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Research from EqualOcean

EqualOcean is an investment research firm and information service provider focusing on China's Technology, Automotive and Consumer Internet sectors. With unique research and due diligence methodology, we provide tailored insights into a wide range of industries and companies, empowering our clients' value-added decisions.

Founded in 2014, EqualOcean is headquartered in Beijing and has offices in Shanghai, Shenzhen and New York.

Thematic (Sector/Industry)

<ul><li>GT (Cell and Gene Therapy) is a sector with high growth potential.</li><li>CAR-T, as one of the main CGT currently, presents great value for both doctors and patients.</li><li>This article showcases the industry pain points and opportunities faced in the CAR-T sub-sector.</li></ul>

GT (Cell and Gene Therapy) is a sector with high growth potential.CAR-T, as one of the main CGT currently, presents great value for both doctors and patients.This article showcases the industry pain points and opportunities faced in the CAR-T sub-sector.

Opportunities and Challenges Hidden in the CGT Industry in China

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

1. Industry viewpoints:<ul>
<li>The official document about the 4th volume-based purchase (VBP) was issued to clarify the relevant varieties and rules, and the bidding will start on February 3rd, 2021.</li>
<li>Biobanks and vaccines are the main driving force for the overall cryogenic storage market to continue to grow at a high rate in the future.</li>
<li>Currently, the “AI + medical” industry is in a period of rapid growth.</li>
</ul>2. Company news:News about the progress of innovative medical device, new drugs and new licensing agreement from <a href="https://www.smartkarma.com/entities/venus-medtech-hangzhou-inc" target="_blank" data-smartkarma-citation="entities:28257:1" rel="noopener">Venus MedTech (2500 HK)</a>, <a href="https://www.smartkarma.com/entities/gracell-biotechnologies-inc" target="_blank" data-smartkarma-citation="entities:31108:1" rel="noopener">Gracell Biotechnologies Inc (GRCL US)</a>, <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>, and <a href="https://www.smartkarma.com/entities/alphamab-oncology" target="_blank" data-smartkarma-citation="entities:28213:1" rel="noopener">Alphamab Co Ltd (9966 HK)</a>.3. Market review: Last week, stock price for healthcare sector in A share increased 7.79%, while CSI 300 increased 2.05% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
The official document about the 4th volume-based purchase (VBP) was issued to clarify the relevant varieties and rules, and the bidding will start on February 3rd, 2021.
Biobanks and vaccines are the main driving force for the overall cryogenic storage market to continue to grow at a high rate in the future.
Currently, the “AI + medical” industry is in a period of rapid growth.
2. Company news:News about the progress of innovative medical device, new drugs and new licensing agreement from Venus MedTech (2500 HK), Gracell Biotechnologies Inc (GRCL US), Innovent Biologics Inc (1801 HK), and Alphamab Co Ltd (9966 HK).3. Market review: Last week, stock price for healthcare sector in A share increased 7.79%, while CSI 300 increased 2.05% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Event-Driven

<ul>
<li>This takeover could be at negotiation stage and different parties haven't reached an agreement.When Legend Bio releases official announcement, it means main issues of the deal have been agreed upon.</li>
<li>Genscript will be a big winner if Legend Bio is acquired. Major shareholders would take measures to maximize personal interests.The concern is whether Genscript will offer dividends to small/medium shareholders/investors. </li>
<li>Whether the takeover is successful or not, reasonable valuation of Legend Bio is between US$12.5- US$15 billion. Due to uncertainties, we recommend investors buy Legend Bio directly rather than Genscript.</li>
</ul>


This takeover could be at negotiation stage and different parties haven't reached an agreement.When Legend Bio releases official announcement, it means main issues of the deal have been agreed upon.
Genscript will be a big winner if Legend Bio is acquired. Major shareholders would take measures to maximize personal interests.The concern is whether Genscript will offer dividends to small/medium shareholders/investors. 
Whether the takeover is successful or not, reasonable valuation of Legend Bio is between US$12.5- US$15 billion. Due to uncertainties, we recommend investors buy Legend Bio directly rather than Genscript.


Legend Biotech (LEGN.US) Offer Update - Some New Information About the Takeover Worth the Attention

Equity Bottom-Up

Shanghai Tofflon Science A / Equity Bottom-Up

<ul>
<li>We have seen four transactions of MNC acquiring Chinese Biotech companies. However, this does not mean that domestic big pharmaceutical companies will also participate in the acquisition of small Biotech.</li>
<li>The underlying investment logic of innovative drug is undergoing changes. Non-oncology fields, such as autoimmunity, CNS, endocrine metabolism, and ophthalmology will be the main hot directions of investment and R&amp;D.</li>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-tofflon-science-a" target="_blank" data-smartkarma-citation="entities:15970:1" rel="noopener">Shanghai Tofflon Science A (300171 CH)</a> is still in downward trend. We’re not optimistic about its 2023 results. We don’t recommend bottom-fish this stock unless there is a major catalyst.</li>
</ul>


We have seen four transactions of MNC acquiring Chinese Biotech companies. However, this does not mean that domestic big pharmaceutical companies will also participate in the acquisition of small Biotech.
The underlying investment logic of innovative drug is undergoing changes. Non-oncology fields, such as autoimmunity, CNS, endocrine metabolism, and ophthalmology will be the main hot directions of investment and R&amp;D.

