HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Akeso achieved outstanding product sales last year, mainly due to off-label prescriptions.It means Akeso has "overdrawn" AK104's performance on other indications in advance. Sales could significantly slow down over time.</li>
<li>It is difficult to turn loss into profit by selling drugs alone. As the profits from selling drugs are far lower than R&amp;D expenditures, losses are the norm.</li>
<li>Akeso is overvalued, but if AK112 is successful in head-to-head trial with Keytruda, Akeso would be a player to compete on international stage. Its valuation would reach a new level.</li>
</ul>


Akeso achieved outstanding product sales last year, mainly due to off-label prescriptions.It means Akeso has "overdrawn" AK104's performance on other indications in advance. Sales could significantly slow down over time.
It is difficult to turn loss into profit by selling drugs alone. As the profits from selling drugs are far lower than R&amp;D expenditures, losses are the norm.
Akeso is overvalued, but if AK112 is successful in head-to-head trial with Keytruda, Akeso would be a player to compete on international stage. Its valuation would reach a new level.


Akeso Biopharma (9926.HK) - Behind the Outstanding Performance in 2022 and the Potential Challenges

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>Akeso reported C2H22 total sales, net revenue 41% and 67% above our estimates. Non-IFRS operating loss, however, was in-line with our estimate, thanks to higher OPEX; </li>
<li>Given Summit’s US$500mn upfront and up to US$5bn upfront payment for Ivonescimab (PD-1/VEGF) (AK112), we now forecast Akeso to achieve non-IFRS breakeven in C1H23 and all subsequent years;</li>
<li>We raise TP by 18% to HK$59 and maintain BUY.</li>
</ul>


Akeso reported C2H22 total sales, net revenue 41% and 67% above our estimates. Non-IFRS operating loss, however, was in-line with our estimate, thanks to higher OPEX; 
Given Summit’s US$500mn upfront and up to US$5bn upfront payment for Ivonescimab (PD-1/VEGF) (AK112), we now forecast Akeso to achieve non-IFRS breakeven in C1H23 and all subsequent years;
We raise TP by 18% to HK$59 and maintain BUY.


[Akeso Inc. (9926 HK) Target Price Change]: A Mini-BeiGene in the Making…Reiterate BUY

Thematic (Sector/Industry)

<ul>
<li>The successful transformation of biotech into large pharmaceutical enterprises needs to meet three conditions, but many biotech enterprises could actually meet only the requirements of the first two.</li>
<li>If investors cannot understand the basic logic of marketing in China pharmaceutical industry, they would never understand or “anticipate” the future potential collapse of valuation of some companies. </li>
<li>The barriers formed by DS-8201 deserve investors' attention. For those ADC players that are in the range of head-to-head competition with DS-8201, they should at least “revise the story” .</li>
</ul>


The successful transformation of biotech into large pharmaceutical enterprises needs to meet three conditions, but many biotech enterprises could actually meet only the requirements of the first two.
If investors cannot understand the basic logic of marketing in China pharmaceutical industry, they would never understand or “anticipate” the future potential collapse of valuation of some companies. 
The barriers formed by DS-8201 deserve investors' attention. For those ADC players that are in the range of head-to-head competition with DS-8201, they should at least “revise the story” .


China Healthcare Weekly (Mar.10)- Three Conditions to Be Biopharma, Anticipate the Collapse, DS-8201

<ul>
<li>9926HK：Akeso and China's 2nd largest pharmaceutical distributor signed collaborative R&amp;D agreement（+）</li>
<li>XPEV: Xpeng to officially unveils facelift of P7 on Friday (+)</li>
<li>981.HK/1347.HK/ACMR: Netherlands announces intention to ban only “state-of-the-art” ASML DUV tools (+/+/+)</li>
</ul>


9926HK：Akeso and China's 2nd largest pharmaceutical distributor signed collaborative R&amp;D agreement（+）
XPEV: Xpeng to officially unveils facelift of P7 on Friday (+)
981.HK/1347.HK/ACMR: Netherlands announces intention to ban only “state-of-the-art” ASML DUV tools (+/+/+)


China TMT Update(Mar.10): 9926hk/XPEV/981.HK/1347.HK/ACMR: Xpeng to Unveils Facelift of P7 (+)

<ul>
<li>9926HK：Summit Therapeutics completed US$500mn rights offering to pay for Akeso's AK112 (+)</li>
<li>3690HK：Meituan closure of self-operated taxi business may have 6% benefit to net profit in 2023 (+)</li>
<li>ZLAB：HBM announced Phase III success of FcRn drug treating MG, about to compete against ZLAB's Efgartigimod(-)</li>
</ul>


9926HK：Summit Therapeutics completed US$500mn rights offering to pay for Akeso's AK112 (+)
3690HK：Meituan closure of self-operated taxi business may have 6% benefit to net profit in 2023 (+)
ZLAB：HBM announced Phase III success of FcRn drug treating MG, about to compete against ZLAB's Efgartigimod(-)


China TMT Update(Mar.8): 9926HK,ZLAB,3690HK: Meituan Closure of Self-Operated Taxi Business (+)

China

Akeso Inc. operates operatesa s a biotech company. The compnay develops treatments and therapies for various types of diseases. Akeso serves cutomers worldwide

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Akeso Biopharma Inc (9926 HK)

Akeso Biopharma (9926.HK) - Behind the Outstanding Performance in 2022 and the Potential Challenges

Akeso's strong sales were driven by off-label use, and sales growth could significantly slow down over time. Due to high R&D expense, it's hard to...

Xinyao (Criss) Wang

[Akeso Inc. (9926 HK) Target Price Change]: A Mini-BeiGene in the Making…Reiterate BUY

Given Summit’s US$500mn upfront and up to US$5bn upfront payment for Ivonescimab (PD-1/VEGF) (AK112), we now forecast Akeso to achieve non-IFRS...

Blue Lotus Research Institute

China Healthcare Weekly (Mar.10)- Three Conditions to Be Biopharma, Anticipate the Collapse, DS-8201

Becoming big pharma needs to meet three conditions. If investors can understand the logic of marketing, they may anticipate potential collapse. ADC...

Xinyao (Criss) Wang

China TMT Update(Mar.10): 9926hk/XPEV/981.HK/1347.HK/ACMR: Xpeng to Unveils Facelift of P7 (+)

Akeso and China's 2nd largest pharmaceutical distributor signed collaborative R&D agreement ; Xpeng to officially unveils facelift of P7:...

Blue Lotus Research Institute

China TMT Update(Mar.8): 9926HK,ZLAB,3690HK: Meituan Closure of Self-Operated Taxi Business (+)

ZLAB：HBM announced Phase III success of FcRn drug treating MG(-) 3690HK：Meituan closure of self-operated taxi business may have 6% benefit to net...

Blue Lotus Research Institute

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