HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>BRUKINSA QoQ growth slowed down to single digit in 24Q3, thus dragging down the overall product revenue growth.However, such QoQ growth and market share growth were still higher than Imbruvica/Calquence. </li>
<li>BRUKINSA’s full-year revenue is expected to reach US$2.5 billion. Due to lower 24Q3 product revenue growth, we adjusted our 2024 forecast - Full year revenue would reach about US$3.7 billion.</li>
<li>BeiGene's performance in 24Q1-Q3 is still on track. Peak sales of BRUKINSA + tislelizumab is about US$5.5 billion. Reasonable market value range for <a href="https://www.smartkarma.com/entities/beigene-ltd-1c8ba4ff-edc5-43c3-b3fe-c3e4230f1c53" target="_blank" data-smartkarma-citation="entities:40395:1" rel="noopener">BeiGene</a> is US$18.5-27.5 billion. </li>
</ul>


BRUKINSA QoQ growth slowed down to single digit in 24Q3, thus dragging down the overall product revenue growth.However, such QoQ growth and market share growth were still higher than Imbruvica/Calquence. 
BRUKINSA’s full-year revenue is expected to reach US$2.5 billion. Due to lower 24Q3 product revenue growth, we adjusted our 2024 forecast - Full year revenue would reach about US$3.7 billion.
BeiGene's performance in 24Q1-Q3 is still on track. Peak sales of BRUKINSA + tislelizumab is about US$5.5 billion. Reasonable market value range for BeiGene is US$18.5-27.5 billion. 


BeiGene (6160.HK/​BGNE.US) 24Q3 - Things Are on Track Despite BRUKINSA’s Disappointing QoQ Growth

Jiangsu Hengrui Medicine / Equity Bottom-Up

<ul>
<li>On the surface, it seems that Hengrui's performance growth in 24H1 is very high, but if excluding the upfront payment from Merck, the Company’s performance actually falls short of expectations.</li>
<li>Our forecast of revenue growth in 2024, 2025, 2026 (excluding Merck’s upfront payment) is 12% YoY, 8% YoY, 15% YoY, respectively. By 2026, Hengrui may still suffer from VBP.</li>
<li>Hengrui is overvalued and reasonable P/E is about 30 (or lower). We also don’t think Hengrui’s valuation should be higher than that of BeiGene. Current high valuation cannot be justified.</li>
</ul>


On the surface, it seems that Hengrui's performance growth in 24H1 is very high, but if excluding the upfront payment from Merck, the Company’s performance actually falls short of expectations.
Our forecast of revenue growth in 2024, 2025, 2026 (excluding Merck’s upfront payment) is 12% YoY, 8% YoY, 15% YoY, respectively. By 2026, Hengrui may still suffer from VBP.
Hengrui is overvalued and reasonable P/E is about 30 (or lower). We also don’t think Hengrui’s valuation should be higher than that of BeiGene. Current high valuation cannot be justified.


Jiangsu Hengrui Medicine (600276.CH) - Share Price Is at Risk of Correction

Event-Driven

Beijing Tiantan Biological Products / Event-Driven

<ul>
<li>Tiantan plans to acquire 100% equity of Zhongyuan Ruide from CSL Behring ASIA PACIFIC LIMITED for US$185 million, so as to consolidate its leading position in blood products industry.</li>
<li>BeiGene is accused of trade secrets theft by AbbVie. Considering AbbVie is good at using legal means to profit for itself, this lawsuit may become full of uncertainty in US.</li>
<li>The House passed BIOSECURE Act to make drug companies stop doing business with Chinese CXO.The probability of this Bill passing is high. We recommend prepare for worst-case scenario in advance.</li>
</ul>


Tiantan plans to acquire 100% equity of Zhongyuan Ruide from CSL Behring ASIA PACIFIC LIMITED for US$185 million, so as to consolidate its leading position in blood products industry.
BeiGene is accused of trade secrets theft by AbbVie. Considering AbbVie is good at using legal means to profit for itself, this lawsuit may become full of uncertainty in US.
The House passed BIOSECURE Act to make drug companies stop doing business with Chinese CXO.The probability of this Bill passing is high. We recommend prepare for worst-case scenario in advance.


China Healthcare Weekly (Sep15)- Tiantan's New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass

<ul>
<li>BeiGene's 24Q2 results far exceeded expectations. Sales of BRUKINSA may exceed that of Calquence for the first time next year. Breakeven in 2024 becomes possible if effective cost control continues.</li>
<li>BeiGene's 2024 revenue could exceed Hengrui, marking the official transition of China's innovative pharmaceutical industry from the old generation to the new one. Reasonable market value for BeiGene is US$19-27.5bn.</li>
<li>Current valuation cannot reflect strong fundamentals.As BeiGene has established a convincing profit model, the market turmoil actually provides investors with a good opportunity to buy the stock at low price.</li>
</ul>


BeiGene's 24Q2 results far exceeded expectations. Sales of BRUKINSA may exceed that of Calquence for the first time next year. Breakeven in 2024 becomes possible if effective cost control continues.
BeiGene's 2024 revenue could exceed Hengrui, marking the official transition of China's innovative pharmaceutical industry from the old generation to the new one. Reasonable market value for BeiGene is US$19-27.5bn.
Current valuation cannot reflect strong fundamentals.As BeiGene has established a convincing profit model, the market turmoil actually provides investors with a good opportunity to buy the stock at low price.


