HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

1. Industry viewpoints:<ul>
<li>Last week, the bidding for the 4th volume-based purchase (VBP) was officially opened.</li>
<li>China's CTLA-4 antibody drug industry is in the early stage, but is expected to expand rapidly from 2021. </li>
<li>China's orthopedic implant device market is in a stage of rapid growth in recent years. However, the future large price reduction if included in the volume-based purchase should also be take into consideration.</li>
</ul>2. Company news:News about the progress of new drugs, COVID-19 vaccine, strategic collaboration and acquisition from <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>, <a href="https://www.smartkarma.com/entities/antengene-corp-ltd" target="_blank" data-smartkarma-citation="entities:29705:1" rel="noopener">Antengene (6996 HK)</a>, <a href="https://www.smartkarma.com/entities/cansino-biologics-inc" target="_blank" data-smartkarma-citation="entities:27739:1" rel="noopener">CanSino Biologics Inc (6185 HK)</a> and <a href="https://www.smartkarma.com/entities/china-medical-system-holdings" target="_blank" data-smartkarma-citation="entities:18736:1" rel="noopener">China Medical System (867 HK)</a>.3. Market review:Last week, stock price for healthcare sector in A share increased 3.75%, while CSI 300 increased 2.46% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
Last week, the bidding for the 4th volume-based purchase (VBP) was officially opened.
China's CTLA-4 antibody drug industry is in the early stage, but is expected to expand rapidly from 2021. 
China's orthopedic implant device market is in a stage of rapid growth in recent years. However, the future large price reduction if included in the volume-based purchase should also be take into consideration.
2. Company news:News about the progress of new drugs, COVID-19 vaccine, strategic collaboration and acquisition from Innovent Biologics Inc (1801 HK), Antengene (6996 HK), CanSino Biologics Inc (6185 HK) and China Medical System (867 HK).3. Market review:Last week, stock price for healthcare sector in A share increased 3.75%, while CSI 300 increased 2.46% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Equity Capital Markets

On January 20th, 2021, <a href="https://www.smartkarma.com/entities/adagene-inc" target="_blank" data-smartkarma-citation="entities:31371:1" rel="noopener">Adagene Inc (ADAG US)</a> filed with the U.S. Securities and Exchange Commission (SEC) to go public, officially starting the process of IPO in the United States. It is said that Adagene may raise as much as $125 million. Meanwhile, according to some media’s reports, Adagene has close ties with the CRO/CDMO giant WuXi AppTec, who is also one of the investors in the Company with 10.8% shares and provides strong support for its IPO. The following mainly provide analysis in terms of platform, pipeline and financial position.

On January 20th, 2021, Adagene Inc (ADAG US) filed with the U.S. Securities and Exchange Commission (SEC) to go public, officially starting the process of IPO in the United States. It is said that Adagene may raise as much as $125 million. Meanwhile, according to some media’s reports, Adagene has close ties with the CRO/CDMO giant WuXi AppTec, who is also one of the investors in the Company with 10.8% shares and provides strong support for its IPO. The following mainly provide analysis in terms of platform, pipeline and financial position.

Pre-IPO Adagene Inc (ADAG US) - Advanced Technology but Still Take Time for Commercialization

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

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

Jacobio Pharmaceuticals / Equity Capital Markets

The terms of Jacobio's listing have been announced: a price range of HKD12-14, resulting in a pre-money valuation of US$1.1-1.3 billion and proceeds of US$140-160MM. The relatively small raise and limited uptake from Cornerstone investors indicate that the company is placing more emphasis on valuation over the amount raised. 
The company has cutting-edge technology; a credible partner in <a href="https://www.smartkarma.com/entities/abbvie-inc" target="_blank" data-smartkarma-citation="entities:1135:1" rel="noopener">Abbvie Inc (ABBV US);</a> and extensive trial readouts in 2021. We like the deal in the lower half of the range, but caution that buyers need a long-term view given the long road to NDA filings and likely limited trading volume post-deal.

The terms of Jacobio's listing have been announced: a price range of HKD12-14, resulting in a pre-money valuation of US$1.1-1.3 billion and proceeds of US$140-160MM. The relatively small raise and limited uptake from Cornerstone investors indicate that the company is placing more emphasis on valuation over the amount raised. 
The company has cutting-edge technology; a credible partner in Abbvie Inc (ABBV US); and extensive trial readouts in 2021. We like the deal in the lower half of the range, but caution that buyers need a long-term view given the long road to NDA filings and likely limited trading volume post-deal. 

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

HBM Holdings Limited / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/harbour-biomed-holdings-limited" target="_blank" data-smartkarma-citation="entities:29717:1" rel="noopener">Harbour Biomed (HMD HK)</a> is a biopharmaceutical company with a focus on discovering, developing and commercialising differentiated antibody therapeutics in immunology and oncology disease areas. Harbour is backed by Legend Capital, GIC, CDH Investments, <a href="https://www.smartkarma.com/entities/sk-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:393:1" rel="noopener">SK Holdings (034730 KS)</a>, OrbiMed, Octagon Capital and Sage Partners. The Series C round in July 2020 raised $102.8 million at a post-money valuation of $780 million. <div class="content-highlight">Harbour is seeking to raise $300 million through a Hong Kong IPO, according to press reports. Harbour’s three antibody platforms (HCAb Platform, HBICE Platform and H2L2 Platform) are a key source of differentiation. Overall, we believe that Harbour’s clinical assets are attractive. </div>

Harbour Biomed (HMD HK) is a biopharmaceutical company with a focus on discovering, developing and commercialising differentiated antibody therapeutics in immunology and oncology disease areas. Harbour is backed by Legend Capital, GIC, CDH Investments, SK Holdings (034730 KS), OrbiMed, Octagon Capital and Sage Partners. The Series C round in July 2020 raised $102.8 million at a post-money valuation of $780 million. Harbour is seeking to raise $300 million through a Hong Kong IPO, according to press reports. Harbour’s three antibody platforms (HCAb Platform, HBICE Platform and H2L2 Platform) are a key source of differentiation. Overall, we believe that Harbour’s clinical assets are attractive. 

HBM Holdings (Harbour Biomed) IPO Initiation: Making Resistance Futile

Hong Kong

CStone Pharmaceuticals operates as a biotechnology company. The Company develops immuno-oncology and molecularly targeted drugs to address unmet medical needs for cancer patients. CStone Pharmaceuticals serves customers worldwide.

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CStone Pharmaceuticals (2616 HK)

China Healthcare Weekly (Feb.5)

This article analyzed the results of the 4th volume-based purchase, the CTLA-4 antibody drug industry, the orthopedic implant device market, news...

Xinyao (Criss) Wang

Pre-IPO Adagene Inc (ADAG US) - Advanced Technology but Still Take Time for Commercialization

This article analyzed Adagene Inc. in terms of the DPL platform, the core products in the pipeline (ADG106, ADG126 and ADG116), the financial...

Xinyao (Criss) Wang

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

Jacobio: Management Solves for Valuation

We think that the offer terms for Jacobio's IPO are fair, but buyers need to take a long view given the small deal size and shares' limited liquidity.

Kemp Dolliver, CFA

HBM Holdings (Harbour Biomed) IPO Initiation: Making Resistance Futile

Harbour is seeking to raise $300 million through a Hong Kong IPO. Harbour’s three antibody platforms are a key source of differentiation. Overall,...

Arun George

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