Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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 Bottom-Up

<ul>
<li>Alibaba (BABA) launched a platform of real estate agency.</li>
<li>Alibaba (BABA) promoted its interactive entertainment unit to first-level department because of a popular game.</li>
<li>We do not believe BABA’s acquisition of an online job agency is rational or true.</li>
</ul>


Alibaba (BABA) launched a platform of real estate agency.
Alibaba (BABA) promoted its interactive entertainment unit to first-level department because of a popular game.
We do not believe BABA’s acquisition of an online job agency is rational or true.


China Internet Weekly (21Sep2020): BABA Launched Property Agency and Promoted Game Department

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

*High Court Ruling: The United Kingdom High Court ruled on a test case brought forth by the Financial Conduct Authority (FCA) indicates that the "COVID-19 pandemic and the government and public response were a single cause of the covered loss, which is a key requirement for claims to be paid even if the policy provides cover". The decision on th Business Interruption (BI) case against the insurance industry is mostly in favorable to policyholders; and *Asia-Pac To Follow: As many countries in Asia-Pacific are Common Law nations, High Court rulings such as this have a tendency to set precedent. It also wouldn’t be a surprise to see significant capital raises given the challenges to solvency.

*High Court Ruling: The United Kingdom High Court ruled on a test case brought forth by the Financial Conduct Authority (FCA) indicates that the "COVID-19 pandemic and the government and public response were a single cause of the covered loss, which is a key requirement for claims to be paid even if the policy provides cover". The decision on th Business Interruption (BI) case against the insurance industry is mostly in favorable to policyholders; and *Asia-Pac To Follow: As many countries in Asia-Pacific are Common Law nations, High Court rulings such as this have a tendency to set precedent. It also wouldn’t be a surprise to see significant capital raises given the challenges to solvency.  

Asian Insurers – High Court Ruling A Harbinger For Region

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

<a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a>, and the rest of the Chinese Online Search industry, has consistently been losing market share to the likes of <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/bytedance-technology" target="_blank" data-smartkarma-citation="entities:27936:1" rel="noopener">ByteDance (1460967D CH)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan Dianping (3690 HK)</a> over the past two years. Although I still believe there is significant long term growth left for the Chinese digital advertising market, it can easily be argued that this growth will be heavily skewed and that the “pure” Search market is in effect an “industry in decline”. 
In his book “Competitive Strategy: Techniques for Analysing Industries and Competitors”, Michael Porter expands on four key strategies which firms could successfully follow when they find themselves in a declining industry. In this insight, I analyse Baidu’s current strategy against these offered strategies to assess if there is indeed value left in the company (or at least the core search business). 
Baidu should be able to continue to produce significant cash flow from its core search business as long as it sticks to the “leadership” strategy – given their dominant share of search queries, the low penetration they have in the SME market, the suitability to Search advertising for certain industry verticals and their superior profitability. I estimate Baidu’s fair value at US$168/ADS based on a SOTP valuation. The values used in my SOTP for <a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">iQIYI Inc (IQ US)</a>, <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a> (market value), Net Cash and Other investments (book value) would imply that Baidu’s core operations are currently valued at only $10.4bn ex-cash, which equates to only 9.1x 2021F PE (only 3.9x PE ex-cash).

Baidu (BIDU US), and the rest of the Chinese Online Search industry, has consistently been losing market share to the likes of Alibaba Group (9988 HK), ByteDance (1460967D CH), Tencent Holdings (700 HK), Pinduoduo (PDD US) and Meituan Dianping (3690 HK) over the past two years. Although I still believe there is significant long term growth left for the Chinese digital advertising market, it can easily be argued that this growth will be heavily skewed and that the “pure” Search market is in effect an “industry in decline”. 
In his book “Competitive Strategy: Techniques for Analysing Industries and Competitors”, Michael Porter expands on four key strategies which firms could successfully follow when they find themselves in a declining industry. In this insight, I analyse Baidu’s current strategy against these offered strategies to assess if there is indeed value left in the company (or at least the core search business). 
Baidu should be able to continue to produce significant cash flow from its core search business as long as it sticks to the “leadership” strategy – given their dominant share of search queries, the low penetration they have in the SME market, the suitability to Search advertising for certain industry verticals and their superior profitability. I estimate Baidu’s fair value at US$168/ADS based on a SOTP valuation. The values used in my SOTP for iQIYI Inc (IQ US), Trip.com (TCOM US) (market value), Net Cash and Other investments (book value) would imply that Baidu’s core operations are currently valued at only $10.4bn ex-cash, which equates to only 9.1x 2021F PE (only 3.9x PE ex-cash).

