HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

Industry viewpoints:<ul>
<li>Recently, the results of the 7th demographic census was released, which is expected to drive the demand of the assisted reproduction industry.</li>
<li>The Ministry of Commerce, the State Administration of Traditional Chinese Medicine (TCM) and other seven departments jointly issued an announcement to support the development of TCM service trade and the promotion of TCM going global.</li>
<li>The room for import substitution in China chromatography packing/chromatographic medium industry would be very large.</li>
</ul>Company news:News about the updated progress on drugs and acquisition of <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>, <a href="https://www.smartkarma.com/entities/shenzhen-mindray-bio-medic-a" target="_blank" data-smartkarma-citation="entities:28017:1" rel="noopener">Shenzhen Mindray Bio-Medical Electronics (300760 CH)</a>, <a href="https://www.smartkarma.com/entities/everest-medicines-ltd" target="_blank" data-smartkarma-citation="entities:29224:1" rel="noopener">Everest Medicines (1952 HK)</a> and <a href="https://www.smartkarma.com/entities/innocare-pharma-ltd" target="_blank" data-smartkarma-citation="entities:28355:1" rel="noopener">InnoCare Pharma Ltd (9969 HK)</a>.Market review:Last week, stock price for healthcare sector in A share decreased 0.69%, while CSI 300 increased 0.46% over the same period of time.Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Industry viewpoints:
Recently, the results of the 7th demographic census was released, which is expected to drive the demand of the assisted reproduction industry.
The Ministry of Commerce, the State Administration of Traditional Chinese Medicine (TCM) and other seven departments jointly issued an announcement to support the development of TCM service trade and the promotion of TCM going global.
The room for import substitution in China chromatography packing/chromatographic medium industry would be very large.
Company news:News about the updated progress on drugs and acquisition of Innovent Biologics Inc (1801 HK), Shenzhen Mindray Bio-Medical Electronics (300760 CH), Everest Medicines (1952 HK) and InnoCare Pharma Ltd (9969 HK).Market review:Last week, stock price for healthcare sector in A share decreased 0.69%, while CSI 300 increased 0.46% over the same period of time.Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Equity Bottom-Up

On February 3rd, 2021, <a href="https://www.smartkarma.com/entities/innocare-pharma-ltd" target="_blank" data-smartkarma-citation="entities:28355:1" rel="noopener">InnoCare Pharma Ltd (9969 HK)</a> announced two subscription agreements with Hillhouse and Vivo Capital. The two investors subscribed 191,613,000 and 18,895,000 new shares respectively, for a total of 210,508,000 new Shares, representing about 16.33% of the existing total issued Shares of the Company as at the date of this announcement and approximately 14.04% of the total issued shares of the Company as enlarged by the allotment and issue of the subscription shares. The subscription price of HK$14.45/share represents an 8.32% premium to the average closing price of the five trading days immediately preceding the date of the subscription agreements (not including 2 February 2021). Source: InnoCare Official WebsiteInnoCare has been invested by two leading funds because in addition to orelabrutinib, which was approved for marketing at the end of last year, the Company has developed a balanced pipeline of over 10 drug candidates for the treatment of malignant tumors and autoimmune diseases. InnoCare’s core value of "Science Drives Innovation" is highly recognized.

On February 3rd, 2021, InnoCare Pharma Ltd (9969 HK) announced two subscription agreements with Hillhouse and Vivo Capital. The two investors subscribed 191,613,000 and 18,895,000 new shares respectively, for a total of 210,508,000 new Shares, representing about 16.33% of the existing total issued Shares of the Company as at the date of this announcement and approximately 14.04% of the total issued shares of the Company as enlarged by the allotment and issue of the subscription shares. The subscription price of HK$14.45/share represents an 8.32% premium to the average closing price of the five trading days immediately preceding the date of the subscription agreements (not including 2 February 2021). Source: InnoCare Official WebsiteInnoCare has been invested by two leading funds because in addition to orelabrutinib, which was approved for marketing at the end of last year, the Company has developed a balanced pipeline of over 10 drug candidates for the treatment of malignant tumors and autoimmune diseases. InnoCare’s core value of "Science Drives Innovation" is highly recognized. 

InnoCare Pharma Ltd (9969.HK) - What Attracts Both Hillhouse and Vivo Capital?

