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

Equity Bottom-Up

<ul>
<li>Amid general disappointment over China’s post-COVID recovery, high beta names like Akeso have sold off in recent days; </li>
<li>Management called for an update which specified on (1) why Ivonescimab (AK112) was absent in ASCO 2023, (2) sales update of Cadonilimab (AK104), (3) NDA and data readout timelines. </li>
<li>We came away positive;  We view management’s confirmation on progress a positive development that enhances certainty. We raise TP by HK$1 to HK$60.</li>
</ul>


Amid general disappointment over China’s post-COVID recovery, high beta names like Akeso have sold off in recent days; 
Management called for an update which specified on (1) why Ivonescimab (AK112) was absent in ASCO 2023, (2) sales update of Cadonilimab (AK104), (3) NDA and data readout timelines. 
We came away positive;  We view management’s confirmation on progress a positive development that enhances certainty. We raise TP by HK$1 to HK$60.


[Akeso Inc. (9926 HK) Target Price Change]: Sell off in High-Beta Names Creates Buying Opportunity

Thematic (Sector/Industry)

<ul>
<li>We see the future, post decoupling world to have two operating systems, one surrounding US and the other surrounding China.</li>
<li>Both US and China will develop respective partners to complete their ecosystems. We will soon have a world running on two sets of standards</li>
<li>While the western world dominates the old order and the new frontiers, China is leading in the new order of energy, drug and manufacturing.</li>
</ul>


We see the future, post decoupling world to have two operating systems, one surrounding US and the other surrounding China.
Both US and China will develop respective partners to complete their ecosystems. We will soon have a world running on two sets of standards
While the western world dominates the old order and the new frontiers, China is leading in the new order of energy, drug and manufacturing.


[Blue Lotus Sector Update]: All Will Have a Bright Future

<ul>
<li>9995HK: ADC gets heated up with another biotech license in biotech deal (-)</li>
<li>9926HK：Akeso's JV with SinoBio signed exclusive distribution of PD-1 drug with SE Asia and Oceania distributor</li>
<li>BGNE.US: Merck KGaA's BTK inhibitor drug hit with FDA hold due to liver injury...Impact to BGNE nil</li>
</ul>


9995HK: ADC gets heated up with another biotech license in biotech deal (-)
9926HK：Akeso's JV with SinoBio signed exclusive distribution of PD-1 drug with SE Asia and Oceania distributor
BGNE.US: Merck KGaA's BTK inhibitor drug hit with FDA hold due to liver injury...Impact to BGNE nil


China TMT Update(Apr.17) -  9995HK/9926HK/BGNE.US: ADC Gets Heated up with Another Biotech License

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>Anhui Province publicly solicits pre-bid data for the provincial centralized procurement of Class B large medical equipment, surgical robots included, which is worth investors’ attention.</li>
<li>No more than five biotech would truly stand out in the future. We suggest investors focus on those biotech in the first echelon, rather than betting on riskier smaller ones.</li>
<li>For Jafron, we analyzed some key points of the company. Due to the concerns, the temporary rebound in performance in 2023 is not enough to completely reverse the investment logic.</li>
</ul>


Anhui Province publicly solicits pre-bid data for the provincial centralized procurement of Class B large medical equipment, surgical robots included, which is worth investors’ attention.
No more than five biotech would truly stand out in the future. We suggest investors focus on those biotech in the first echelon, rather than betting on riskier smaller ones.
For Jafron, we analyzed some key points of the company. Due to the concerns, the temporary rebound in performance in 2023 is not enough to completely reverse the investment logic.


China Healthcare Weekly (Apr.14)- Surgical Robot VBP, Only 5 Biotech to Stand Out, Jafron Biomedical

<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

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 Inc. (9926 HK) Target Price Change]: Sell off in High-Beta Names Creates Buying Opportunity

We view management’s confirmation on progress a positive development that enhances certainty. We raise TP by HK$1 to HK$60.

Blue Lotus Research Institute

[Blue Lotus Sector Update]: All Will Have a Bright Future

We see the future, post decoupling world to have two operating systems, one surrounding US and the other surrounding China.

Blue Lotus Research Institute

China TMT Update(Apr.17) - 9995HK/9926HK/BGNE.US: ADC Gets Heated up with Another Biotech License

9995HK: ADC gets heated up with another biotech license in biotech deal (-); 9926HK：Akeso's JV with SinoBio signed exclusive distribution /）;...

Blue Lotus Research Institute

China Healthcare Weekly (Apr.14)- Surgical Robot VBP, Only 5 Biotech to Stand Out, Jafron Biomedical

Anhui Province starts VBP on medical equipment, including surgical robot.No more than 5 biotech will truly stand out, so just focus on them.For...

Xinyao (Criss) Wang

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

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