Baidu: Strategies for Operating in an Industry in Decline

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<div>
<a href="https://www.smartkarma.com/entities/zai-lab-ltd" target="_blank" data-smartkarma-citation="entities:25877:1" rel="noopener">Zai Lab Ltd (ZLAB US)</a> has launched a $0.9 billion secondary listing in Hong Kong. Zai Lab is a commercial-stage biopharmaceutical company which started to generate revenue from sales of commercialized products from 2018. In 1H20, revenue was primarily derived from the sales of both ZEJULA and Optune in Hong Kong and China.
<div class="content-highlight">The H shares will be priced on 22 September (Tuesday) and are scheduled for listing on 28 September.  Zai Lab will price its H-shares at a discount to its ADSs to entice investors to participate in the secondary listing. Overall, we think that Zai Lab pricing its H-shares around a 2% discount to its ADSs will be reasonable.</div>
</div>


Zai Lab Ltd (ZLAB US) has launched a $0.9 billion secondary listing in Hong Kong. Zai Lab is a commercial-stage biopharmaceutical company which started to generate revenue from sales of commercialized products from 2018. In 1H20, revenue was primarily derived from the sales of both ZEJULA and Optune in Hong Kong and China.
The H shares will be priced on 22 September (Tuesday) and are scheduled for listing on 28 September.  Zai Lab will price its H-shares at a discount to its ADSs to entice investors to participate in the secondary listing. Overall, we think that Zai Lab pricing its H-shares around a 2% discount to its ADSs will be reasonable.