Equity Capital Markets

Since China planned to pilot registration-based IPO system, more and more eligible unprofitable biotech companies are allowed to go public. <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a> would be the next one. The Company is going to list on the STAR market. Founded in Beijing in 2010, BeiGene is the most representative of the early biotech companies, and it has become a giant now, with a market value of about HK$254 billion on February 1, or less than half of that of <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH) </a>(around RMB550 billion). Meanwhile, different from Hengrui’s strategy, which adheres more to the independent R&amp;D and control of core technology and related rights, BeiGene is better at capital operation - Most of the products in pipeline are from license-in mode, and the Company is continuously suffering from losses. So, would the IPO on the STAR market be the last hurrah?

Since China planned to pilot registration-based IPO system, more and more eligible unprofitable biotech companies are allowed to go public. BeiGene Ltd (6160 HK) would be the next one. The Company is going to list on the STAR market. Founded in Beijing in 2010, BeiGene is the most representative of the early biotech companies, and it has become a giant now, with a market value of about HK$254 billion on February 1, or less than half of that of Jiangsu Hengrui Medicine (600276 CH) (around RMB550 billion). Meanwhile, different from Hengrui’s strategy, which adheres more to the independent R&amp;D and control of core technology and related rights, BeiGene is better at capital operation - Most of the products in pipeline are from license-in mode, and the Company is continuously suffering from losses. So, would the IPO on the STAR market be the last hurrah?

Pre-IPO BeiGene - Would the IPO on the STAR Market Be the Last Hurrah?

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

We spend a substantial portion of our time thinking about oncology in China: one of the largest unmet needs in healthcare globally. The World Health Organization estimates that there are 4.3 million new cases and 2.9 million deaths annually. Historically, treatment options have been limited compared to the US, EU, and many of China’s neighbors. Fortunately, the government has implemented several reforms in recent years to accelerate development and importation of innovative treatments and to provide reimbursement for them. This Insight includes names to consider for two approaches to invest in this opportunity:1) Invest in the leading multi-asset oncology companies.2) Invest in a basket of companies with narrower oncology offerings.

We spend a substantial portion of our time thinking about oncology in China: one of the largest unmet needs in healthcare globally. The World Health Organization estimates that there are 4.3 million new cases and 2.9 million deaths annually. Historically, treatment options have been limited compared to the US, EU, and many of China’s neighbors. Fortunately, the government has implemented several reforms in recent years to accelerate development and importation of innovative treatments and to provide reimbursement for them. This Insight includes names to consider for two approaches to invest in this opportunity:1) Invest in the leading multi-asset oncology companies.2) Invest in a basket of companies with narrower oncology offerings.

BeiGene: Cancer Treatment in China--The Underestimated Opportunity

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Member of the Hang Seng Composite Index (HSCI) are included in the Southbound Stock Connect program if their market cap exceeds HK$5bn. However, Secondary Listings and Biotech stocks that listed under Chapter 18A of the Listing Rules were excluded from the Stock Connect program.This headline "*H.K. TO INCLUDE SECONDARY-LISTED COS IN STOCK CONNECT: SING TAO" could drive stocks that are HSCI members but not a part of Stock Connect higher. If Chapter 18A listed Biotech stocks are added to Stock Connect, they could run even more.In this Insight, we take a look at stocks that are a part of the HSCI or are expected to join the HSCI in the next review and could be eligible to be included in the Stock Connect program.

Member of the Hang Seng Composite Index (HSCI) are included in the Southbound Stock Connect program if their market cap exceeds HK$5bn. However, Secondary Listings and Biotech stocks that listed under Chapter 18A of the Listing Rules were excluded from the Stock Connect program.This headline "*H.K. TO INCLUDE SECONDARY-LISTED COS IN STOCK CONNECT: SING TAO" could drive stocks that are HSCI members but not a part of Stock Connect higher. If Chapter 18A listed Biotech stocks are added to Stock Connect, they could run even more.In this Insight, we take a look at stocks that are a part of the HSCI or are expected to join the HSCI in the next review and could be eligible to be included in the Stock Connect program.

Stock Connect - Secondary Listings and Biotech Stocks to Become Eligible?

China

InnoCare Pharma Limited researches, develops, manufactures, and distributes pharmaceuticals. The Company produces antibiotic drugs, respiratory drugs, cardiovascular drugs, vitamin tablets, health care drugs, and other related products. InnoCare Pharma markets its products throughout China.

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InnoCare Pharma Ltd (9969 HK)

China Healthcare Weekly (May.21)

The article analyzed the results and potential impact of the 7th demographic census,new policy on TCM market,insights on China chromatography...

Xinyao (Criss) Wang