HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Simcere Pharmaceutical Group / Equity Bottom-Up

<ul>
<li>Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. </li>
<li>The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.</li>
<li>In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.</li>
</ul>


Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. 
The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.
In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.


Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

Equity Capital Markets

Beijing Continent Pharmaceuticals / Equity Capital Markets

<ul>
<li>With favorable policies and improved intellectual property protection, investors' attitude towards rare diseases in China has changed significantly and become more interested in this field.</li>
<li>Since no new candidates would be commercialized until 2024, <a href="https://www.smartkarma.com/entities/beijing-continent-pharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:35664:1" rel="noopener">Beijing Continent Pharmaceuticals (CPH HK)</a> could face increasing competition and financial pressure. The breakthrough point is to develop overseas markets.</li>
<li>In terms of valuation, Continent is better than <a href="https://www.smartkarma.com/entities/canbridge-pharmaceuticals-inc" target="_blank" data-smartkarma-citation="entities:33783:1" rel="noopener">CANbridge Pharmaceuticals (1228 HK)</a>, so it is expected to have higher valuation than CANbridge after listing.</li>
</ul>


With favorable policies and improved intellectual property protection, investors' attitude towards rare diseases in China has changed significantly and become more interested in this field.
Since no new candidates would be commercialized until 2024, Beijing Continent Pharmaceuticals (CPH HK) could face increasing competition and financial pressure. The breakthrough point is to develop overseas markets.
In terms of valuation, Continent is better than CANbridge Pharmaceuticals (1228 HK), so it is expected to have higher valuation than CANbridge after listing.


Pre-IPO Beijing Continent Pharmaceuticals - The Orphan Drug Pioneer Needs to Expand Overseas

<ul>
<li>BeiGene’s product sales in 2022H1 more than doubled YoY, which was a positive sign for commercialization. However, net loss further widened, mainly due to significantly high R&amp;D and SG&amp;A expenses.</li>
<li>Tislelizumab and zanubrutinib are not enough to support BeiGene’s high valuation. The success or failure of TIGIT project will be the key to determine how far BeiGene will go.</li>
<li>So far, it is still an indisputable fact that BeiGene has profitability issues. That's why it's hard for us to be optimistic about this company. </li>
</ul>


BeiGene’s product sales in 2022H1 more than doubled YoY, which was a positive sign for commercialization. However, net loss further widened, mainly due to significantly high R&amp;D and SG&amp;A expenses.
Tislelizumab and zanubrutinib are not enough to support BeiGene’s high valuation. The success or failure of TIGIT project will be the key to determine how far BeiGene will go.
So far, it is still an indisputable fact that BeiGene has profitability issues. That's why it's hard for us to be optimistic about this company. 


BeiGene (6160.HK/BGNE.US) 22H1- It Is an Indisputable Fact that BeiGene Is Difficult to Make Profits

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 Shanghai/Shenzhen northbound Connect flows with our data engine for record date as of Aug 5th.</li>
<li>Outflows from financials, industrials, materials were offset by inflows into information technology, consumer staples and health care.</li>
<li>We highlight outflows from Sanhua, Baoshan Iron, Sungrow, Han's Laser, Changchun High &amp; New Tech.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for record date as of Aug 5th.
Outflows from financials, industrials, materials were offset by inflows into information technology, consumer staples and health care.
We highlight outflows from Sanhua, Baoshan Iron, Sungrow, Han's Laser, Changchun High &amp; New Tech.


Northbound Flows: Sanhua, Baoshan Iron, Sungrow, Han's Laser, Changchun High

Cali Biosciences / Equity Capital Markets

<ul>
<li>Both the postoperative pain management and the expansive application of anesthetics in various fields would increase the market demand for ropivacaine.</li>
<li>
<a href="https://www.smartkarma.com/entities/cali-biosciences-co-ltd" target="_blank" data-smartkarma-citation="entities:35539:1" rel="noopener">Cali Biosciences (CALI HK)</a>’s core product, the ropivacaine long-acting analgesic injection drug candidate CPL-01, would have to face the challenges of fierce competition, uncertain market acceptance, and negative policy impact.</li>
<li>Together with other concerns such as slow development progress, “not rich enough” pipeline and potential liquidity risk, we are conservative about Cali’s outlook at the current stage.  </li>
</ul>


Both the postoperative pain management and the expansive application of anesthetics in various fields would increase the market demand for ropivacaine.

Cali Biosciences (CALI HK)’s core product, the ropivacaine long-acting analgesic injection drug candidate CPL-01, would have to face the challenges of fierce competition, uncertain market acceptance, and negative policy impact.
Together with other concerns such as slow development progress, “not rich enough” pipeline and potential liquidity risk, we are conservative about Cali’s outlook at the current stage.  


Pre-IPO Cali Biosciences - The Industry, the Business and the Concerns

China

Jiangsu Hengrui Medicine Co., Ltd. develops, manufactures, and markets a variety of medicines and medicine packing materials. The Company's products include anti-tumor medicines, pain-killers, anti-infection medicines, aluminum foil, and other related products.

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Jiangsu Hengrui Medicine (600276 CH)

Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

Simcere’s profit was driven by investment business, which will further decline due to unfriendly macro. The pipeline quality is not high, leading...

Xinyao (Criss) Wang

Pre-IPO Beijing Continent Pharmaceuticals - The Orphan Drug Pioneer Needs to Expand Overseas

Despite promising orphan drug market, with no new drugs commercialized until 2024, Continent will face increasing competition/financial pressure....

Xinyao (Criss) Wang

BeiGene (6160.HK/BGNE.US) 22H1- It Is an Indisputable Fact that BeiGene Is Difficult to Make Profits

Despite improved product sales, BeiGene’s future still depends on TIGIT project. It's hard to make profits due to high R&D and SG&A expenses....

Xinyao (Criss) Wang

Northbound Flows: Sanhua, Baoshan Iron, Sungrow, Han's Laser, Changchun High

Northbound Shanghai/Shenzhen connect recorded outflows of USD 114m last week. We highlight outflows from Sanhua, Baoshan Iron, Sungrow, Han's...

Ke Yan, CFA, FRM

Pre-IPO Cali Biosciences - The Industry, the Business and the Concerns

Cali’s core product will face fierce competition,uncertain market acceptance and negative policy impact. The pipeline isn't rich with slow...

Xinyao (Criss) Wang

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