Zai Lab Secondary Listing: HK-ADS Premium/​​(Discount) Views

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

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 <img src='https://api2.sgx.com/sites/default/files/2020-09/iX-COO.jpg' alt='IX-COO' />
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 <div class='content-caption'>IX-COO</div>
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Dr Janakan Krishnarajah has never shied away from thinking – or dreaming – big. In fact, setting bold targets is par for the course with him. 
“Be aware of self-imposed limitations,” said the Chief Medical Officer and Chief Operating Officer of SGX-listed specialty pharmaceutical company iX Biopharma Ltd. “You only have one life – pursue it with your whole heart, and live without regrets.” 
For the last 20 years, Krishnarajah, a Bachelor of Medicine and Bachelor of Surgery with Honours graduate from the University of Western Australia, has relentlessly followed his passion. A Fellow of the Royal Australasian College of Physicians, he is a specialist in the fields of Clinical Pharmacology and Internal Medicine. 
“Internal medicine deals with a broad and complex range of issues – you get to develop expertise in the diagnosis and treatment of chronic illnesses – there’s quite a bit of detective work involved,” he said.  
“Clinical Pharmacology focuses on drugs and their optimal use to treat disease. If not used correctly, they can cause the patient more harm than good.” 
Krishnarajah feels privileged to be able to make a positive impact on the lives of others. “By producing safe and effective medicines in the drug development process, we help improve the health of thousands. It’s also intellectually challenging and satisfying to come up with solutions for patients and fulfill unmet clinical needs.” 
Between 2013 and 2016, the 42-year-old held the position of CEO and Medical Director at Linear Clinical Research Ltd, a leading Australian early phase clinical trials facility. There, he developed extensive experience in Phases I-IV clinical trials, and acted as Principal or Co-Investigator in more than a hundred Phase I-II clinical trials. 
In April 2016, Krishnarajah joined iX Biopharma as CMO, and was subsequently promoted to COO three years later. “Previously, although I designed and ran the clinical trials, I never got to see the final stage, as companies would take the successful products to register them in their respective countries. Now at iX, I’m involved in the end-to-end process of drug development – from discovery to registration, manufacturing and marketing,” he said. 
“It’s deeply satisfying to see all that design and planning come to fruition through the patients who use these products.” Cutting-Edge 
Listed on SGX Catalist in 2015, iX Biopharma has established itself as a specialty pharmaceutical and nutraceutical company, operating a fully integrated business model from drug development and manufacturing, to sales and marketing, with facilities in Australia. 
It focuses on the development and commercialisation of novel wafer formulations to improve the quality of life of those suffering from pain and other health conditions, using its cutting-edge, patented sublingual delivery technology, WaferiX. 
The Group’s nutraceuticals division, Entity Health Ltd, is also engaged in the development and commercialisation of nutraceutical products that address specific health conditions and needs. 
Looking ahead, iX Biopharma’s twin growth engines will be its pharmaceutical and nutraceutical divisions, underpinned by its WaferiX delivery technology, said Krishnarajah. 
WaferiX is a multiple drug carrier platform that allows pharmacologically active compounds to be administered sublingually, or under the tongue. Produced via its proprietary freeze-drying technique, the porous and amorphous matrix holding the drug molecules is designed to collapse under the tongue within a minute, thus delivering the active compounds safely, conveniently and rapidly into the blood stream. This technology has also been proven to increase the bioavailability of drug actives as well as predictability of effect. 
The Group’s intellectual property rights for this technology has been secured in key markets such as the United States, China, Australia, New Zealand, Singapore, Japan, South Korea, India, Malaysia, Indonesia, as well as countries in the European Union. 
The Group has also filed corresponding patent applications in other jurisdictions that will allow it to seek similar patent protection in key markets throughout the world. 
This delivery technology is also applied across iX Biopharma’s pipeline of products that include Wafermine, the world’s first ketamine product delivered sublingually, and Wafesil, a sublingual sildenafil drug, which has obtained approval and registration in Australia, for the treatment of male erectile dysfunction. It has also developed a cannabidiol (CBD) drug – Xativa – using WaferiX, making it the world’s first freeze-dried, sublingual medicinal cannabis wafer. Crown Jewel 
Currently, the jewel in iX Biopharma’s crown is Wafermine. The group is in the process of out-licensing the product.  
The Group has made good progress so far, having concluded its End-of-Phase II meeting with the US Food and Drug Administration (FDA) last December, with both parties reaching an agreement on key aspects of the pivotal Phase III clinical trial program to support approval of Wafermine to treat moderate to severe acute pain. 
“We plan to pursue the monetising of Wafermine via partnerships with suitable pharmaceutical, biotech or other partners to advance the clinical development programme beyond Phase II,” Krishnarajah said. 
“Typically, to find a suitable partner to undertake Phase III, it’s an involved process, and COVID-19 has not helped. Things are progressing well, however, and we’re working through a number of interesting candidates,” he added. 
An out-licensing agreement usually involves a host of payments – upfront payment upon contract signing, as well as payments on the achievement of milestones in the Phase III clinical trial, and as the product progresses on its commercialisation path. 
