HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Shandong BoAn Biotechnology  / Equity Capital Markets

<ul>
<li>Without the advantages in product efficacy, production capacity, clinical progress and speed of approval, Boan's products have lost their pricing power in both China and overseas markets.</li>
<li>Due to the lack of differentiation and frontier enough target layout, the product commercialization potential is bound to be more easily questioned, with limited value in the long term.</li>
<li>Even if Boan could go public successfully, investors may not be able to achieve the expected returns because of the unfriendly market sentiment and a lack of liquidity in HKEX. </li>
</ul>


Without the advantages in product efficacy, production capacity, clinical progress and speed of approval, Boan's products have lost their pricing power in both China and overseas markets.
Due to the lack of differentiation and frontier enough target layout, the product commercialization potential is bound to be more easily questioned, with limited value in the long term.
Even if Boan could go public successfully, investors may not be able to achieve the expected returns because of the unfriendly market sentiment and a lack of liquidity in HKEX. 


Pre-IPO Shandong Boan Biotechnology - Conservative About the Outlook

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/akeso-biopharma-inc" target="_blank" data-smartkarma-citation="entities:28830:1" rel="noopener">Akeso Biopharma Inc (9926 HK)</a> and Summit Therapeutics entered into a collaborative and licensing agreement for AK112, which has set a new record for China's innovative drug license-out cooperation. </li>
<li>While the market remained positive about the transaction, there are also doubts. We deep dive the potential logic of the deal. </li>
<li>We recommended investors not to neglect “the nature of the deal” and “the real motivation” behind. It’s also important to see whether the subsequent operations can make some achievements overseas.</li>
</ul>



Akeso Biopharma Inc (9926 HK) and Summit Therapeutics entered into a collaborative and licensing agreement for AK112, which has set a new record for China's innovative drug license-out cooperation. 
While the market remained positive about the transaction, there are also doubts. We deep dive the potential logic of the deal. 
We recommended investors not to neglect “the nature of the deal” and “the real motivation” behind. It’s also important to see whether the subsequent operations can make some achievements overseas.


Akeso Biopharma (9926.HK) - Behind the Deal with Summit: A Snake Swallows an Elephant?

<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

<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”

China

BeiGene, Ltd. operates as a commercial stage biopharmaceutical company. The Company focuses on discovery, development, and commercialization of molecularly targeted and immuno-oncology drugs for the treatment of cancer. BeiGene serves patients worldwide.

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BeOne (ONC US)

Pre-IPO Shandong Boan Biotechnology - Conservative About the Outlook

Due to lack of differentiated/frontier enough target layout and slow progress, Boan's product commercialization potential is highly uncertain....

Xinyao (Criss) Wang

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

Akeso Biopharma (9926.HK) - Behind the Deal with Summit: A Snake Swallows an Elephant?

The deal between Akeso and Summit set a new record of China license-out. We deep dive the logic of the deal. Investors are advised not to neglect...

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

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