HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The market is satisfied with BeiGene's 24Q1 performance. The major reason for BeiGene to narrow net loss in 24Q1 was based on strong product revenue growth rather than cost control. </li>
<li>Given the varying pace of product promotion/R&amp;D expenditure and the changes of product sales growth, BeiGene’s adjusted loss may achieve breakeven in a certain quarter of this year (e.g. 24Q4).</li>
<li>
<a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene (6160 HK) </a>is hard to cut costs largely. Sustained overall profitability may not be achieved until 2026 or 2027. But at least, we still see hope for a turnaround.</li>
</ul>


The market is satisfied with BeiGene's 24Q1 performance. The major reason for BeiGene to narrow net loss in 24Q1 was based on strong product revenue growth rather than cost control. 
Given the varying pace of product promotion/R&amp;D expenditure and the changes of product sales growth, BeiGene’s adjusted loss may achieve breakeven in a certain quarter of this year (e.g. 24Q4).

BeiGene (6160 HK) is hard to cut costs largely. Sustained overall profitability may not be achieved until 2026 or 2027. But at least, we still see hope for a turnaround.


BeiGene (6160.HK/​BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable

Equity Capital Markets

Elpiscience Biopharmaceuticals / Equity Capital Markets

<ul>
<li>Elpiscience is incubated by LAV from the very beginning.The Company has strong capital operation capabilities, but the story of "founding team's decent background + star cornerstone investors" doesn't work anymore.</li>
<li>Elpiscience’s pipelines are still in early stage. However, investors are rational. They will no longer believe in those "good stories", but focus more on cash flow and drug sales revenue.</li>
<li>Elpiscience’s business model has raised concerns about its future product sales scale and profits.The market may not recognize the post-investment valuation of US$599 million if check the valuation of peers.</li>
</ul>


Elpiscience is incubated by LAV from the very beginning.The Company has strong capital operation capabilities, but the story of "founding team's decent background + star cornerstone investors" doesn't work anymore.
Elpiscience’s pipelines are still in early stage. However, investors are rational. They will no longer believe in those "good stories", but focus more on cash flow and drug sales revenue.
Elpiscience’s business model has raised concerns about its future product sales scale and profits.The market may not recognize the post-investment valuation of US$599 million if check the valuation of peers.


Pre-IPO Elpiscience Biopharmaceuticals - Will Investors Still Buy in These Stories?

<ul>
<li>Although people acknowledged BeiGene's performance, it still makes us uneasy about a long-standing question: When will BeiGene be profitable?With current cost structure, there’s at least two years left until breakeven. </li>
<li>BeiGene’s internationalization only proves decent increase in revenue, but it doesn’t yet verify its profitability.SG&amp;A expense ratio completely deviates from the normal state of Biotech with over US$2 billion sales.</li>
<li>If BeiGene indeed has a plan to turn loss into profits, besides maintaining a high growth rate in sales, reasonable optimization in cost and expenses is the most basic “sincerity”.</li>
</ul>


Although people acknowledged BeiGene's performance, it still makes us uneasy about a long-standing question: When will BeiGene be profitable?With current cost structure, there’s at least two years left until breakeven. 
BeiGene’s internationalization only proves decent increase in revenue, but it doesn’t yet verify its profitability.SG&amp;A expense ratio completely deviates from the normal state of Biotech with over US$2 billion sales.
If BeiGene indeed has a plan to turn loss into profits, besides maintaining a high growth rate in sales, reasonable optimization in cost and expenses is the most basic “sincerity”.


