HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Kintor Pharmaceutical / Equity Capital Markets

<ul>
<li>Over the past year, we've seen the stock price of Kintor fluctuate largely, which was mainly driven by its COVID-19 drug proxalutamide. However, we are not optimistic about its outlook.</li>
<li>There are big concerns about the credibility of management. The suspicion caused by mistrust leads us to suggest that investors directly enter the "show me the result" mode.</li>
<li>Shares plunged after the announcement of the Placing. Obviously, <a href="https://www.smartkarma.com/entities/kintor-pharmaceutical" target="_blank" data-smartkarma-citation="entities:28884:1" rel="noopener">Kintor Pharmaceutical (9939 HK)</a> is short of money. Considering the potential risks behind, we are bearish on Kintor. </li>
</ul>


Over the past year, we've seen the stock price of Kintor fluctuate largely, which was mainly driven by its COVID-19 drug proxalutamide. However, we are not optimistic about its outlook.
There are big concerns about the credibility of management. The suspicion caused by mistrust leads us to suggest that investors directly enter the "show me the result" mode.
Shares plunged after the announcement of the Placing. Obviously, Kintor Pharmaceutical (9939 HK) is short of money. Considering the potential risks behind, we are bearish on Kintor. 


Kintor Pharmaceutical (9939.HK) Placement - The Hidden Risks and the True Colors

Thematic (Sector/Industry)

<ul>
<li>The Development and Reform Commission of Shenzhen Municipality issued a document about the subsidy for VBP, which is a positive policy and is good for innovation.</li>
<li>The approval of Genuine Biotech’s Azvudine could greatly increase the unpredictability of the approval of domestic innovative drugs, thus greatly increasing the unpredictable risk of domestic innovative drug enterprises.</li>
<li>In terms of internationalization, we summarized what Chinese pharmaceutical companies could do at the current stage. But they are hard to become the mainstream in pharmaceuticals globally in short term.</li>
</ul>


The Development and Reform Commission of Shenzhen Municipality issued a document about the subsidy for VBP, which is a positive policy and is good for innovation.
The approval of Genuine Biotech’s Azvudine could greatly increase the unpredictability of the approval of domestic innovative drugs, thus greatly increasing the unpredictable risk of domestic innovative drug enterprises.
In terms of internationalization, we summarized what Chinese pharmaceutical companies could do at the current stage. But they are hard to become the mainstream in pharmaceuticals globally in short term.


China Healthcare Weekly (July.29)-Subsidy for VBP, Unpredictable NMPA, Ways for Internationalization

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.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Apr 8th. Due to public holiday in Hong Kong, the announcement was delayed by 2 days.</li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight property names that saw short interest increase last week: Cifi, Country Garden, Country Garden services, and Kintor which reported Phase 3 clinical trial results for COVID-19 treatment.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Apr 8th. Due to public holiday in Hong Kong, the announcement was delayed by 2 days.
Top short increases and decreases were tabulated for one week and four week period. 
We highlight property names that saw short interest increase last week: Cifi, Country Garden, Country Garden services, and Kintor which reported Phase 3 clinical trial results for COVID-19 treatment.


<ul>
<li>The MPP announced that it has signed agreements with 27 generic manufacturing companies including several Chinese companies for the manufacturing of molnupiravir and supply in 105 low- and-middle-income countries.</li>
<li>The profit margin would be limited because of its public benefit purpose. Therefore, it may not be able to bring huge incremental performance to the relevant domestic pharmaceutical companies.</li>
<li>The future risks and concerns on Merck's molnupiravir should also not be neglected. So, investors are advised to view this agreement with MPP rationally.</li>
</ul>


The MPP announced that it has signed agreements with 27 generic manufacturing companies including several Chinese companies for the manufacturing of molnupiravir and supply in 105 low- and-middle-income countries.
The profit margin would be limited because of its public benefit purpose. Therefore, it may not be able to bring huge incremental performance to the relevant domestic pharmaceutical companies.
The future risks and concerns on Merck's molnupiravir should also not be neglected. So, investors are advised to view this agreement with MPP rationally.


Would the Cheap Versions of Oral COVID-19 Antiviral Bring New Opportunities for Chinese Companies?

<ul>
<li>For Pfizer,orders on COVID-19 vaccine and Paxlovid would generate over US$50 billion revenue in 2022. So whether Pfizer would pursue for new M&amp;A opportunities become the focus of the market.</li>
<li>The oral COVID-19 antivirals are a great opportunity for the development of Chinese API companies, improving the overall valuation. However, CXOs are actually the first to benefit from this market.</li>
<li>If the COVID mutates in a more transmissible direction, the valuation and forecast of related companies in this industrial chain needs readjustment.However, if it doesn’t, the logic would change again.</li>
</ul>


For Pfizer,orders on COVID-19 vaccine and Paxlovid would generate over US$50 billion revenue in 2022. So whether Pfizer would pursue for new M&amp;A opportunities become the focus of the market.
The oral COVID-19 antivirals are a great opportunity for the development of Chinese API companies, improving the overall valuation. However, CXOs are actually the first to benefit from this market.
If the COVID mutates in a more transmissible direction, the valuation and forecast of related companies in this industrial chain needs readjustment.However, if it doesn’t, the logic would change again.


