HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>NRDL negotiation has completely changed the pricing method/valuation logic of innovative drugs. Even if price reduction could be milder this year, it’s hard to reverse the shrinking market size/slowing growth.</li>
<li>
<a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a> has successively acquired several factories/production facilities built by domestic biotech companies at low cost. However, we have several concerns.</li>
<li>The industry is in the process of understanding and adapting to various changes. The model capital envisioned for biotech to both develop and then commercialize drugs successfully doesn’t work anymore.</li>
</ul>


NRDL negotiation has completely changed the pricing method/valuation logic of innovative drugs. Even if price reduction could be milder this year, it’s hard to reverse the shrinking market size/slowing growth.

Wuxi Biologics (2269 HK) has successively acquired several factories/production facilities built by domestic biotech companies at low cost. However, we have several concerns.
The industry is in the process of understanding and adapting to various changes. The model capital envisioned for biotech to both develop and then commercialize drugs successfully doesn’t work anymore.


China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails

Ascentage Pharma Group Corp / Equity Bottom-Up

<ul>
<li>The  R&amp;D direction and field of <a href="https://www.smartkarma.com/entities/ascentage-pharma-group-inter" target="_blank" data-smartkarma-citation="entities:27824:1" rel="noopener">Ascentage Pharma Group Corp (6855 HK)</a> distinguish it from other domestic biotech companies. The Company has proved its R&amp;D capability after the successful launch of olverembatinib.</li>
<li>The uncertainties of commercialization performance and R&amp;D risks would make it difficult for Ascentage to achieve break-even. Due to increasing cash flow pressure, Ascentage must first solve the survival problem.</li>
<li>Considering the Risk return trade-off, we think Ascentage has short-term investment value only when it's “extremely undervalued”.We suggest that it could be sold in a timely manner to secure gains.</li>
</ul>


The  R&amp;D direction and field of Ascentage Pharma Group Corp (6855 HK) distinguish it from other domestic biotech companies. The Company has proved its R&amp;D capability after the successful launch of olverembatinib.
The uncertainties of commercialization performance and R&amp;D risks would make it difficult for Ascentage to achieve break-even. Due to increasing cash flow pressure, Ascentage must first solve the survival problem.
Considering the Risk return trade-off, we think Ascentage has short-term investment value only when it's “extremely undervalued”.We suggest that it could be sold in a timely manner to secure gains.


Ascentage Pharma (6855.HK) - May Not Survive "This Winter"

Thematic (Sector/Industry)

<ul>
<li>The government issued a central infrastructure investment budget of RMB26.52 billion in healthcare sector for 2022. Related leading domestic manufacturers would maintain relatively stable growth in the next 2-3 years.</li>
<li>Behind the wave of import substitution of endoscopes, the demand for anesthetic drugs would also increase, which are not affected by VBP. We think this market deserves investors’ attention.</li>
<li>Considering the large number of insomniacs, the resulting demand for treatment makes the insomniacs market show a good growth prospect.</li>
</ul>


The government issued a central infrastructure investment budget of RMB26.52 billion in healthcare sector for 2022. Related leading domestic manufacturers would maintain relatively stable growth in the next 2-3 years.
Behind the wave of import substitution of endoscopes, the demand for anesthetic drugs would also increase, which are not affected by VBP. We think this market deserves investors’ attention.
Considering the large number of insomniacs, the resulting demand for treatment makes the insomniacs market show a good growth prospect.


China Healthcare Weekly (Nov.18) - Central Investment Budget, Anesthetic Drugs, Insomniacs Demand

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.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Oct 28th.</li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight short changes in CCB, Alibaba, trip.com, and AIA.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Oct 28th.
Top short increases and decreases were tabulated for one week and four week period. 
We highlight short changes in CCB, Alibaba, trip.com, and AIA.


HK Short Interest Weekly: CCB, Alibaba, Trip.com, AIA

<ul>
<li>Akeso has made some business progress. We analyzed the commercialization outlook/concerns on its late stage products. Akeso still stays at the level of biotech, a long way from becoming biopharma.</li>
<li>The core challenge is whether bispecific antibody can bring better marginal clinical benefits than the combination of two mab, and why patients are willing to pay higher price for them?</li>
<li>The sales forecast of Akeso’s late stage products could be RMB2 billion to RMB3 billion. The market value by the end of Nov 4 was just reasonable but not undervalued.</li>
</ul>


Akeso has made some business progress. We analyzed the commercialization outlook/concerns on its late stage products. Akeso still stays at the level of biotech, a long way from becoming biopharma.
The core challenge is whether bispecific antibody can bring better marginal clinical benefits than the combination of two mab, and why patients are willing to pay higher price for them?
The sales forecast of Akeso’s late stage products could be RMB2 billion to RMB3 billion. The market value by the end of Nov 4 was just reasonable but not undervalued.


Akeso Biopharma (9926.HK) - The Recent Business Progress, the Valuation and the 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)

China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails

NRDL negotiation completely changes the valuation logic of innovative drug. We've some concerns about WuXi Bio's new business updates. The model...

Xinyao (Criss) Wang

Ascentage Pharma (6855.HK) - May Not Survive "This Winter"

Ascentage has proved its R&D capability, but R&D risk/cash shortage/commercialization challenges make it difficult for Ascentage to achieve break...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov.18) - Central Investment Budget, Anesthetic Drugs, Insomniacs Demand

New central infrastructure investment budget means stable growth of medical devices; Anesthetic drugs are not affected by VBP, which deserves...

Xinyao (Criss) Wang

HK Short Interest Weekly: CCB, Alibaba, Trip.com, AIA

We analyzed the latest HK SFC report for aggregate short position as of Oct 28th and highlight short interest changes in CCB, Alibaba, trip.com,...

Ke Yan, CFA, FRM

Akeso Biopharma (9926.HK) - The Recent Business Progress, the Valuation and the Challenges

The key concern is whether Akeso' bispecific antibody can bring better marginal clinical benefits/cost performance than combination of mab....

Xinyao (Criss) Wang

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