HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

<ul>
<li>Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.</li>
<li>“Increasing revenue without increasing profits” is actually a “denial” of a company's business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.</li>
<li>Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor's valuation and allowing Edding to achieve its goal of going public.</li>
</ul>


Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.
“Increasing revenue without increasing profits” is actually a “denial” of a company's business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.
Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor's valuation and allowing Edding to achieve its goal of going public.


China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Equity Capital Markets

<ul>
<li>Vancocin/Ceclor/FPN are currently the “cash cow” for Edding, but they’re facing the challenges of generics, VBP and increasing competition. Their current market leading position may be lost in the future.</li>
<li>Edding seeks business transformation as its CSO model doesn’t work under domestic negative policies. But peak sales of three innovative drugs Vascepa/Mulpleta/EDP 125 may not reach the level of Vancocin/Ceclor.</li>
<li>Edding’s core advantage still lies in sales capabilities. Its R&amp;D capabilities have always been questioned. It’s unsure whether the market would give high valuation to a company without core competitiveness.</li>
</ul>


Vancocin/Ceclor/FPN are currently the “cash cow” for Edding, but they’re facing the challenges of generics, VBP and increasing competition. Their current market leading position may be lost in the future.
Edding seeks business transformation as its CSO model doesn’t work under domestic negative policies. But peak sales of three innovative drugs Vascepa/Mulpleta/EDP 125 may not reach the level of Vancocin/Ceclor.
Edding’s core advantage still lies in sales capabilities. Its R&amp;D capabilities have always been questioned. It’s unsure whether the market would give high valuation to a company without core competitiveness.


Pre-IPO Edding Group - CSO Model Is Hard to Sustain, but Business Transformation Faces Challenges

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Edding Group, a leading integrated pharmaceutical company in China, plans to raise up to USD 200m via a Hong Kong listing.In our previous note, we discussed that the company is turning from a distributor of NMC drugs to a pharmaceutical company by acquiring product rights in the past two years. We are of the view that the Vancocin and Ceclor are the selling point of the company as they both have a dominant position in the respective segment and are in growing markets. The company's Vascepa is an interesting CVD product but the competition is intense given that the statin is the main therapy to reduce CV risks and it has many varieties with a competitive market. However, we do not see Mulpleta and EPD 125 attractive. Sales of Mulpleta are very small in Japan and the EDP125 was suspended by Eli Lilly previously given that it failed to demonstrate superiority in Phase II/III clinical trials. We think the management does not possess impressive working experience, though investor backing is strong.The strong line-up of pre-IPO investors prompted us to do further research in the company. In this note, we will be looking at the company's financials. We highlight key points from its financials and the contractual arrangement. We also note issues with its related party.

Edding Group, a leading integrated pharmaceutical company in China, plans to raise up to USD 200m via a Hong Kong listing.In our previous note, we discussed that the company is turning from a distributor of NMC drugs to a pharmaceutical company by acquiring product rights in the past two years. We are of the view that the Vancocin and Ceclor are the selling point of the company as they both have a dominant position in the respective segment and are in growing markets. The company's Vascepa is an interesting CVD product but the competition is intense given that the statin is the main therapy to reduce CV risks and it has many varieties with a competitive market. However, we do not see Mulpleta and EPD 125 attractive. Sales of Mulpleta are very small in Japan and the EDP125 was suspended by Eli Lilly previously given that it failed to demonstrate superiority in Phase II/III clinical trials. We think the management does not possess impressive working experience, though investor backing is strong.The strong line-up of pre-IPO investors prompted us to do further research in the company. In this note, we will be looking at the company's financials. We highlight key points from its financials and the contractual arrangement. We also note issues with its related party.

