HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>China further optimized COVID policy. The main reason to ease the policy at this time could be to release risks in advance so as to recover as soon as possible.</li>
<li>The growth curve of biotech is not linear. We analyzed three situations to help investors better understand “the new story” of Biotech at different stages.</li>
<li>We reviewed the performance of Company listed under HKEX Chapter 18A since this year. We found some interesting points worth the attention.</li>
</ul>


China further optimized COVID policy. The main reason to ease the policy at this time could be to release risks in advance so as to recover as soon as possible.
The growth curve of biotech is not linear. We analyzed three situations to help investors better understand “the new story” of Biotech at different stages.
We reviewed the performance of Company listed under HKEX Chapter 18A since this year. We found some interesting points worth the attention.


China Healthcare Weekly (Dec.9) - COVID Policy Update, Biotech Growth Curve, HKEX Chapter 18A Review

Equity Capital Markets

<ul>
<li>The NRDL negotiation has completely changed the pricing method and valuation logic of innovative drugs. Based on the 3D Alphamab Simcere Agreements, 3D Medicines would have limited profits from envafolimab.</li>
<li>The majority candidates are based on license-in model. The intention to “pile up” a nice pipeline based on license-in model before IPO is obvious. 3D Medicines’s R&amp;D capability is questionable.</li>
<li>The overall quality and core competitiveness of 3D Medicines are not high. Mr. Market is not friendly to the valuation of companies based on license-in model. </li>
</ul>


The NRDL negotiation has completely changed the pricing method and valuation logic of innovative drugs. Based on the 3D Alphamab Simcere Agreements, 3D Medicines would have limited profits from envafolimab.
The majority candidates are based on license-in model. The intention to “pile up” a nice pipeline based on license-in model before IPO is obvious. 3D Medicines’s R&amp;D capability is questionable.
The overall quality and core competitiveness of 3D Medicines are not high. Mr. Market is not friendly to the valuation of companies based on license-in model. 


Pre-IPO 3D Medicines (3DM HK) - Some Points Worth the Attention; Our Thoughts on Valuation

Equity Bottom-Up

<ul>
<li>Our forecast of the total peak sales of BRUKINSA, tislelizumab and the rest commercialized products is about RMB10 billion, which is not enough for BeiGene to turn losses into profits. </li>
<li>BeiGene has the highest R&amp;D/academic ability among domestic pharmaceutical enterprises,but BeiGene cannot be assessed according to the standards of Chinese pharmaceutical enterprises due to its fundamentally different cost structure/breakeven point.</li>
<li>The current market value has already priced in the success of TIGIT project to some extent. In other words, the upward elasticity may be limited. But BeiGene deserves long-term follow.</li>
</ul>


Our forecast of the total peak sales of BRUKINSA, tislelizumab and the rest commercialized products is about RMB10 billion, which is not enough for BeiGene to turn losses into profits. 
BeiGene has the highest R&amp;D/academic ability among domestic pharmaceutical enterprises,but BeiGene cannot be assessed according to the standards of Chinese pharmaceutical enterprises due to its fundamentally different cost structure/breakeven point.
The current market value has already priced in the success of TIGIT project to some extent. In other words, the upward elasticity may be limited. But BeiGene deserves long-term follow.


BeiGene (6160.HK/BGNE.US) 22Q3 - The Price of Being an “Outlier”

<ul>
<li>NRDL negotiation has completely changed the pricing method/valuation logic of innovative drugs. Even if price reduction could be milder this year, it’s hard to reverse the shrinking market size/slowing growth.</li>
<li>
<a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a> has successively acquired several factories/production facilities built by domestic biotech companies at low cost. However, we have several concerns.</li>
<li>The industry is in the process of understanding and adapting to various changes. The model capital envisioned for biotech to both develop and then commercialize drugs successfully doesn’t work anymore.</li>
</ul>


NRDL negotiation has completely changed the pricing method/valuation logic of innovative drugs. Even if price reduction could be milder this year, it’s hard to reverse the shrinking market size/slowing growth.