BeiGene (6160.HK/​BGNE.US/688235.CH) - Pain Points Behind the High Growth

<ul>
<li>Since Imbruvica's sales continued to decline and Calquence hadn’t shown much growth in US since 23Q2, either Zanubrutinib gained more market share or the entire BTK inhibitors market is shrinking. </li>
<li>BeiGene's recent sluggish share price could be related to geopolitical conflicts/weak market sentiment.However, innovative drugs don’t involve supply chain security issues. There’s no need for US to sanction China's biotech.</li>
<li>We are relatively optimistic about BeiGene's 23Q4 sales growth. In our view, BeiGene’s reasonable market value is at least about US$18 billion. <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene (6160 HK)</a> is undervalued.   </li>
</ul>


Since Imbruvica's sales continued to decline and Calquence hadn’t shown much growth in US since 23Q2, either Zanubrutinib gained more market share or the entire BTK inhibitors market is shrinking. 
BeiGene's recent sluggish share price could be related to geopolitical conflicts/weak market sentiment.However, innovative drugs don’t involve supply chain security issues. There’s no need for US to sanction China's biotech.
We are relatively optimistic about BeiGene's 23Q4 sales growth. In our view, BeiGene’s reasonable market value is at least about US$18 billion. BeiGene (6160 HK) is undervalued.   


BeiGene (6160.HK/​BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

China

Chongqing Zhifei Biological Products Company Ltd. researches, manufactures, and sells vaccines and biological products including prevention products, blood products, diagnostic reagents, and therapeutic agents.

Chongqing Zhifei Biological Products (300122 CH)

Beijing Tiantan Biological Products Corporation Limited researches, develops, and commercializes biological products.  The Company provides treatment for hepatitis and offers a line of vaccine products including hepatitis vaccines and rubella vaccines.

Beijing Tiantan Biological Products (600161 CH)

Innovent Biologics, Inc. operates as a biopharmaceutical company. The Company develops, manufactures, and distributes monoclonal antibody drug candidates for the treatment of oncology, ophthalmology, autoimmune, cardiovascular, and other diseases. Innovent Biologics serves customers in China.

Hualan Biological Engineering Inc. produces and markets human serum albumin (HSA), gamma globulin, frozen prothrombin (PCC), and other related biological products.

Hualan Biological Engineering (002007 CH)

Walvax Biotechnology Company Limited develops, manufactures and sells bio-pharmaceutical vaccination products.  The Company's products include haemophilus influenzae type b conjugate vaccine and meningococcal group A,C bivalent polysaccharide conjugate vaccine.

Jiangxi Boya Bio-Pharmaceutical company Limited develops, produces and sells blood product. The Company's main products include human serum albumin, intravenous immunoglobulin (static C) and fibrinogen.

Jiangxi Boya Bio Pharmaceutical (300294 CH)

Shenzhen Kangtai Biological Products Co., Ltd. operates biological product manufacturing businesses. The Company produces biological vaccines and other vaccine products. Shenzhen Kangtai Biological Products conducts businesses in China.

Shenzhen Kangtai Biological Pr (300601 CH)

3SBio, Inc. is a biotechnology company located in China. The Company focuses on mammalian cell-based biopharmaceuticals in the biotechnology industry. 3SBio also develops, manufactures and markets biopharmaceutical products globally.

Zai Lab Limited operates as a bio-pharmaceutical company. The Company researches and develops therapeutic technology for antibody-based oncology, autoimmune, and infectious diseases treatments. Zai Lab also manufactures drugs in the form of capsules, injections, and liquids. Zai Lab serves patients worldwide.

BGI Genomics Co., Ltd offers researching and testing services. The Company provides deoxyribonucleic acid sequencing, food science, health care researching, cancer prevention, drug discovery, and DNA sequencing. BGI Genomics offers services to medical and scientific research institutions worldwide.

BioMarin Pharmaceutical Inc. develops and commercializes therapeutic enzyme products.  The Company has applied its proprietary enzyme technology to develop products for lysosomal storage diseases and for the treatment of serious burns. BioMarin's subsidiary provides analytical and diagnostic products and services in the area of carbohydrate biology.

Insmed, Inc. is a biopharmaceutical company focused on developing and commercializing novel, targeted inhaled therapies for patients with high unmet need battling serious orphan lung diseases.