Shanghai Tofflon Science A (300171 CH) is still in downward trend. We’re not optimistic about its 2023 results. We don’t recommend bottom-fish this stock unless there is a major catalyst.


China Healthcare Weekly (Apr.21) - M&As in Biotech, Capital Is Bullish on Non-Tumor Sectors, Tofflon

Gracell Biotechnologies Inc / Equity Bottom-Up

<ul>
<li>Ministry of Finance and National Health Commission issued new policy strictly prohibiting public hospitals from borrowing to purchase medical equipment, which will change the investment logic of medical device sector.</li>
<li>“PD-1+ADC” is expected to replace “PD-1+chemotherapy” as the first-line standard therapy. This will be a huge market. So, good story of ADC CDMO (such as WuXi XDC) would continue.</li>
<li>The inspiration that AstraZeneca's acquisition of Gracell brings to investors is IPO isn’t the only way for exit.Being acquired is also good, which will become more important in the future.</li>
</ul>


Ministry of Finance and National Health Commission issued new policy strictly prohibiting public hospitals from borrowing to purchase medical equipment, which will change the investment logic of medical device sector.
“PD-1+ADC” is expected to replace “PD-1+chemotherapy” as the first-line standard therapy. This will be a huge market. So, good story of ADC CDMO (such as WuXi XDC) would continue.
The inspiration that AstraZeneca's acquisition of Gracell brings to investors is IPO isn’t the only way for exit.Being acquired is also good, which will become more important in the future.


China Healthcare Weekly (Dec.31)-New Medical Device Policy, AstraZeneca to Acquire Gracell, PD-1+ADC

United States

Gracell Biotechnologies Inc. operates as a clinical-stage biopharmaceutical company. The Company focuses on discovering and developing cell therapies to address medical needs in the treatment of cancer. Gracell Biotechnologies aims to disrupt conventional approaches to CAR-T cell therapies with technology platforms-FasTCAR and TruUCAR.

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Gracell Biotechnologies Inc (GRCL US)

Opportunities and Challenges Hidden in the CGT Industry in China

GT (Cell and Gene Therapy) is a sector with high growth potential. CAR-T, as one of the main CGT currently, presents great value for both doctors...

EqualOcean

China Healthcare Weekly (Jan.22)

The article analyzed the new official document for the volume-based purchase,industry viewpoints on China cryogenic storage market and “AI +...

Xinyao (Criss) Wang

Legend Biotech (LEGN.US) Offer Update - Some New Information About the Takeover Worth the Attention

The potential takeover seems reliable.Genscript will be a big winner but it's uncertain whether Genscript will offer dividends to small/medium...

Xinyao (Criss) Wang

China Healthcare Weekly (Apr.21) - M&As in Biotech, Capital Is Bullish on Non-Tumor Sectors, Tofflon

MNCs acquiring Chinese biotech companies, but domestic big pharma may not follow suit.Investment focus shifting to non-oncology fields.Tofflon is...

Xinyao (Criss) Wang

China Healthcare Weekly (Dec.31)-New Medical Device Policy, AstraZeneca to Acquire Gracell, PD-1+ADC

As new policy prohibits public hospitals from borrowing to purchase medical device, investment logic changes. AZ-Gracell deal has epoch-making...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Opportunities and Challenges Hidden in the CGT Industry in China

GT (Cell and Gene Therapy) is a sector with high growth potential. CAR-T, as one of the main CGT currently, presents great value for both doctors...

EqualOcean

China Healthcare Weekly (Jan.22)

The article analyzed the new official document for the volume-based purchase,industry viewpoints on China cryogenic storage market and “AI +...

Xinyao (Criss) Wang

Legend Biotech (LEGN.US) Offer Update - Some New Information About the Takeover Worth the Attention

The potential takeover seems reliable.Genscript will be a big winner but it's uncertain whether Genscript will offer dividends to small/medium...

Xinyao (Criss) Wang

China Healthcare Weekly (Apr.21) - M&As in Biotech, Capital Is Bullish on Non-Tumor Sectors, Tofflon

​MNCs acquiring Chinese biotech companies, but domestic big pharma may not follow suit.Investment focus shifting to non-oncology fields.Tofflon is...

Xinyao (Criss) Wang

China Healthcare Weekly (Dec.31)-New Medical Device Policy, AstraZeneca to Acquire Gracell, PD-1+ADC

As new policy prohibits public hospitals from borrowing to purchase medical device, investment logic changes. AZ-Gracell deal has epoch-making...

Xinyao (Criss) Wang

MNCs acquiring Chinese biotech companies, but domestic big pharma may not follow suit.Investment focus shifting to non-oncology fields.Tofflon is...