HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>Recently, a new document about online diagnosis and treatment was released, which would bring changes to the business model and profit model of digital healthcare platforms.</li>
<li>The COVID-19 has pushed mRNA vaccines to great heights. However, the next mRNA-based product may not be approved that quick as COVID-19 vaccine. The trough in mRNA may be imminent.</li>
<li>About 20 pharmaceutical companies have drugs included in VBP scope but cannot ensure timely supply due to COVID-19/raw material cost increases/supply chain issues. Investors need to be aware of that.</li>
</ul>


Recently, a new document about online diagnosis and treatment was released, which would bring changes to the business model and profit model of digital healthcare platforms.
The COVID-19 has pushed mRNA vaccines to great heights. However, the next mRNA-based product may not be approved that quick as COVID-19 vaccine. The trough in mRNA may be imminent.
About 20 pharmaceutical companies have drugs included in VBP scope but cannot ensure timely supply due to COVID-19/raw material cost increases/supply chain issues. Investors need to be aware of that.


China Healthcare Weekly (Jun.17)- Digital Healthcare New Policy,mRNA Dilemma, Drug Supply Disruption

Equity Capital Markets

Shanghai Junshi Biosciences  / Equity Capital Markets

<ul>
<li>Junshi’s fatal flaw is not that it is still suffering loss, or that its founders have no medical background, but that the Company is very short of money.</li>
<li>Considering the gloomy prospects of etesevimab/VV116, uncertainties in toripalimab and other late-stage candidates, we remain conservative about Junshi’s commercialization outlook. Junshi's higher valuation than Innovent is not justified.</li>
<li>Together with unfriendly macro environment, we don’t think heavy investment in R&amp;D/MRCT/commercial development could bring high return as expected.Investors need to be rational about Junshi's RMB4 billion private placement plan.</li>
</ul>


Junshi’s fatal flaw is not that it is still suffering loss, or that its founders have no medical background, but that the Company is very short of money.
Considering the gloomy prospects of etesevimab/VV116, uncertainties in toripalimab and other late-stage candidates, we remain conservative about Junshi’s commercialization outlook. Junshi's higher valuation than Innovent is not justified.
Together with unfriendly macro environment, we don’t think heavy investment in R&amp;D/MRCT/commercial development could bring high return as expected.Investors need to be rational about Junshi's RMB4 billion private placement plan.


Shanghai Junshi Bioscience Placement- Junshi Is Having a Hard Time, with Lower than Expected Returns

Equity Bottom-Up

<ul>
<li>With Roche’s failure of several clinical trials on TIGIT project tiragolumab, the market's future expectations on this target have discounted. Investors may need to get prepared in advance.</li>
<li>Ociperlimab means a lot to BeiGene. If ociperlimab fails, BeiGene would have no big catalyst for a long time. BeiGene’s label of superior global R&amp;D capability + potential BIC doesn't hold water.</li>
<li>Without ociperlimab, BeiGene’s valuation could fall back to about RMB60 billion to RMB80 billion. If the valuation is finally in line with Innovent, it would be no surprising.</li>
</ul>


With Roche’s failure of several clinical trials on TIGIT project tiragolumab, the market's future expectations on this target have discounted. Investors may need to get prepared in advance.
Ociperlimab means a lot to BeiGene. If ociperlimab fails, BeiGene would have no big catalyst for a long time. BeiGene’s label of superior global R&amp;D capability + potential BIC doesn't hold water.
Without ociperlimab, BeiGene’s valuation could fall back to about RMB60 billion to RMB80 billion. If the valuation is finally in line with Innovent, it would be no surprising.


BeiGene Ltd (6160.HK/BGNE.US/688235.CH) - Valuation Remodeling if the TIGIT Project Fails

<ul>
<li>China biotech companies are “being squeezed” between the negative domestic policies and the dilemma of internationalization. The investment logic of biotech has broken and the valuation forecasts are ineffective.</li>
<li>For CXO, the uncertainties outweigh the certainties.Investors need to be prepared for the possibility of CXO not to return to its peak, because its best time may have been over.</li>
<li>We’re in a very complicated environment. A lot of things come together. Survive first. Seize rebounds after plunge rather than go bottom fishing. You don't know when the bottom is. </li>
</ul>


China biotech companies are “being squeezed” between the negative domestic policies and the dilemma of internationalization. The investment logic of biotech has broken and the valuation forecasts are ineffective.
For CXO, the uncertainties outweigh the certainties.Investors need to be prepared for the possibility of CXO not to return to its peak, because its best time may have been over.
We’re in a very complicated environment. A lot of things come together. Survive first. Seize rebounds after plunge rather than go bottom fishing. You don't know when the bottom is. 


Re-Examine the Outlook and Investment Strategy for China Biotech and CXO

<ul>
<li>FDA’s CRL on Hutchmed and Junshi indicates if there’s no real innovation, there’s little point in doing MRCT. Chinese companies must re-evaluate the costs of internationalization.There’s nothing related to “politics”.</li>
<li>DRGs is a policy that will have a significant impact on the development trend of the entire healthcare industry, because it would change doctors’ interest orientation and companies’ profit model.</li>
<li>However, we believe that DRGs will be a top-level policy design, which will gradually be followed by supporting policies, such as special subsidies for innovation.</li>
</ul>


FDA’s CRL on Hutchmed and Junshi indicates if there’s no real innovation, there’s little point in doing MRCT. Chinese companies must re-evaluate the costs of internationalization.There’s nothing related to “politics”.
DRGs is a policy that will have a significant impact on the development trend of the entire healthcare industry, because it would change doctors’ interest orientation and companies’ profit model.
However, we believe that DRGs will be a top-level policy design, which will gradually be followed by supporting policies, such as special subsidies for innovation.


China Healthcare Weekly (May.6)-FDA’s CRL on Junshi/HCM, Biotech Globalization, Significance of DRGs

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)

China Healthcare Weekly (Jun.17)- Digital Healthcare New Policy,mRNA Dilemma, Drug Supply Disruption

New policy for digital healthcare will change related platforms' profit model. The trough in mRNA may be imminent, as companies fail due to...

Xinyao (Criss) Wang

Shanghai Junshi Bioscience Placement- Junshi Is Having a Hard Time, with Lower than Expected Returns

Junshi's Achilles heel is lack of cash and is in difficult time. PD-1/COVID-19 products can't relieve cashflow pressure.The uncertain outlook/macro...

Xinyao (Criss) Wang

BeiGene Ltd (6160.HK/BGNE.US/688235.CH) - Valuation Remodeling if the TIGIT Project Fails

Roche’s clinical failures on TIGIT project are enough to make investors wary. Without TIGIT, BeiGene's outlook and valuation would shrink largely....

Xinyao (Criss) Wang

Re-Examine the Outlook and Investment Strategy for China Biotech and CXO

The investment logic of China biotech has broken due to dilemma of domestic policy and internationalization risk.CXO couldn't sustain high...

Xinyao (Criss) Wang

China Healthcare Weekly (May.6)-FDA’s CRL on Junshi/HCM, Biotech Globalization, Significance of DRGs

The FDA announced its CRL on Hutchmed’s surufatinib and Junshi’s PD-1. It's time to reexamine the logic and prospects of biotech globalization. The...

Xinyao (Criss) Wang

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