HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

On February 3rd, 2021, <a href="https://www.smartkarma.com/entities/innocare-pharma-ltd" target="_blank" data-smartkarma-citation="entities:28355:1" rel="noopener">InnoCare Pharma Ltd (9969 HK)</a> announced two subscription agreements with Hillhouse and Vivo Capital. The two investors subscribed 191,613,000 and 18,895,000 new shares respectively, for a total of 210,508,000 new Shares, representing about 16.33% of the existing total issued Shares of the Company as at the date of this announcement and approximately 14.04% of the total issued shares of the Company as enlarged by the allotment and issue of the subscription shares. The subscription price of HK$14.45/share represents an 8.32% premium to the average closing price of the five trading days immediately preceding the date of the subscription agreements (not including 2 February 2021). Source: InnoCare Official WebsiteInnoCare has been invested by two leading funds because in addition to orelabrutinib, which was approved for marketing at the end of last year, the Company has developed a balanced pipeline of over 10 drug candidates for the treatment of malignant tumors and autoimmune diseases. InnoCare’s core value of "Science Drives Innovation" is highly recognized.

On February 3rd, 2021, InnoCare Pharma Ltd (9969 HK) announced two subscription agreements with Hillhouse and Vivo Capital. The two investors subscribed 191,613,000 and 18,895,000 new shares respectively, for a total of 210,508,000 new Shares, representing about 16.33% of the existing total issued Shares of the Company as at the date of this announcement and approximately 14.04% of the total issued shares of the Company as enlarged by the allotment and issue of the subscription shares. The subscription price of HK$14.45/share represents an 8.32% premium to the average closing price of the five trading days immediately preceding the date of the subscription agreements (not including 2 February 2021). Source: InnoCare Official WebsiteInnoCare has been invested by two leading funds because in addition to orelabrutinib, which was approved for marketing at the end of last year, the Company has developed a balanced pipeline of over 10 drug candidates for the treatment of malignant tumors and autoimmune diseases. InnoCare’s core value of "Science Drives Innovation" is highly recognized. 

InnoCare Pharma Ltd (9969.HK) - What Attracts Both Hillhouse and Vivo Capital?

Equity Capital Markets

Since China planned to pilot registration-based IPO system, more and more eligible unprofitable biotech companies are allowed to go public. <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a> would be the next one. The Company is going to list on the STAR market. Founded in Beijing in 2010, BeiGene is the most representative of the early biotech companies, and it has become a giant now, with a market value of about HK$254 billion on February 1, or less than half of that of <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH) </a>(around RMB550 billion). Meanwhile, different from Hengrui’s strategy, which adheres more to the independent R&amp;D and control of core technology and related rights, BeiGene is better at capital operation - Most of the products in pipeline are from license-in mode, and the Company is continuously suffering from losses. So, would the IPO on the STAR market be the last hurrah?

Since China planned to pilot registration-based IPO system, more and more eligible unprofitable biotech companies are allowed to go public. BeiGene Ltd (6160 HK) would be the next one. The Company is going to list on the STAR market. Founded in Beijing in 2010, BeiGene is the most representative of the early biotech companies, and it has become a giant now, with a market value of about HK$254 billion on February 1, or less than half of that of Jiangsu Hengrui Medicine (600276 CH) (around RMB550 billion). Meanwhile, different from Hengrui’s strategy, which adheres more to the independent R&amp;D and control of core technology and related rights, BeiGene is better at capital operation - Most of the products in pipeline are from license-in mode, and the Company is continuously suffering from losses. So, would the IPO on the STAR market be the last hurrah?

Pre-IPO BeiGene - Would the IPO on the STAR Market Be the Last Hurrah?

Thematic (Sector/Industry)