Meanwhile, Xativa, which the Group is evaluating for the treatment of anxiety, tremor and inflammatory conditions, also offers huge potential. 
“CBD alternatives in the market today suffer from poor oral bioavailability,” Krishnarajah said. “Xativa was created to address the shortcomings of alternative delivery methods like smoking and vapourising, or other oral preparations, such as oil extracts.” 
“Sublingual delivery is fast-becoming the most preferred method of consuming CBD, allowing a user to maximise the benefits of its active compounds,” he added. 
Last December, iX Biopharma announced its wholly owned subsidiary iX Syrinx was granted a cannabis manufacture licence from the Office of Drug Control in Australia. Together with import and export licences that were already in hand, this latest licence opens up significant avenues for the Group to participate in the global medicinal cannabis business. 
The legal cannabis industry has seen explosive growth over the last two years. The size of the global cannabis market was estimated at US$13.8 billion in 2018, and is projected to reach US$66.3 billion by end-2025, expanding at a compound annual growth rate (CAGR) of about 24% over the seven years. 
In its most significant milestone to-date, iX Biopharma has inked its maiden agreement with medicinal cannabis enterprise Cannatrek to supply Xativa to the Australian market. Following its roll-out in Australia at the end of April, Xativa’s initial production runs totalling 1,700 boxes have been fully sold. 
“We’ve seen tremendous enthusiasm from doctors and patients – they’ve acknowledged that Xativa is different from other products as it offers fixed unit dosing, improved speed and level of absorption, as well as predictability of effect,” Krishnarajah added. 
“Xativa is also expected to be a superior alternative for certain population segments, such as senior citizens and the young, as it’s easy to use and doesn’t require swallowing capsules or ingesting oils, which may be harder to tolerate.” Gold Standard 
The third prong of iX Biopharma’s strategy involves its nutraceutical arm, Entity Health. To address high-growth categories like beauty, anti-ageing and lifestyle needs, the Group aims to roll out two to three new Entity products annually. 
Entity’s nutraceuticals are manufactured in the Group’s Therapeutic Goods Administration- (TGA) approved and Good Manufacturing Practice- (GMP) compliant  facility located in Victoria, Australia, and sold in more than 250 pharmacies and health food stores across Sydney, Melbourne and Perth. Its products have also been available online in Singapore since December 2017. 
Entity Health is currently tapping on e-commerce sales channels in China following the launch of online stores on JD.com and Alibaba’s Tmall Global in April. These two stores provide market access to more than 85% of the total business-to-consumer (B2C) e-commerce market in China. 
“China is a high-priority market and big growth driver for us,” Krishnarajah noted. “Australian-made health supplements are regarded by Chinese consumers as the gold standard of products due to the country’s reputation for safety and quality. We expect this market to grow from strength to strength.” 
Its Entity Health products and the licensing of its pharmaceutical drug Wafesil to Yiling Pharmaceutical for the China market in April this year have placed iX Biopharma “on the map”. “We’re in talks with a couple of Chinese pharmaceutical companies about our WaferiX platform as a result,” he added. 
While the overall outlook remains bright, the Group is grappling with production capacity constraints. 
“COVID-19 lockdowns have hampered our production capacity upgrades by delaying equipment installation, due to restrictions for overseas-based engineers to come onsite to commission the equipment,” Krishnarajah said. “These upgrades would have boosted our manufacturing capability by six-fold.” 
The Group is exploring alternative options, such as getting local engineering contractors to commission its new equipment. “We’re optimistic we can boost production capacity soon, and this in turn will give us the confidence to pursue the numerous deals out there,” he added. 
And when he is not strategising for the Group’s operations, Krishnarajah can be found with his three sons, aged 10 months, five and seven. Family time usually involves playing ball, other sports, and a board game or two. 
“My kids are growing up so quickly – it’s important to spend whatever time I have with them,” he smiled. 
“I want them to have a spirit of positivity,” he added. More importantly, they must cultivate resilience and an indomitable spirit. “I always tell my two older boys – dream big, and never ever, ever give up!” iX Biopharma Ltd 
iX Biopharma is a specialty pharmaceutical and nutraceutical company listed on SGX Catalist, operating a fully integrated business model from drug development to manufacturing and supply, with facilities in Australia. The Group is focused on the development and commercialisation of therapies for diseases of the central nervous system using novel, patent-protected formulations for sublingual delivery. Its pipeline of products under development includes Wafermine (ketamine wafer) for pain management, while drugs for the treatment of erectile dysfunction, Wafesil, a sublingual sildenafil wafer, and Silcap, have been registered in Australia. The Group has also developed Xativa, the world’s first freeze-dried sublingual medicinal cannabis wafer. Its nutraceuticals division, Entity Health, is engaged in the development and commercialisation of nutraceutical products that address specific conditions and improve quality of life. It distributes its Entity line of nutraceutical products in Australia through more than 250 pharmacies and health food shops, in China through its flagship stores on Tmall Global and JD Worldwide, and globally through its online store. 
The company website is: <a href="http://www.ixbiopharma.com">www.ixbiopharma.com</a> 
Click <a href="https://www.sgx.com/securities/equities/42C">here </a>for the company's StockFacts page. 
For the full year ended 30 June 2020 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/4TY3N0RPPL2VQZIW/629811_iX_Press%20Release_4Q20.pdf">here</a>.

