HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Ascentage Pharma Group Corp / Equity Capital Markets

<ul>
<li>Our forecast is sales of olverembatinib in 2025 could reach RMB500mn. APG-2575 is better than Sonrotoclax in ORR/safety profile, but global commercialization success is not simply determined by clinical data.</li>
<li>Placing price of HK$68.6/share has priced in the successful licensing deal of APG-2575 to some extent, which however is not a done deal. US$1.5-2.375bn is a more reasonable valuation range.</li>
<li>The big rally in biotech sector is not based on fundamental inflection point. The driving mentality behind the valuation bubble this time has a more obvious nature of “short-term gambling”.  </li>
</ul>


Our forecast is sales of olverembatinib in 2025 could reach RMB500mn. APG-2575 is better than Sonrotoclax in ORR/safety profile, but global commercialization success is not simply determined by clinical data.
Placing price of HK$68.6/share has priced in the successful licensing deal of APG-2575 to some extent, which however is not a done deal. US$1.5-2.375bn is a more reasonable valuation range.
The big rally in biotech sector is not based on fundamental inflection point. The driving mentality behind the valuation bubble this time has a more obvious nature of “short-term gambling”.  


Ascentage Pharma (6855.HK) Placement - Thoughts on The Placing Price and the Outlook

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.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of May 16th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for CCB, BOC, CMB, China Shenhua Energy, CNOOC, Tencent, Xiaomi, SMIC, Cosco Shipping.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of May 16th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for CCB, BOC, CMB, China Shenhua Energy, CNOOC, Tencent, Xiaomi, SMIC, Cosco Shipping.


HK Connect Flows Weekly (May 16th): Biggest Weekly Outflows in a Year

Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>Celltrion received FDA approval for Omlyclo, the first and only biosimilar designated as interchangeable with Xolair. Ono Pharmaceutical in-licensed drug candidate for polycythemia vera from Ionis Pharmaceuticals.</li>
<li>Sun Pharmaceutical will acquire Checkpoint Therapeutics for an upfront cash payment of $4.10 per share. Syngene is acquiring Emergent’s biologics facility in Baltimore for $36.5M.</li>
<li>Zydus Lifesciences is acquiring 85.6% stake in in Amplitude Surgical for €257M. Sichuan Kelun received China approval for sacituzumab tirumotecan for certain types of non-small cell lung cancer.</li>
</ul>


Celltrion received FDA approval for Omlyclo, the first and only biosimilar designated as interchangeable with Xolair. Ono Pharmaceutical in-licensed drug candidate for polycythemia vera from Ionis Pharmaceuticals.
Sun Pharmaceutical will acquire Checkpoint Therapeutics for an upfront cash payment of $4.10 per share. Syngene is acquiring Emergent’s biologics facility in Baltimore for $36.5M.
Zydus Lifesciences is acquiring 85.6% stake in in Amplitude Surgical for €257M. Sichuan Kelun received China approval for sacituzumab tirumotecan for certain types of non-small cell lung cancer.


APAC Healthcare Weekly (Mar 16)- Celltrion, Ono Pharma, Sun Pharma, Syngene, Zydus, Sichuan Kelun

Sunshine Lake Pharma / Equity Capital Markets

<ul>
<li>Most revenue was contributed by Kewei, but kewei has been included in VBP.Together with increasing competition, the outlook is gloomy if Sunshine Lake Pharma continues to mainly rely on Kewei.</li>
<li>There’s a significant gap in Sunshine Lake Pharma's R&amp;D progress/clinical data compared to the products of peers.The pipeline has been “disconnected” from the level of domestic biotech in recent years</li>
<li>Sunshine Lake Pharma is inferior to other pharmaceutical companies in China.Even if CJ Pharma will be merged into Sunshine Lake Pharma, its market value should be lower than leading Biotech.</li>
</ul>


Most revenue was contributed by Kewei, but kewei has been included in VBP.Together with increasing competition, the outlook is gloomy if Sunshine Lake Pharma continues to mainly rely on Kewei.
There’s a significant gap in Sunshine Lake Pharma's R&amp;D progress/clinical data compared to the products of peers.The pipeline has been “disconnected” from the level of domestic biotech in recent years
Sunshine Lake Pharma is inferior to other pharmaceutical companies in China.Even if CJ Pharma will be merged into Sunshine Lake Pharma, its market value should be lower than leading Biotech.