United Therapeutics Corporation develops pharmaceuticals to treat vascular diseases such as pulmonary hypertension and peripheral vascular disease.  The Company's lead products are stable synthetic forms of prostacyclin and are delivered orally or subcutaneously.

Natera, Inc. operates as a diagnostics company. The Company provides preconception and prenatal genetic testing services. Natera also offers pre-implantation genetic diagnosis, aneuploidy screening, translocation, and single gene testing services.

Neurocrine Biosciences, Inc. is focused on the discovery and development of therapeutics for neuropsychiatric, neuroinflammatory, and neurodegenerative diseases and disorders.  The Company is developing therapeutic interventions for anxiety, depression, Alzheimer's disease, insomnia, stroke, malignant brain tumors, multiple sclerosis, obesity, and diabetes.

Alteogen Inc. is a pharmaceutical research company.  The Company researches and develops bio-medicines such as bio-better and bio-similar.

Sarepta Therapeutics, Inc. is a biopharmaceutical company focused on the discovery and development of unique RNA-based therapeutics for the treatment of both rare and infectious diseases. The Company offers its products to the medical industry in countries around the world.

Incyte Corp is a biopharmaceutical company. The Company discovers, develops and commercializes proprietary small molecule drugs, primarily used in oncology.

Genmab A/S operates as a biotechnology company. The Company creates and develops human antibody products for the treatment of life threatening and debilitating diseases. Genmab focuses on products to treat cancer, rheumatoid arthritis and other inflammatory conditions, and psoriasis. The Company develops new products through partnerships. Genmab operates in Europe and the United States.

Genmab A/S operates as a biotechnology company. The Company specializes in development of antibody therapeutics for the treatment of cancer. Genmab serves customers worldwide.

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)

BeiGene (6160.HK/BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable

BeiGene's high product revenue growth in 24Q1 narrowed net loss, with potential for breakeven in 24Q4.This is an affirmation for BeiGene....

Xinyao (Criss) Wang

Pre-IPO Elpiscience Biopharmaceuticals - Will Investors Still Buy in These Stories?

Elpiscience's strong capital operation capabilities are no longer enough as investors shift focus to cash flow and drug sales revenue. We have...

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US/688235.CH) - Pain Points Behind the High Growth

Due to quick pick-up of expenses, breakeven is more challenging. BeiGene hasn't proved its profitability. If it indeed has a plan to turn loss into...

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns

BeiGene's sluggish share price could be related to geopolitical conflicts/weak market sentiment. But there’s no need for US to sanction China's...

Xinyao (Criss) Wang

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

BeiGene (6160.HK/​BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable

​BeiGene's high product revenue growth in 24Q1 narrowed net loss, with potential for breakeven in 24Q4.This is an affirmation for BeiGene....

Xinyao (Criss) Wang

Pre-IPO Elpiscience Biopharmaceuticals - Will Investors Still Buy in These Stories?

​Elpiscience's strong capital operation capabilities are no longer enough as investors shift focus to cash flow and drug sales revenue. We have...

Xinyao (Criss) Wang

BeiGene (6160.HK/​BGNE.US/688235.CH) - Pain Points Behind the High Growth

Due to quick pick-up of expenses, breakeven is more challenging. BeiGene hasn't proved its profitability. If it indeed has a plan to turn loss into...

Xinyao (Criss) Wang

BeiGene (6160.HK/​BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns

BeiGene's sluggish share price could be related to geopolitical conflicts/weak market sentiment. But there’s no need for US to sanction China's...

Xinyao (Criss) Wang

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

BeiGene (6160.HK/BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable

BeiGene's high product revenue growth in 24Q1 narrowed net loss, with potential for breakeven in 24Q4.This is an affirmation for BeiGene....

Elpiscience's strong capital operation capabilities are no longer enough as investors shift focus to cash flow and drug sales revenue. We have...

BeiGene (6160.HK/BGNE.US/688235.CH) - Pain Points Behind the High Growth

BeiGene (6160.HK/BGNE.US/688235.CH) - 2023 Results Preview and Undervaluation Concerns