 About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10">here</a>.  
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    IX-COO


Dr Janakan Krishnarajah has never shied away from thinking – or dreaming – big. In fact, setting bold targets is par for the course with him.  
“Be aware of self-imposed limitations,” said the Chief Medical Officer and Chief Operating Officer of SGX-listed specialty pharmaceutical company iX Biopharma Ltd. “You only have one life – pursue it with your whole heart, and live without regrets.”  
For the last 20 years, Krishnarajah, a Bachelor of Medicine and Bachelor of Surgery with Honours graduate from the University of Western Australia, has relentlessly followed his passion. A Fellow of the Royal Australasian College of Physicians, he is a specialist in the fields of Clinical Pharmacology and Internal Medicine.  
“Internal medicine deals with a broad and complex range of issues – you get to develop expertise in the diagnosis and treatment of chronic illnesses – there’s quite a bit of detective work involved,” he said.   
“Clinical Pharmacology focuses on drugs and their optimal use to treat disease. If not used correctly, they can cause the patient more harm than good.”  
Krishnarajah feels privileged to be able to make a positive impact on the lives of others. “By producing safe and effective medicines in the drug development process, we help improve the health of thousands. It’s also intellectually challenging and satisfying to come up with solutions for patients and fulfill unmet clinical needs.”  
Between 2013 and 2016, the 42-year-old held the position of CEO and Medical Director at Linear Clinical Research Ltd, a leading Australian early phase clinical trials facility. There, he developed extensive experience in Phases I-IV clinical trials, and acted as Principal or Co-Investigator in more than a hundred Phase I-II clinical trials.  
In April 2016, Krishnarajah joined iX Biopharma as CMO, and was subsequently promoted to COO three years later. “Previously, although I designed and ran the clinical trials, I never got to see the final stage, as companies would take the successful products to register them in their respective countries. Now at iX, I’m involved in the end-to-end process of drug development – from discovery to registration, manufacturing and marketing,” he said.  
“It’s deeply satisfying to see all that design and planning come to fruition through the patients who use these products.”  Cutting-Edge  
Listed on SGX Catalist in 2015, iX Biopharma has established itself as a specialty pharmaceutical and nutraceutical company, operating a fully integrated business model from drug development and manufacturing, to sales and marketing, with facilities in Australia.  
It focuses on the development and commercialisation of novel wafer formulations to improve the quality of life of those suffering from pain and other health conditions, using its cutting-edge, patented sublingual delivery technology, WaferiX.  
The Group’s nutraceuticals division, Entity Health Ltd, is also engaged in the development and commercialisation of nutraceutical products that address specific health conditions and needs.  
Looking ahead, iX Biopharma’s twin growth engines will be its pharmaceutical and nutraceutical divisions, underpinned by its WaferiX delivery technology, said Krishnarajah.  
WaferiX is a multiple drug carrier platform that allows pharmacologically active compounds to be administered sublingually, or under the tongue. Produced via its proprietary freeze-drying technique, the porous and amorphous matrix holding the drug molecules is designed to collapse under the tongue within a minute, thus delivering the active compounds safely, conveniently and rapidly into the blood stream. This technology has also been proven to increase the bioavailability of drug actives as well as predictability of effect.  
The Group’s intellectual property rights for this technology has been secured in key markets such as the United States, China, Australia, New Zealand, Singapore, Japan, South Korea, India, Malaysia, Indonesia, as well as countries in the European Union.  
The Group has also filed corresponding patent applications in other jurisdictions that will allow it to seek similar patent protection in key markets throughout the world.  
This delivery technology is also applied across iX Biopharma’s pipeline of products that include Wafermine, the world’s first ketamine product delivered sublingually, and Wafesil, a sublingual sildenafil drug, which has obtained approval and registration in Australia, for the treatment of male erectile dysfunction. It has also developed a cannabidiol (CBD) drug – Xativa – using WaferiX, making it the world’s first freeze-dried, sublingual medicinal cannabis wafer.  Crown Jewel   
Currently, the jewel in iX Biopharma’s crown is Wafermine. The group is in the process of out-licensing the product.   
The Group has made good progress so far, having concluded its End-of-Phase II meeting with the US Food and Drug Administration (FDA) last December, with both parties reaching an agreement on key aspects of the pivotal Phase III clinical trial program to support approval of Wafermine to treat moderate to severe acute pain.  
“We plan to pursue the monetising of Wafermine via partnerships with suitable pharmaceutical, biotech or other partners to advance the clinical development programme beyond Phase II,” Krishnarajah said.  
“Typically, to find a suitable partner to undertake Phase III, it’s an involved process, and COVID-19 has not helped. Things are progressing well, however, and we’re working through a number of interesting candidates,” he added.  
An out-licensing agreement usually involves a host of payments – upfront payment upon contract signing, as well as payments on the achievement of milestones in the Phase III clinical trial, and as the product progresses on its commercialisation path.  
Meanwhile, Xativa, which the Group is evaluating for the treatment of anxiety, tremor and inflammatory conditions, also offers huge potential.  
