HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Innovent Biologics Inc / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>’s share price had some rebounds last week, which could be related to some positive progress on business and the picking-up market sentiment in healthcare sector. </li>
<li>We increased overall sales forecast for Innovent by including the two new products from Sanofi. But it’s still far from the management's target of RMB20 billion sales in 5 years.</li>
<li>Innovent’s current commercialization capability is like a "semi-finished product", and has long way to go. It lacks the second big product except PD-1 to “pave the way” for next-stage development.</li>
</ul>



Innovent Biologics Inc (1801 HK)’s share price had some rebounds last week, which could be related to some positive progress on business and the picking-up market sentiment in healthcare sector. 
We increased overall sales forecast for Innovent by including the two new products from Sanofi. But it’s still far from the management's target of RMB20 billion sales in 5 years.
Innovent’s current commercialization capability is like a "semi-finished product", and has long way to go. It lacks the second big product except PD-1 to “pave the way” for next-stage development.


Innovent Biologics Inc (1801.HK) - The Concerns and the Outlook

<ul>
<li>There’s an “insurmountable obstacle” to license-in business model. <a href="https://www.smartkarma.com/entities/antengene-corp-ltd" target="_blank" data-smartkarma-citation="entities:29705:1" rel="noopener">Antengene (6996 HK)</a> has to go all the way to the end. Otherwise, Antengene won't end up well.</li>
<li>Considering the pipeline quality/speed of clinical advancement/high cost of license-in/fierce competition/just APAC rights/limited cash balance, the biggest problem Antengene has to face is how to “survive this winter” .</li>
<li>Theoretically, Antengene is undervalued, so if willing to, investors could do short-term trade. However, due to the concerns, we are still bearish on Antengene’s outlook overall. </li>
</ul>


There’s an “insurmountable obstacle” to license-in business model. Antengene (6996 HK) has to go all the way to the end. Otherwise, Antengene won't end up well.
Considering the pipeline quality/speed of clinical advancement/high cost of license-in/fierce competition/just APAC rights/limited cash balance, the biggest problem Antengene has to face is how to “survive this winter” .
Theoretically, Antengene is undervalued, so if willing to, investors could do short-term trade. However, due to the concerns, we are still bearish on Antengene’s outlook overall. 


Antengene (6996.HK) 22H1-Defective Business Model and Uncompetitive Pipeline; Bearish on the Outlook

Thematic (Sector/Industry)

<ul>
<li>The plunge in medical beauty sector last week was due to the industry-wide overhaul and investigation resulting from the increase in business bribery/tax evasion/medical malpractice/customer complaints.</li>
<li>We found an interesting phenomenon – Investors dare not buy biotech, opting instead for Traditional Chinese Medicine (TCM) companies, scientific research service companies and medical service companies.</li>
<li>If investors still want to trade CXO, here are two suggestions.</li>
</ul>


The plunge in medical beauty sector last week was due to the industry-wide overhaul and investigation resulting from the increase in business bribery/tax evasion/medical malpractice/customer complaints.
We found an interesting phenomenon – Investors dare not buy biotech, opting instead for Traditional Chinese Medicine (TCM) companies, scientific research service companies and medical service companies.
If investors still want to trade CXO, here are two suggestions.


China Healthcare Weekly (Sep.25) - CXO Trading Strategy, Plunge in Medical Beauty, Belief in Biotech

<ul>
<li>NHSA will set aside a certain market to provide space for innovative medical devices/consumables to explore the market in addition to centralized procurement. However, we tend to be cautiously optimistic.</li>
<li>We think it is important to clarify for investors what constitutes "commercialization success" – That is to generate revenue at scale and stable profitability through the sale of drugs.</li>
<li>All the products that covered by VBP begin to lose logic. Don't be fooled by those positive interpretations. We are bearish on the sectors with downward logic in long cycle. </li>
</ul>


NHSA will set aside a certain market to provide space for innovative medical devices/consumables to explore the market in addition to centralized procurement. However, we tend to be cautiously optimistic.
We think it is important to clarify for investors what constitutes "commercialization success" – That is to generate revenue at scale and stable profitability through the sale of drugs.
All the products that covered by VBP begin to lose logic. Don't be fooled by those positive interpretations. We are bearish on the sectors with downward logic in long cycle. 


China Healthcare Weekly(Sep9)-Innovative Device Policy,Commercial Success Definition,Don't Be Fooled

<ul>
<li>The Statement of Protocol signed between PCAOB and CSRC/MOF is good for China concept stocks in the short term, but it doesn’t mean the risk of delisting is completely eliminated.</li>
<li>From the statements of the two sides, there are still some differences. What the US side emphasizes is "full authority", but China requires "principle of reciprocity" of regulatory cooperation.</li>
<li>It’s difficult to reach final agreement.The trend of China concept stocks delisting from US and relisting on HKEX/A-share would not change. Investors are advised to prepare for Black Swan event.</li>
</ul>


The Statement of Protocol signed between PCAOB and CSRC/MOF is good for China concept stocks in the short term, but it doesn’t mean the risk of delisting is completely eliminated.
From the statements of the two sides, there are still some differences. What the US side emphasizes is "full authority", but China requires "principle of reciprocity" of regulatory cooperation.
It’s difficult to reach final agreement.The trend of China concept stocks delisting from US and relisting on HKEX/A-share would not change. Investors are advised to prepare for Black Swan event.


PCAOB and CSRC‘s Agreement on Audit Terms Could Fail - The Real Test of China ADRs Lies Ahead

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)

Innovent Biologics Inc (1801.HK) - The Concerns and the Outlook

Even with Sanofi's products,Innovent's sales forecast is still far from management's goal.Its commercialization capability has a long way to go.A...

Xinyao (Criss) Wang

Antengene (6996.HK) 22H1-Defective Business Model and Uncompetitive Pipeline; Bearish on the Outlook

There’s an “insurmountable obstacle” to license-in business model.Antengene has to go all the way to the end. Otherwise, it won't end up well. The...

Xinyao (Criss) Wang

China Healthcare Weekly (Sep.25) - CXO Trading Strategy, Plunge in Medical Beauty, Belief in Biotech

If investor still want to trade CXO,here are two suggestions; The plunge in medical beauty sector last week was due to industry-wide...

Xinyao (Criss) Wang

China Healthcare Weekly(Sep9)-Innovative Device Policy,Commercial Success Definition,Don't Be Fooled

We recommend cautiously optimistic about new innovative device policy. It's important to clarify what constitutes "commercialization success". All...

Xinyao (Criss) Wang

PCAOB and CSRC‘s Agreement on Audit Terms Could Fail - The Real Test of China ADRs Lies Ahead

China ADRs are only a part of Sino-US game, which shouldn't be looked at alone. It’s hard to reach final agreement. The trend of relisting on HKEX...

Xinyao (Criss) Wang

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