Edding Group (亿腾医药) Pre-IPO: Notes from Latest Financials and Its Related Party

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Bottom-Up

Alibaba Health Information Tec / Equity Bottom-Up

This Insight summarizes the takeaways from a recent China healthcare industry conference focused on biopharmaceuticals and medical devices, and builds on our Originals Insight <a href="https://www.smartkarma.com/insights/asian-healthcare-coming-of-age" target="_blank" data-smartkarma-citation="insights:45676" rel="noopener">Asian Healthcare - Coming of Age</a>.  Topics addressed include value-based purchasing for drugs and devices; development of commercial health insurance; internet hospitals and online pharmacies; DRGs for hospitals; issues for medical device companies; and amendments to China's patent laws.

This Insight summarizes the takeaways from a recent China healthcare industry conference focused on biopharmaceuticals and medical devices, and builds on our Originals Insight Asian Healthcare - Coming of Age.  Topics addressed include value-based purchasing for drugs and devices; development of commercial health insurance; internet hospitals and online pharmacies; DRGs for hospitals; issues for medical device companies; and amendments to China's patent laws.

Eddingpharm is a China-based pharmaceutical company that has filed an Application Proof to list on the HKEX. The product line consist of older drugs with varying degrees of exposure to the government's VBP/GQCE program. The development pipeline has two intriguing candidates that should come to market in 2022. We think the overarching issue for the shares will be whether enthusiasm for the pipeline can offset the VBP-related overhang. 
This Insight addresses the company's products and market opportunity, and leave other topics to a future Insight. Our Bullish tag is a placeholder until we get closer to an offering.

Eddingpharm is a China-based pharmaceutical company that has filed an Application Proof to list on the HKEX. The product line consist of older drugs with varying degrees of exposure to the government's VBP/GQCE program. The development pipeline has two intriguing candidates that should come to market in 2022. We think the overarching issue for the shares will be whether enthusiasm for the pipeline can offset the VBP-related overhang. 
This Insight addresses the company's products and market opportunity, and leave other topics to a future Insight. Our Bullish tag is a placeholder until we get closer to an offering.

China

Pharmaceutical company focusing on three core therapeutic areas, namely anti-infectives, cardiovascular ('CV') and respiratory, by leveraging our market-tested full value chain capabilities.

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Edding Group (EDG HK)

China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Genor/Edding are merging through a reverse takeover, but valuation is unsatisfactory. Remegen is negative example among China Biotech.Weak...

Xinyao (Criss) Wang

Pre-IPO Edding Group - CSO Model Is Hard to Sustain, but Business Transformation Faces Challenges

As once a leading CSO company in China, Edding’s core advantage still lies in sales capabilities. But changes in domestic policy/business...

Xinyao (Criss) Wang

China Healthcare: Macro Themes

This Insight summarizes the takeaways from a recent China healthcare industry conference. There is much talk of pressures on the industry, but...

Kemp Dolliver, CFA

Eddingpharm: First Impressions

Eddingpharm plans to list on the HKEX. This Insight analyzes the company's products and pipeline. The main question is whether enthusiasm for the...

Kemp Dolliver, CFA

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China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Genor/Edding are merging through a reverse takeover, but valuation is unsatisfactory. Remegen is negative example among China Biotech.Weak...

Xinyao (Criss) Wang

Pre-IPO Edding Group - CSO Model Is Hard to Sustain, but Business Transformation Faces Challenges

As once a leading CSO company in China, Edding’s core advantage still lies in sales capabilities. But changes in domestic policy/business...

Xinyao (Criss) Wang

Edding Group (亿腾医药) Pre-IPO: Notes from Latest Financials and Its Related Party

The strong line-up of pre-IPO investors prompted us to do further research in the company. In this note, we will be looking at the company's...

Ke Yan, CFA, FRM

China Healthcare: Macro Themes

This Insight summarizes the takeaways from a recent China healthcare industry conference. There is much talk of pressures on the industry, but...

Kemp Dolliver, CFA

Eddingpharm: First Impressions

Eddingpharm plans to list on the HKEX. This Insight analyzes the company's products and pipeline. The main question is whether enthusiasm for the...

Kemp Dolliver, CFA