Oral COVID-19 Antivirals and the Impact on China

China

Biosino Bio-Technology & Science, Inc. is a biotechnology company.  The Company develops, manufactures, and markets protein-based in-vitro diagnostic reagents and biochemical drugs.  The Company's diagnostic reagents help diagnose cardiac, helatic, diabetes, inflammation/immunology, and pancreatic related diseases.

I-Mab operates as a clinical stage biopharmaceutical company. The Company focuses on the discovery, development, and commercialization of novel biologics to treat diseases with significant unmet medical needs, particularly cancers and autoimmune disorders. I-Mab conducts business in China.

Mabpharm Limitied manufactures medical products. The Company produces cancer treatment drugs, immune diseases drugs, biosimilar drugs, and other products. Mabpharm markets its products throughout China.

Quantum Hi-Tech China Biological Co Ltd researches, develops, produces and sells fructooligosaccharides (FOS) products. The Company's main products are fructooligosaccharides, galacto-oligosaccharide and complex oligosaccharides.

Quantum Hi Tech (China) Biologicl (300149 CH)

Beijing Leadman Biochemistry Company Limited develops, manufactures and sells in vitro diagnostic products and biochemical raw materials. The Company's main products include in vitro diagnostic reagents, and biochemical raw materials.

Xinjiang Tianshan Animal Husbandry Bio-engineering Co Ltd develops cattle breed and genetic improvements. The Company's main products include high quality cattle semen, embryos as well as other genetic material and related services.

Xinjiang Tianshan Animal Husba (300313 CH)

Jiangsu Sihuan Bioengineering Co., Ltd. operates in the  pharmaceutical industry.  The Company's products include injections, tablets, bioengineering products, and other related products.

Jiangsu Sihuan Bioengineering Co., (000518 CH)

Grandhope Biotech Company Limited develops, manufactures and markets regenerative medical materials and regenerative implantable medical devices.

Shanghai Kehua Bio-Engineering Co., Ltd. develops and manufactures bio-chemical reagents, medical equipment, diagnostic reagents, and genetic engineering pharmaceuticals.

Shanghai Kehua Bio Engineering (002022 CH)

Baotou Dongbao Bio-technology Company Limited develops, produces, sells gelatinrelated and small moledule collagen products. The Company also produces calcium hydrogen phosphate as a by-product.

Orthocell Ltd is a biotherapeutic technology development company seeking to address unmet clinical needs within the global orthopaedics sector. The Company's core focus is biological therapies for tendon and ligament tissue repair and regeneration.

AnGes MG, Inc. develops gene-therapy drugs that use Hepatocyte Growth Factor (HGF) for myocardial infarction and arteriosclerosis patients.  The Company also develops nucleic acid drug (decoy oligo) for patients with asthma, allergy, and rheumatism.  AnGes MG develops vectors (a carrier used to introduce a foreign gene into a host cell) which help study and analyze genetic functions.

SELLAS Life Sciences Group, Inc. operates as a biopharmaceutical company. The Company develops late-stage oncology drugs and therapies for the treatment of cancer diseases. SELLAS Life Sciences Group serves patients worldwide.

Allied Biotech Corp manufactures carotenoid formulations for food, supplement and feed industries. Products include beta-carotene, beta-apo-8-carotenal, coenzyme Q10 and lycopene.

Genomics BioSci & Tech Co., Ltd. provides complete and professional antibody production services, multiple immune animal systems, and complete antibody production consulting services. The Company offers DNA sequencing, primer synthesis, genetic function analysis, gene mutation analysis, and biological information integration.

Taiwan Advance Bio-Pharmaceutical Inc researches and develops IVD, antibiotic preparation, umbilical cord blood stem cell, other medical equipments. The company also provides drug testing services and biotechnology services.

Atara Biotherapeutics Inc. provides health care services. The Company offers research and development treatment solutions for cancer, kidney disease, and other illnesses.

Naturalendo Tech Co., Ltd. specializes in bio-sciences, herbs, and endocrinology.  The Company also develops, manufactures, and sells health care products such as natural medicine, health food, cosmetic material, and transdermal drug delivery system.

Cidara Therapeutics, Inc. operates as a bio-pharmaceutical company. The Company focuses on the discovery, development, and commercialization of novel anti-infectives for the treatment of diseases. Cidara Therapeutics serves customers in the United States.

Seoulin Bioscience Co., Ltd. develops and provides biotechnology related products.  The Company's main products include DNA chip scanner and diagnostic DNA kit. Seoulin also operates various research.

Kintor Pharmaceutical Limited develops and markets drugs. The Company produces and sells androgen receptor antagonists, small molecule innovative drugs, and other products. Kintor Pharmaceutical markets its products primarily throughout China with limited overseas.

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Kintor Pharmaceutical (9939 HK)