HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The growth of TIDES business slowed down, and revenue decreased QoQ despite increasing production capacity.As the main growth point of WuXi AppTec’s future performance, this is not a good signal.</li>
<li>Due to BIOSECURE Act, US companies have been negotiating with other contract manufacturers so as to reduce reliance on WuXi AppTec.Let’s see the situation of new orders in following quarters.</li>
<li>WuXi AppTec’s performance recovery is closely related to the pace of Fed's interest rate cuts. From the perspective of growth outlook/macro environment/geopolitical conflicts, WuXi AppTec is still in "dangerous period".</li>
</ul>


The growth of TIDES business slowed down, and revenue decreased QoQ despite increasing production capacity.As the main growth point of WuXi AppTec’s future performance, this is not a good signal.
Due to BIOSECURE Act, US companies have been negotiating with other contract manufacturers so as to reduce reliance on WuXi AppTec.Let’s see the situation of new orders in following quarters.
WuXi AppTec’s performance recovery is closely related to the pace of Fed's interest rate cuts. From the perspective of growth outlook/macro environment/geopolitical conflicts, WuXi AppTec is still in "dangerous period".


WuXi AppTec (2359.HK/603259.CH) - The Pain of 2024 Has Just Begun

<ul>
<li>Innovent’s 24Q1 product sales was up just 6% QoQ. The overall data shows that PD-1 growth has entered a bottleneck. This makes 24H2 YoY growth rate uncertain.</li>
<li>The deal between Hengrui and Hercules is different from traditional license-out cooperation, but belong to asset spin-off in essence, which is a “smart deal” and also a meaningful attempt.</li>
<li>There’re some positive signals in Zai Lab’s 24Q1 performance, but the pain points of business model severely limit its profitability/revenue scale. Zai Lab still has a long way to go.</li>
</ul>


Innovent’s 24Q1 product sales was up just 6% QoQ. The overall data shows that PD-1 growth has entered a bottleneck. This makes 24H2 YoY growth rate uncertain.
The deal between Hengrui and Hercules is different from traditional license-out cooperation, but belong to asset spin-off in essence, which is a “smart deal” and also a meaningful attempt.
There’re some positive signals in Zai Lab’s 24Q1 performance, but the pain points of business model severely limit its profitability/revenue scale. Zai Lab still has a long way to go.


China Healthcare Weekly (Jun.2) - Innovent's Trouble, Hengrui's “smart Deal”, Zai Lab’s Pain Point

Event-Driven

<ul>
<li>There are many rumors about Henlius’s trading halt, but Fosun Pharma had applied for the resumption of trading in H Shares, which makes us confused whether this is really privatization.</li>
<li>Henlius is in “an awkward position” in capital market. Fosun is to blame for Henlius's low valuation. The high debt problem makes the profits generated from drug sales meaningless.</li>
<li>If Henlius cannot break away from the system controlled by Fosun, the complexity of corporate governance brought about by the relationship between Henlius and Fosun would inevitably affect investment judgment.</li>
</ul>


There are many rumors about Henlius’s trading halt, but Fosun Pharma had applied for the resumption of trading in H Shares, which makes us confused whether this is really privatization.
Henlius is in “an awkward position” in capital market. Fosun is to blame for Henlius's low valuation. The high debt problem makes the profits generated from drug sales meaningless.
If Henlius cannot break away from the system controlled by Fosun, the complexity of corporate governance brought about by the relationship between Henlius and Fosun would inevitably affect investment judgment.


Shanghai Henlius Biotech (2696.HK) - Behind the Trading Halt and Privatization Rumor

<ul>
<li>In 24Q1, the innovative drug projects and medical device projects ranked top two in domestic investment and financing deals, but investment in the field of AI cooled down.</li>
<li>For biotech that located in China and only for China markets, it’s hard for them to generate good returns. It is recommended not to spend too much time on them.</li>
<li>As the US House Committee advances the BIOSECURE Act to restrict WuXi AppTec/WuXi Bio last week, we listed some points worth the attention at this stage.This is far from over.</li>
</ul>


In 24Q1, the innovative drug projects and medical device projects ranked top two in domestic investment and financing deals, but investment in the field of AI cooled down.
For biotech that located in China and only for China markets, it’s hard for them to generate good returns. It is recommended not to spend too much time on them.
As the US House Committee advances the BIOSECURE Act to restrict WuXi AppTec/WuXi Bio last week, we listed some points worth the attention at this stage.This is far from over.