Wuxi Biologics (2269 HK) has successively acquired several factories/production facilities built by domestic biotech companies at low cost. However, we have several concerns.
The industry is in the process of understanding and adapting to various changes. The model capital envisioned for biotech to both develop and then commercialize drugs successfully doesn’t work anymore.


China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Shanghai Fosun Pharmaceutical (Group) / Event-Driven

<ul>
<li>Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry</li>
<li>Overall, the net inflow over the past week was ~HK$4.1bn, split (+HK$1.7bn) for Shanghai and (+HK$2.4bn) for Shenzhen.</li>
<li>The largest inflows were in <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a>. The largest outflows were in<a href="https://www.smartkarma.com/entities/koolearn-technology-holding" target="_blank" data-smartkarma-citation="entities:27796:1" rel="noopener">Koolearn (1797 HK)</a>and <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a>.</li>
</ul>


Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry
Overall, the net inflow over the past week was ~HK$4.1bn, split (+HK$1.7bn) for Shanghai and (+HK$2.4bn) for Shenzhen.
The largest inflows were in Tencent (700 HK) and Wuxi Biologics (2269 HK). The largest outflows were inKoolearn (1797 HK)and China Mobile (941 HK).


Shanghai/​​​​​​​​​​​​​​​​​​​​Shenzhen Southbound Connect: Weekly Moves (11 November 2022)

China

Shanghai Junshi Biosciences Co., Ltd. operates as a biopharmaceutical company. The Company develops and sells small molecule drugs, antibody drug conjugates, and other products. Shanghai Junshi Biosciences markets its products worldwide.

Price Gauge
52-week Range	0.00 - 0.00
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Shanghai Junshi Biosciences (1877 HK)

China Healthcare Weekly (Dec.9) - COVID Policy Update, Biotech Growth Curve, HKEX Chapter 18A Review

China further optimized COVID policy, so as to release risks in advance and recover ASAP. The growth curve of biotech is not linear. We reviewed...

Xinyao (Criss) Wang

Pre-IPO 3D Medicines (3DM HK) - Some Points Worth the Attention; Our Thoughts on Valuation

The overall quality/core competitiveness of 3D Medicines isn't high. Its pipeline is mainly based on license-in model, which is not favored by Mr....

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US) 22Q3 - The Price of Being an “Outlier”

Sales of current commercialized products isn't enough for BeiGene to turn loss into profit. BeiGene is fundamentally different from any other China...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails

NRDL negotiation completely changes the valuation logic of innovative drug. We've some concerns about WuXi Bio's new business updates. The model...

Xinyao (Criss) Wang

Shanghai/Shenzhen Southbound Connect: Weekly Moves (11 November 2022)

Inside is a recap of movements in the Shanghai/Shenzhen-HK Connect. Overall, the net inflow over the past week was ~HK$4.1bn, split (+HK$1.7bn) for...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Healthcare Weekly (Dec.9) - COVID Policy Update, Biotech Growth Curve, HKEX Chapter 18A Review

China further optimized COVID policy, so as to release risks in advance and recover ASAP. The growth curve of biotech is not linear. We reviewed...

Xinyao (Criss) Wang

Pre-IPO 3D Medicines (3DM HK) - Some Points Worth the Attention; Our Thoughts on Valuation

The overall quality/core competitiveness of 3D Medicines isn't high. Its pipeline is mainly based on license-in model, which is not favored by Mr....

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US) 22Q3 - The Price of Being an “Outlier”

Sales of current commercialized products isn't enough for BeiGene to turn loss into profit. BeiGene is fundamentally different from any other China...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails

NRDL negotiation completely changes the valuation logic of innovative drug. We've some concerns about WuXi Bio's new business updates. The model...

Xinyao (Criss) Wang

Shanghai/​​​​​​​​​​​​​​​​​​​​Shenzhen Southbound Connect: Weekly Moves (11 November 2022)

Inside is a recap of movements in the Shanghai/Shenzhen-HK Connect. Overall, the net inflow over the past week was ~HK$4.1bn, split (+HK$1.7bn) for...

David Blennerhassett

Shanghai/Shenzhen Southbound Connect: Weekly Moves (11 November 2022)