China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>LI: Li Auto unveils all-electric solution and makes its AD Max 3.0 free (+)</li>
<li>9995HK: Hengrui disclosed the results of its HER2 ADC phase III clinical trial and will become a strong competitor in the ADC track(-)</li>
<li>LGEN:Novartis Signs Legend Bio/Johnson &amp; Johnson to help produce CAR-T(+)</li>
</ul>


LI: Li Auto unveils all-electric solution and makes its AD Max 3.0 free (+)
9995HK: Hengrui disclosed the results of its HER2 ADC phase III clinical trial and will become a strong competitor in the ADC track(-)
LGEN:Novartis Signs Legend Bio/Johnson &amp; Johnson to help produce CAR-T(+)


China TMT Update (Apr.19) - LI/9995HK/LGEN:Li Auto Unveils All-Electric Solution

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Gracell Biotechnologies Inc / Equity Bottom-Up

<ul>
<li>Although the pipeline has characteristics, Gracell’s R&amp;D progress cannot catch up with the speed of the transformation of global CGT investment climate. Its commercialization performance could be much lower than expected. </li>
<li>There’s “practical obstacles” for the use of CAR-T, which cannot solve the actual clinical needs at this stage. Doctors would choose other solutions. So, the actual market space is small.</li>
<li>Investors can do short-term trade when Gracell’s valuation is lower than peers, but due to the highly uncertain long-term prospects of this company, we do not recommend long-term hold.</li>
</ul>


Although the pipeline has characteristics, Gracell’s R&amp;D progress cannot catch up with the speed of the transformation of global CGT investment climate. Its commercialization performance could be much lower than expected. 
There’s “practical obstacles” for the use of CAR-T, which cannot solve the actual clinical needs at this stage. Doctors would choose other solutions. So, the actual market space is small.
Investors can do short-term trade when Gracell’s valuation is lower than peers, but due to the highly uncertain long-term prospects of this company, we do not recommend long-term hold.


Gracell Biotechnologies Inc (GRCL.US) - The Overall Outlook for CAR T Therapy Is Highly Uncertain

<ul>
<li>Pharmaron’s disappointing 2022 performance is just a start.Its business layout has always been "one step behind". CGT cannot become the main cornerstone business supporting valuation growth for the next stage.</li>
<li>The overall environment of CXO is different from that of the past. Even if Pharmaron finally achieves end-to-end integration,whether the prosperity of CXO industry still exists is a question mark.</li>
<li>Pharmaron may have entered a vicious circle, so that it is very challenging to generate the expected results no matter which direction the Company tries to break through.  </li>
</ul>


Pharmaron’s disappointing 2022 performance is just a start.Its business layout has always been "one step behind". CGT cannot become the main cornerstone business supporting valuation growth for the next stage.
The overall environment of CXO is different from that of the past. Even if Pharmaron finally achieves end-to-end integration,whether the prosperity of CXO industry still exists is a question mark.
Pharmaron may have entered a vicious circle, so that it is very challenging to generate the expected results no matter which direction the Company tries to break through.  


Pharmaron Beijing Co Ltd (3759.HK/300759.CH) - Start to Enter a Vicious Circle

<ul>
<li>Genscript doesn’t equal to CGT CXO or cell therapy company,although these two businesses have attracted a lot of attention. It’s inappropriate to look at Genscript only from these two perspectives.</li>
<li>Genscript’s strength and core basic business is gene synthesis,which would remain promising growth. We’re also optimistic about Bestzyme. The chaos in CGT field won’t have a material impact on Genscript. </li>
<li>Investing a company/stock is essentially investing the people. Although Genscript has its core competence, our concern about this company lies in the management. Short-term trading is more appropriate for Genscript.</li>
</ul>


Genscript doesn’t equal to CGT CXO or cell therapy company,although these two businesses have attracted a lot of attention. It’s inappropriate to look at Genscript only from these two perspectives.
Genscript’s strength and core basic business is gene synthesis,which would remain promising growth. We’re also optimistic about Bestzyme. The chaos in CGT field won’t have a material impact on Genscript. 
Investing a company/stock is essentially investing the people. Although Genscript has its core competence, our concern about this company lies in the management. Short-term trading is more appropriate for Genscript.


Genscript Biotech (1548.HK) - Inadequate Cognition Will Lead to Bad Investment Decisions

<ul>
<li>The benefits of assisted reproduction being covered by medical insurance are limited. Its main role is still to delay not fundamentally reverse the decline of China's birth rate.</li>
<li>If the valuation collapse occurs collectively in one field, it basically reflects that Miss Market does not hold much hope for this field in the future, such as cell therapy. </li>
<li>We mainly analyzed some key points of the companies that investors may be interested in, such as <a href="https://www.smartkarma.com/entities/iray-technology-company-limited" target="_blank" data-smartkarma-citation="entities:35716:1" rel="noopener">iRay Technology (688301 CH)</a> and <a href="https://www.smartkarma.com/entities/shanghai-medicilon-inc" target="_blank" data-smartkarma-citation="entities:30368:1" rel="noopener">Shanghai Medicilon Inc (688202 CH)</a>.</li>
</ul>


The benefits of assisted reproduction being covered by medical insurance are limited. Its main role is still to delay not fundamentally reverse the decline of China's birth rate.
If the valuation collapse occurs collectively in one field, it basically reflects that Miss Market does not hold much hope for this field in the future, such as cell therapy. 
We mainly analyzed some key points of the companies that investors may be interested in, such as iRay Technology (688301 CH) and Shanghai Medicilon Inc (688202 CH).


China Healthcare Weekly (Feb.10) - Assisted Reproduction into NRDL, Cell Therapy, Medicilon, IRay,

China

Legend Biotech Corporation operates as a biopharmaceutical company. The Company engages in discovery and development of novel cell therapies for oncology and other indications. Legend Biotech serves customers in the State of New Jersey.

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Legend Biotech Corp (LEGN US)

China TMT Update (Apr.19) - LI/9995HK/LGEN:Li Auto Unveils All-Electric Solution

LI: Li Auto unveils all-electric solution (+)； 9995HK: Hengrui disclosed the results of its HER2 ADC phase III clinical trial；LGEN:Novartis Signs...

Blue Lotus Research Institute

Gracell Biotechnologies Inc (GRCL.US) - The Overall Outlook for CAR T Therapy Is Highly Uncertain

When the market pays more attention to companies' growth certainty, the investment value of Gracell has been transferred from R&D progress to...

Xinyao (Criss) Wang

Pharmaron Beijing Co Ltd (3759.HK/300759.CH) - Start to Enter a Vicious Circle

Due to slow layout in end-to-end integration/high uncertainty in CGT, Pharmaron has entered a vicious circle as CXO's fast-growing dividend period...

Xinyao (Criss) Wang

Genscript Biotech (1548.HK) - Inadequate Cognition Will Lead to Bad Investment Decisions

Genscript doesn’t equal to CGT CXO. Its core competitiveness is gene synthesis,which has larger potential than expected. However,there're concerns...

Xinyao (Criss) Wang

China Healthcare Weekly (Feb.10) - Assisted Reproduction into NRDL, Cell Therapy, Medicilon, IRay,

Medical insurance coverage of assisted reproduction has limited positive effects;Mr Market may not hold much hope for cell therapy after valuation...

Xinyao (Criss) Wang

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