China Healthcare Weekly (May.19)- Decoupling Deadline with WuXi,Biotech Classification,Deals Cooling

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

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

Thematic (Sector/Industry)

<ul>
<li>9926 HK/1801 HK/ BGNE US/9995 HK: US Biosecure Act extended Chinese CXO collaboration until 2032  (+/+/+/+)</li>
<li>BGNE US :BeiGene’s performance in the first quarter of 2024 exceeded expectations, especially benefiting from overseas BRUKINSA(/)</li>
<li>ZLAB US:Zai Lab's revenue and profit in the first quarter of 2024 exceeded expectations, mainly due to Efgartigimod.(/)</li>
</ul>


9926 HK/1801 HK/ BGNE US/9995 HK: US Biosecure Act extended Chinese CXO collaboration until 2032  (+/+/+/+)
BGNE US :BeiGene’s performance in the first quarter of 2024 exceeded expectations, especially benefiting from overseas BRUKINSA(/)
ZLAB US:Zai Lab's revenue and profit in the first quarter of 2024 exceeded expectations, mainly due to Efgartigimod.(/)


[Blue Lotus Daily]:9926 HK/1801HK/ BGNE/9995HK/ZLAB/NIO/LI/1211HK/BEKE/1810HK/3888HK/981HK/MSFT/INTC

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 (BGNE US)

WuXi AppTec (2359.HK/603259.CH) - The Pain of 2024 Has Just Begun

HR8333 proposal involving WuXi AppTec/WuXi Bio faced obstacles when included in NDAA.After the presidential election, new legislation process is...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun.2) - Innovent's Trouble, Hengrui's “smart Deal”, Zai Lab’s Pain Point

Innovent's PD-1 growth face bottleneck, with uncertainty in 24H2 growth; Hengrui-Hercules deal a "smart" asset spin-off; Zai Lab has positive...

Xinyao (Criss) Wang

Shanghai Henlius Biotech (2696.HK) - Behind the Trading Halt and Privatization Rumor

Rumors swirl around Henlius's trading halt, raising questions about privatization.Henlius faces challenge in the market due to high debt, with...

Xinyao (Criss) Wang

China Healthcare Weekly (May.19)- Decoupling Deadline with WuXi,Biotech Classification,Deals Cooling

Investment/financing deals cooling in 24Q1. It's better not to spend too much time on Biotech that located in China and only for China...

Xinyao (Criss) Wang

[Blue Lotus Daily]:9926 HK/1801HK/ BGNE/9995HK/ZLAB/NIO/LI/1211HK/BEKE/1810HK/3888HK/981HK/MSFT/INTC

US Biosecure Act extends Chinese collaboration until 2032, BeiGene and Zai Lab exceed Q1 expectations with BRUKINSA and Efgartigimod.

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

WuXi AppTec (2359.HK/603259.CH) - The Pain of 2024 Has Just Begun

HR8333 proposal involving WuXi AppTec/WuXi Bio faced obstacles when included in NDAA.After the presidential election, new legislation process is...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun.2) - Innovent's Trouble, Hengrui's “smart Deal”, Zai Lab’s Pain Point

​Innovent's PD-1 growth face bottleneck, with uncertainty in 24H2 growth; Hengrui-Hercules deal a "smart" asset spin-off; Zai Lab has positive...

Xinyao (Criss) Wang

Shanghai Henlius Biotech (2696.HK) - Behind the Trading Halt and Privatization Rumor

​Rumors swirl around Henlius's trading halt, raising questions about privatization.Henlius faces challenge in the market due to high debt, with...

Xinyao (Criss) Wang

China Healthcare Weekly (May.19)- Decoupling Deadline with WuXi,Biotech Classification,Deals Cooling

Investment/financing deals cooling in 24Q1. It's better not to spend too much time on Biotech that located in China and only for China...

Xinyao (Criss) Wang

[Blue Lotus Daily]:9926 HK/1801HK/ BGNE/9995HK/ZLAB/NIO/LI/1211HK/BEKE/1810HK/3888HK/981HK/MSFT/INTC

​US Biosecure Act extends Chinese collaboration until 2032, BeiGene and Zai Lab exceed Q1 expectations with BRUKINSA and Efgartigimod.

Blue Lotus Research Institute

Innovent's PD-1 growth face bottleneck, with uncertainty in 24H2 growth; Hengrui-Hercules deal a "smart" asset spin-off; Zai Lab has positive...

Rumors swirl around Henlius's trading halt, raising questions about privatization.Henlius faces challenge in the market due to high debt, with...

US Biosecure Act extends Chinese collaboration until 2032, BeiGene and Zai Lab exceed Q1 expectations with BRUKINSA and Efgartigimod.