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.

Equity Capital Markets

<ul>
<li>Lepu Biopharma is a biotech spin-off of A-share listed Lepu Medical. The company launched book building to raise up to USD 120m via a Hong Kong listing.</li>
<li>In our previous note, we look at the company's core products, including HX008, LP002, MRG003 and MRG002. The products have their own differentiating factors to tackle the intense competition.</li>
<li>In this note, we provide an update for the book building. We will run the deal through our ECM framework and provide an update on the deal.</li>
</ul>


Lepu Biopharma is a biotech spin-off of A-share listed Lepu Medical. The company launched book building to raise up to USD 120m via a Hong Kong listing.
In our previous note, we look at the company's core products, including HX008, LP002, MRG003 and MRG002. The products have their own differentiating factors to tackle the intense competition.
In this note, we provide an update for the book building. We will run the deal through our ECM framework and provide an update on the deal.


Lepu Biopharma (乐普生物科技) IPO: Sentiment Cooled Down

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The expansion of the scope of positioning directly reflects the change in the importance of pharmaceutical industry in the minds of the top level, which is very pivotal.</li>
<li>The determination to abandon old development mode, and promote real innovation and high-quality internationalization remains unchanged. So, companies need to develop at a higher level and a larger stage.</li>
<li>Once achieved, it means that China's pharmaceutical industry will have another radical change after 2015, leading the industry to another new phase of growth.</li>
</ul>


The expansion of the scope of positioning directly reflects the change in the importance of pharmaceutical industry in the minds of the top level, which is very pivotal.
The determination to abandon old development mode, and promote real innovation and high-quality internationalization remains unchanged. So, companies need to develop at a higher level and a larger stage.
Once achieved, it means that China's pharmaceutical industry will have another radical change after 2015, leading the industry to another new phase of growth.


Interpretation of The "14th Five-Year Plan" For the Development of China Pharmaceutical Industry

<ul>
<li>RC48’s commercialization performance in China market could be lower than expected. The breakthrough point is whether the deal with Seagen can bring any surprise in the global markets.</li>
<li>Due to large R&amp;D and selling expenses, <a href="https://www.smartkarma.com/entities/remegen-co-ltd" target="_blank" data-smartkarma-citation="entities:29191:1" rel="noopener">Remegen Co Ltd (9995 HK)</a> is facing cash flow pressure, indicating that this IPO in SSE STAR market is very important for the Company.</li>
<li>Let’s see if RemeGen would in-license some unique late-stage candidates or reach new blockbuster license-out deals that surprise us again, both of which would help turn things around.</li>
</ul>


RC48’s commercialization performance in China market could be lower than expected. The breakthrough point is whether the deal with Seagen can bring any surprise in the global markets.
Due to large R&amp;D and selling expenses, Remegen Co Ltd (9995 HK) is facing cash flow pressure, indicating that this IPO in SSE STAR market is very important for the Company.
Let’s see if RemeGen would in-license some unique late-stage candidates or reach new blockbuster license-out deals that surprise us again, both of which would help turn things around.


Pre-IPO Remegen Co Ltd - Some Points Worth the Attention

<ul>
<li>Last week, we saw some rebounds in the healthcare sector, and many investors begin to believe that a complete reversal is imminent. </li>
<li>Our view is that this is <strong>a temporary rebound</strong> after continuous pull-back due to the broken logic, rather than <strong>a complete reversal</strong>.We recommend investors to see the rebound rationally.</li>
<li>In terms of the future direction of stock price, we analyze it based on three scenarios.</li>
</ul>


Last week, we saw some rebounds in the healthcare sector, and many investors begin to believe that a complete reversal is imminent. 
Our view is that this is a temporary rebound after continuous pull-back due to the broken logic, rather than a complete reversal.We recommend investors to see the rebound rationally.
In terms of the future direction of stock price, we analyze it based on three scenarios.


The Insecure Rebound in Healthcare Sector and the Future Direction of Stock Price (2022)

<ul>
<li>Based on our analysis, the growth rate of China's drug spending is linked to GDP, and it would not be a high growth rate, but a stable growth rate.</li>
<li>The logic behind China and US biotech companies is different. To some extent, the lower the domestic biotech’s share price, the greater the risk.</li>
<li>In the current policy environment, the risks of VBP on anesthetics could be low because of their high barriers, strict control and potential social risks.</li>
</ul>


Based on our analysis, the growth rate of China's drug spending is linked to GDP, and it would not be a high growth rate, but a stable growth rate.
The logic behind China and US biotech companies is different. To some extent, the lower the domestic biotech’s share price, the greater the risk.
In the current policy environment, the risks of VBP on anesthetics could be low because of their high barriers, strict control and potential social risks.


China Healthcare Weekly (Jan.7)-China's Drug Spending,Logic Behind China/US Biotech, Anesthetics VBP

China

RemeGen Co., Ltd. operates biotechnology businesses. The Company develops therapeutic antibody drugs such as antibody drug conjugates (ADC), antibody fusion proteins, monoclonal antibodies and double antibodies. RemeGen provides solutions autoimmune diseases, tumor diseases, and ophthalmic diseases.

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Remegen (9995 HK)

Lepu Biopharma (乐普生物科技) IPO: Sentiment Cooled Down

Downsized deal amid cooled sentiment for Chapter 18A, we think the valuation of Lepu Biopharm is not attractive for investors.

Ke Yan, CFA, FRM

Interpretation of The "14th Five-Year Plan" For the Development of China Pharmaceutical Industry

For the newly released "14th Five-year Plan" of China pharmaceutical industry, we analyzed key points and our interpretation. Once achieved, it...

Xinyao (Criss) Wang

Pre-IPO Remegen Co Ltd - Some Points Worth the Attention

We analyzed the competitive landscape of RC48 in both China and global markets,the outlook and concerns.We also pointed out the cashflow pressure...

Xinyao (Criss) Wang

The Insecure Rebound in Healthcare Sector and the Future Direction of Stock Price (2022)

The rebound in China healthcare sector last week was a temporary rebound rather than a complete reversal. In terms of future direction of stock...

Xinyao (Criss) Wang

China Healthcare Weekly (Jan.7)-China's Drug Spending,Logic Behind China/US Biotech, Anesthetics VBP

The insight mainly analyzed the relationship of drug spending with GDP growth, different logic behind China/US biotech companies and related risks...

Xinyao (Criss) Wang

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52-week Range

Market Cap (USDm)

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