1. Industry viewpoints:<ul>
<li>It is expected that the market size of IBD (Inflammatory Bowel Disease) drug therapy in China would keep growing in the next five years.</li>
<li>Since COVID-19 virus was detected in imported reagents this time, considering safety factors, the trend of import substitution for reagent varieties is expected to accelerate.</li>
<li>In the field of high-end antibiotics, Chinese enterprises have yet to make breakthroughs.</li>
</ul>2. Company news:News about the progress of new drugs from <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a>, <a href="https://www.smartkarma.com/entities/harbour-biomed-holdings-limited" target="_blank" data-smartkarma-citation="entities:29717:1" rel="noopener">Harbour Biomed (2142 HK)</a>, <a href="https://www.smartkarma.com/entities/antengene-corp-ltd" target="_blank" data-smartkarma-citation="entities:29705:1" rel="noopener">Antengene (6996 HK)</a> and <a href="https://www.smartkarma.com/entities/shanghai-junshi-bioscience-h" target="_blank" data-smartkarma-citation="entities:27760:1" rel="noopener">Shanghai Junshi Bioscience Co. Ltd. (1877 HK)</a>.3. Market review:Last week, stock price for healthcare sector in A share decreased 7.1%, while CSI 300 decreased 3.91% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
It is expected that the market size of IBD (Inflammatory Bowel Disease) drug therapy in China would keep growing in the next five years.
Since COVID-19 virus was detected in imported reagents this time, considering safety factors, the trend of import substitution for reagent varieties is expected to accelerate.
In the field of high-end antibiotics, Chinese enterprises have yet to make breakthroughs.
2. Company news:News about the progress of new drugs from BeiGene Ltd (6160 HK), Harbour Biomed (2142 HK), Antengene (6996 HK) and Shanghai Junshi Bioscience Co. Ltd. (1877 HK).3. Market review:Last week, stock price for healthcare sector in A share decreased 7.1%, while CSI 300 decreased 3.91% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:<ul>
<li>The National Healthcare Security Administration (NHSA) released new interim procedures about the medical insurance coverage for the retail pharmacies, which will come into effect on February 1st, 2021.</li>
<li>The epidemic since the end of 2019 has brought a large demand for blood products.</li>
<li>With the improvement of affordability, the expansion of medical insurance coverage and the increase of R&amp;D investment, the biological drug market size is expected to further expand.</li>
</ul>2. Company news:News about the progress of new drugs and new license agreement of Fosun Kite, <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a>, <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> and <a href="https://www.smartkarma.com/entities/betta-pharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:25883:1" rel="noopener">Betta Pharmaceuticals (300558 CH)</a>.3. Market review:Last week, stock price for healthcare sector in A share decreased 2.41%, while CSI 300 decreased 0.68% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
The National Healthcare Security Administration (NHSA) released new interim procedures about the medical insurance coverage for the retail pharmacies, which will come into effect on February 1st, 2021.
The epidemic since the end of 2019 has brought a large demand for blood products.
With the improvement of affordability, the expansion of medical insurance coverage and the increase of R&amp;D investment, the biological drug market size is expected to further expand.
2. Company news:News about the progress of new drugs and new license agreement of Fosun Kite, BeiGene Ltd (6160 HK), Innovent Biologics Inc (1801 HK) and Betta Pharmaceuticals (300558 CH).3. Market review:Last week, stock price for healthcare sector in A share decreased 2.41%, while CSI 300 decreased 0.68% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

BeiGene has outlicensed ex-China rights to its PD-1 tislelizumab to Novartis on favorable terms, validating the competitive position of this compound in a crowded market. Further, the agreement marks a growing trend of Chinese companies outlicensing products to multinationals, which can have a leveraged benefit on their P&amp;Ls and valuations.

BeiGene has outlicensed ex-China rights to its PD-1 tislelizumab to Novartis on favorable terms, validating the competitive position of this compound in a crowded market. Further, the agreement marks a growing trend of Chinese companies outlicensing products to multinationals, which can have a leveraged benefit on their P&amp;Ls and valuations.

BeiGene: Novartis Grabs Tislelizumab Rights

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 (6160 HK)

InnoCare Pharma Ltd (9969.HK) - What Attracts Both Hillhouse and Vivo Capital?

The article analyzed what InnoCare attracts both Hillhouse and Vivo Capital in terms of its core product orelabrutinib, other products (ICP-192/ICP...

Xinyao (Criss) Wang

Pre-IPO BeiGene - Would the IPO on the STAR Market Be the Last Hurrah?

This article analyzed BeiGene in terms of its current pipeline, products on the market, competitive landscape, financial position, and the concerns...

Xinyao (Criss) Wang

China Healthcare Weekly (Jan.29)

The article analyzed industry viewpoints in terms of IBD drug therapy, import substitution for reagent varieties and high-end antibiotics market,...

Xinyao (Criss) Wang

China Healthcare Weekly (Jan.15)

This article analyzed the new interim procedures released by NHSA, trend of blood products and biological drug market, and also include company...

Xinyao (Criss) Wang

BeiGene: Novartis Grabs Tislelizumab Rights

BeiGene's deal with Novartis for PD-1 tislelizumab validates its competitive position, and marks a rising trend of Chinese companies licensing...

Kemp Dolliver, CFA

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