“CBD alternatives in the market today suffer from poor oral bioavailability,” Krishnarajah said. “Xativa was created to address the shortcomings of alternative delivery methods like smoking and vapourising, or other oral preparations, such as oil extracts.”  
“Sublingual delivery is fast-becoming the most preferred method of consuming CBD, allowing a user to maximise the benefits of its active compounds,” he added.  
Last December, iX Biopharma announced its wholly owned subsidiary iX Syrinx was granted a cannabis manufacture licence from the Office of Drug Control in Australia. Together with import and export licences that were already in hand, this latest licence opens up significant avenues for the Group to participate in the global medicinal cannabis business.  
The legal cannabis industry has seen explosive growth over the last two years. The size of the global cannabis market was estimated at US$13.8 billion in 2018, and is projected to reach US$66.3 billion by end-2025, expanding at a compound annual growth rate (CAGR) of about 24% over the seven years.  
In its most significant milestone to-date, iX Biopharma has inked its maiden agreement with medicinal cannabis enterprise Cannatrek to supply Xativa to the Australian market. Following its roll-out in Australia at the end of April, Xativa’s initial production runs totalling 1,700 boxes have been fully sold.  
“We’ve seen tremendous enthusiasm from doctors and patients – they’ve acknowledged that Xativa is different from other products as it offers fixed unit dosing, improved speed and level of absorption, as well as predictability of effect,” Krishnarajah added.  
“Xativa is also expected to be a superior alternative for certain population segments, such as senior citizens and the young, as it’s easy to use and doesn’t require swallowing capsules or ingesting oils, which may be harder to tolerate.”  Gold Standard  
The third prong of iX Biopharma’s strategy involves its nutraceutical arm, Entity Health. To address high-growth categories like beauty, anti-ageing and lifestyle needs, the Group aims to roll out two to three new Entity products annually.  
Entity’s nutraceuticals are manufactured in the Group’s Therapeutic Goods Administration- (TGA) approved and Good Manufacturing Practice- (GMP) compliant  facility located in Victoria, Australia, and sold in more than 250 pharmacies and health food stores across Sydney, Melbourne and Perth. Its products have also been available online in Singapore since December 2017.  
Entity Health is currently tapping on e-commerce sales channels in China following the launch of online stores on JD.com and Alibaba’s Tmall Global in April. These two stores provide market access to more than 85% of the total business-to-consumer (B2C) e-commerce market in China.  
“China is a high-priority market and big growth driver for us,” Krishnarajah noted. “Australian-made health supplements are regarded by Chinese consumers as the gold standard of products due to the country’s reputation for safety and quality. We expect this market to grow from strength to strength.”  
Its Entity Health products and the licensing of its pharmaceutical drug Wafesil to Yiling Pharmaceutical for the China market in April this year have placed iX Biopharma “on the map”. “We’re in talks with a couple of Chinese pharmaceutical companies about our WaferiX platform as a result,” he added.  
While the overall outlook remains bright, the Group is grappling with production capacity constraints.  
“COVID-19 lockdowns have hampered our production capacity upgrades by delaying equipment installation, due to restrictions for overseas-based engineers to come onsite to commission the equipment,” Krishnarajah said. “These upgrades would have boosted our manufacturing capability by six-fold.”  
The Group is exploring alternative options, such as getting local engineering contractors to commission its new equipment. “We’re optimistic we can boost production capacity soon, and this in turn will give us the confidence to pursue the numerous deals out there,” he added.  
And when he is not strategising for the Group’s operations, Krishnarajah can be found with his three sons, aged 10 months, five and seven. Family time usually involves playing ball, other sports, and a board game or two.  
“My kids are growing up so quickly – it’s important to spend whatever time I have with them,” he smiled.  
“I want them to have a spirit of positivity,” he added. More importantly, they must cultivate resilience and an indomitable spirit. “I always tell my two older boys – dream big, and never ever, ever give up!”   iX Biopharma Ltd  
iX Biopharma is a specialty pharmaceutical and nutraceutical company listed on SGX Catalist, operating a fully integrated business model from drug development to manufacturing and supply, with facilities in Australia. The Group is focused on the development and commercialisation of therapies for diseases of the central nervous system using novel, patent-protected formulations for sublingual delivery. Its pipeline of products under development includes Wafermine (ketamine wafer) for pain management, while drugs for the treatment of erectile dysfunction, Wafesil, a sublingual sildenafil wafer, and Silcap, have been registered in Australia. The Group has also developed Xativa, the world’s first freeze-dried sublingual medicinal cannabis wafer. Its nutraceuticals division, Entity Health, is engaged in the development and commercialisation of nutraceutical products that address specific conditions and improve quality of life. It distributes its Entity line of nutraceutical products in Australia through more than 250 pharmacies and health food shops, in China through its flagship stores on Tmall Global and JD Worldwide, and globally through its online store.  
The company website is: www.ixbiopharma.com  
Click here for the company's StockFacts page.  
For the full year ended 30 June 2020 financial results, click here.

 About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.  



iX Biopharma: Blazing New Trails in Healthcare

China

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

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