BeiGene (6160.HK/BGNE.US) 24Q2 - It Is Time to Open a New Chapter in China's Pharmaceutical Industry

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 analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of August 9th.</li>
<li>We estimate the weekly outflows to be US$2,018.4 million, led by information technology, consumer discretionary, financials, and offset by health care, consumer staples, utilities.</li>
<li>We highlight flows for Suzhou Dongshan Precision Manufacturing, Midea, CATL, Zhongji Innolight.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of August 9th.
We estimate the weekly outflows to be US$2,018.4 million, led by information technology, consumer discretionary, financials, and offset by health care, consumer staples, utilities.
We highlight flows for Suzhou Dongshan Precision Manufacturing, Midea, CATL, Zhongji Innolight.


Northbound Flows (Aug 9th): Suzhou Dongshan Precision Manufacturing, Midea, CATL, Zhongji Innolight

China

BeiGene, Ltd. operates as a commercial stage biopharmaceutical company. The Company focuses on discovery, development, and commercialization of molecularly targeted and immuno-oncology drugs for the treatment of cancer. BeiGene serves patients worldwide.

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BeiGene (688235 CH)

BeiGene (6160.HK/BGNE.US) 24Q3 - Things Are on Track Despite BRUKINSA’s Disappointing QoQ Growth

BRUKINSA's QoQ growth slowed in 24Q3, but still outperformed peers.Full-year revenue forecast adjusted to $3.7 billion.Peak sales projected at...

Xinyao (Criss) Wang

China Healthcare Weekly (Sep15)- Tiantan's New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass

Tiantan to acquire Zhongyuan Ruide for $185 million from CSL Behring. BeiGene is accused of trade secrets theft by AbbVie. The chances of...

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US) 24Q2 - It Is Time to Open a New Chapter in China's Pharmaceutical Industry

BeiGene's strong Q2 results make breakeven possible in Q4.BRUKINSA may surpass Calquence in sales next year.BeiGene is a new king in China's...

Xinyao (Criss) Wang

Northbound Flows (Aug 9th): Suzhou Dongshan Precision Manufacturing, Midea, CATL, Zhongji Innolight

We analyzed northbound Shanghai/Shenzhen connect flows in the past week and highlighted flows for Suzhou Dongshan Precision Manufacturing, Midea,...

Ke Yan, CFA, FRM

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52-week Range

Market Cap (USDm)

P/E

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BeiGene (6160.HK/​BGNE.US) 24Q3 - Things Are on Track Despite BRUKINSA’s Disappointing QoQ Growth

​BRUKINSA's QoQ growth slowed in 24Q3, but still outperformed peers.Full-year revenue forecast adjusted to $3.7 billion.Peak sales projected at...

Xinyao (Criss) Wang

Jiangsu Hengrui Medicine (600276.CH) - Share Price Is at Risk of Correction

​Hengrui's high growth in 24H1 is overshadowed by the upfront payment from Merck. There are concerns about whether revenue growth is sustainable....

Xinyao (Criss) Wang

China Healthcare Weekly (Sep15)- Tiantan's New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass

​Tiantan to acquire Zhongyuan Ruide for $185 million from CSL Behring. BeiGene is accused of trade secrets theft by AbbVie. The chances of...

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US) 24Q2 - It Is Time to Open a New Chapter in China's Pharmaceutical Industry

​BeiGene's strong Q2 results make breakeven possible in Q4.BRUKINSA may surpass Calquence in sales next year.BeiGene is a new king in China's...

Xinyao (Criss) Wang

Northbound Flows (Aug 9th): Suzhou Dongshan Precision Manufacturing, Midea, CATL, Zhongji Innolight

We analyzed northbound Shanghai/Shenzhen connect flows in the past week and highlighted flows for Suzhou Dongshan Precision Manufacturing, Midea,...

Ke Yan, CFA, FRM

BeiGene (6160.HK/BGNE.US) 24Q3 - Things Are on Track Despite BRUKINSA’s Disappointing QoQ Growth

BRUKINSA's QoQ growth slowed in 24Q3, but still outperformed peers.Full-year revenue forecast adjusted to $3.7 billion.Peak sales projected at...

Hengrui's high growth in 24H1 is overshadowed by the upfront payment from Merck. There are concerns about whether revenue growth is sustainable....

Tiantan to acquire Zhongyuan Ruide for $185 million from CSL Behring. BeiGene is accused of trade secrets theft by AbbVie. The chances of...

BeiGene's strong Q2 results make breakeven possible in Q4.BRUKINSA may surpass Calquence in sales next year.BeiGene is a new king in China's...