Pre-IPO Sunshine Lake Pharma - “Outdated” Pipeline Is Difficult to Obtain Decent Valuation

Equity Bottom-Up

<ul>
<li>Relevant departments are discussing the promotion of drugs included in VBP scope to enter retail pharmacies. However, the new business model will be detrimental to valuation performance for retail pharmacies.</li>
<li>The gap in the distribution of funds among biotech companies is rapidly widening. We suggest investors focus on leading biotech rather than take risks in areas with higher uncertainties.</li>
<li>Vesync is a good company. Due to the low liquidity, the Proposal presents a good opportunity for shareholders to exit. Considering its future growth potential, Share Alternative can be considered.</li>
</ul>


Relevant departments are discussing the promotion of drugs included in VBP scope to enter retail pharmacies. However, the new business model will be detrimental to valuation performance for retail pharmacies.
The gap in the distribution of funds among biotech companies is rapidly widening. We suggest investors focus on leading biotech rather than take risks in areas with higher uncertainties.
Vesync is a good company. Due to the low liquidity, the Proposal presents a good opportunity for shareholders to exit. Considering its future growth potential, Share Alternative can be considered.


China Healthcare Weekly (Feb.9) - Vesync Is a High-Quality Company, VBP to Cover Retail Pharmacies

Hong Kong

HUTCHMED (China) Limited develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. HUTCHMED (China) markets its products worldwide.

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Hutchmed China Ltd (13 HK)

Ascentage Pharma (6855.HK) Placement - Thoughts on The Placing Price and the Outlook

The Placing price of HK$68.6 has priced in successful licensing deal of APG-2575. US$1.5-2.375bn is a more reasonable valuation. Biotech sector...

Xinyao (Criss) Wang

HK Connect Flows Weekly (May 16th): Biggest Weekly Outflows in a Year

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for CCB, BOC, CMB, China Shenhua Energy, CNOOC, Tencent,...

Ke Yan, CFA, FRM

APAC Healthcare Weekly (Mar 16)- Celltrion, Ono Pharma, Sun Pharma, Syngene, Zydus, Sichuan Kelun

APAC healthcare companies continued to get approvals for new products and initiates clinical trials. The companies continued with acquisitions and...

Tina Banerjee

Pre-IPO Sunshine Lake Pharma - “Outdated” Pipeline Is Difficult to Obtain Decent Valuation

Sunshine Lake Pharma is heavily relying on Kewei, leading to a gloomy outlook due to competition/VBP. Pipeline has been “disconnected” from the...

Xinyao (Criss) Wang

China Healthcare Weekly (Feb.9) - Vesync Is a High-Quality Company, VBP to Cover Retail Pharmacies

Promoting VBP in retail pharmacy may harm valuation.Biotech funding gap widens, investors advised to focus on leading companies. Vesync is a good...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Ascentage Pharma (6855.HK) Placement - Thoughts on The Placing Price and the Outlook

The Placing price of HK$68.6 has priced in successful licensing deal of APG-2575. US$1.5-2.375bn is a more reasonable valuation. Biotech sector...

Xinyao (Criss) Wang

HK Connect Flows Weekly (May 16th): Biggest Weekly Outflows in a Year

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for CCB, BOC, CMB, China Shenhua Energy, CNOOC, Tencent,...

Ke Yan, CFA, FRM

APAC Healthcare Weekly (Mar 16)- Celltrion, Ono Pharma, Sun Pharma, Syngene, Zydus, Sichuan Kelun

APAC healthcare companies continued to get approvals for new products and initiates clinical trials. The companies continued with acquisitions and...

Tina Banerjee

Pre-IPO Sunshine Lake Pharma - “Outdated” Pipeline Is Difficult to Obtain Decent Valuation

​Sunshine Lake Pharma is heavily relying on Kewei, leading to a gloomy outlook due to competition/VBP. Pipeline has been “disconnected” from the...

Xinyao (Criss) Wang

China Healthcare Weekly (Feb.9) - Vesync Is a High-Quality Company, VBP to Cover Retail Pharmacies

Promoting VBP in retail pharmacy may harm valuation.Biotech funding gap widens, investors advised to focus on leading companies. Vesync is a good...

Xinyao (Criss) Wang

Sunshine Lake Pharma is heavily relying on Kewei, leading to a gloomy outlook due to competition/VBP. Pipeline has been “disconnected” from the...