would no longer be Zhaoke's controlling shareholder, but would still be its single largest shareholder. Meanwhile, at present, there are some good listed companies in the ophthalmology industry in the secondary capital market, such as <a href="https://www.smartkarma.com/entities/chengdu-kanghong-pharmaceu-a" target="_blank" data-smartkarma-citation="entities:24723:1" rel="noopener">Chengdu Kanghong Pharmaceu-A (002773 CH)</a> and <a href="https://www.smartkarma.com/entities/shenyang-xingqi-pharmaceut-a" target="_blank" data-smartkarma-citation="entities:29617:1" rel="noopener">Shenyang Xingqi Pharmaceut-A (300573 CH)</a>. As a "new force", how would Zhaoke perform compared with its strong peers in this industry?

On December 18th 2020, Lee's Pharmaceutical (950 HK) announced that it had submitted an application to the Hong Kong Stock Exchange for approval to list Zhaoke Ophthalmology Pharmaceutical (ZKO HK) on the main board of the HKEX. It is worth mentioning that, before the IPO, Lee's Pharmaceuticals holds 34.1% shares in Zhaoke, and Zhaoke is the affiliated company of the group. After the spin-off and listing, Lee's Pharmaceuticals would no longer be Zhaoke's controlling shareholder, but would still be its single largest shareholder. Meanwhile, at present, there are some good listed companies in the ophthalmology industry in the secondary capital market, such as Chengdu Kanghong Pharmaceu-A (002773 CH) and Shenyang Xingqi Pharmaceut-A (300573 CH). As a "new force", how would Zhaoke perform compared with its strong peers in this industry?

Pre-IPO Zhaoke Ophthalmology Pharmaceutical - It Remains to Be Seen How to Find Its Way Out

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Zhaoke Ophthalmology is a pre-revenue pharmaceutical company specializing in ophthalmic drugs for the China market. The company has filed an Application Proof to list on the HKEX, and is a carve-out of <a href="https://www.smartkarma.com/entities/lee-s-pharmaceutical-hldgs" target="_blank" data-smartkarma-citation="entities:14616:1" rel="noopener">Lee'S Pharmaceutical Hldgs (950 HK)</a> , which owns 34% of the shares. This Insight discusses the product pipelines (both innovative and generic), funding, and valuation (particularly in the context of the parent company).  We tag this Insight as Bullish for now.

Zhaoke Ophthalmology is a pre-revenue pharmaceutical company specializing in ophthalmic drugs for the China market. The company has filed an Application Proof to list on the HKEX, and is a carve-out of Lee'S Pharmaceutical Hldgs (950 HK) , which owns 34% of the shares. This Insight discusses the product pipelines (both innovative and generic), funding, and valuation (particularly in the context of the parent company).  We tag this Insight as Bullish for now.

Zhaoke Ophthalmology: Bringing Focus to China

Sciclone Pharmaceuticals / Equity Capital Markets

SciClone Pharmaceuticals is a China-based company that has filed to list on the HKEX. The company primarily sells products in-licensed from third parties and provides promotion services. We expect concerns about Volume-Based Procurement for Zadaxin to weigh on the valuation until new products can offset potential pressures. As a result, we would pass on the deal.

SciClone Pharmaceuticals is a China-based company that has filed to list on the HKEX. The company primarily sells products in-licensed from third parties and provides promotion services. We expect concerns about Volume-Based Procurement for Zadaxin to weigh on the valuation until new products can offset potential pressures. As a result, we would pass on the deal. 

SciClone Pharmaceuticals: Caged by the Elephant

Equity Bottom-Up

BeiGene has outlicensed ex-China rights to its PD-1 tislelizumab to Novartis on favorable terms, validating the competitive position of this compound in a crowded market. Further, the agreement marks a growing trend of Chinese companies outlicensing products to multinationals, which can have a leveraged benefit on their P&amp;Ls and valuations.

BeiGene has outlicensed ex-China rights to its PD-1 tislelizumab to Novartis on favorable terms, validating the competitive position of this compound in a crowded market. Further, the agreement marks a growing trend of Chinese companies outlicensing products to multinationals, which can have a leveraged benefit on their P&amp;Ls and valuations.

BeiGene: Novartis Grabs Tislelizumab Rights

Hong Kong

Lee's Pharmaceutical Holdings Limited develops, manufactures and sells quality biopharmaceutical products that focus on combating cardiovascular diseases and viral sexually transmitted diseases.

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Lee's Pharmaceutical (950 HK)

Zhaoke Ophthalmic (兆科眼科): Could Be Over-Valued for Pre-IPO Round

The company has an OK management team but strong backing of institutional investors. We think the pre-IPO valuation could be too high.

Ke Yan, CFA, FRM

Pre-IPO Zhaoke Ophthalmology Pharmaceutical - It Remains to Be Seen How to Find Its Way Out

The article analyzed Zhaoke Ophthalmology in terms of pipeline, competitive landscape, financial position and also included concerns for the future...

Xinyao (Criss) Wang

Zhaoke Ophthalmology: Bringing Focus to China

Zhaoke Ophthalmology is a pre-revenue pharmaceutical company specializing in ophthalmic drugs for China that has filed to list on the HKEX. Lee's...

Kemp Dolliver, CFA

SciClone Pharmaceuticals: Caged by the Elephant

SciClone Pharmaceuticals is a China-based company that has filed to list on the HKEX. We expect concerns about VBP for Zadaxin to weigh on the...

Kemp Dolliver, CFA

BeiGene: Novartis Grabs Tislelizumab Rights

BeiGene's deal with Novartis for PD-1 tislelizumab validates its competitive position, and marks a rising trend of Chinese companies licensing...

Kemp Dolliver, CFA

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