Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

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

Equity Bottom-Up

<ul>
<li>We believe RemeGen has bottom fishing value because its Systemic Lupus Erythematosus (SLE) drug Telitacicept (RC18) has already been approved for sale in China.</li>
<li>Earliest data read in US clinical trial for IgA Nephropathy is already available, with SLE data read available in C3Q24 and MS in C4Q24;</li>
<li>We don’t think a leading biotech from the wealthy city of Yantai will run out of cash. We assume RemeGen will be able to mitigate its liquidity problem.</li>
</ul>


We believe RemeGen has bottom fishing value because its Systemic Lupus Erythematosus (SLE) drug Telitacicept (RC18) has already been approved for sale in China.
Earliest data read in US clinical trial for IgA Nephropathy is already available, with SLE data read available in C3Q24 and MS in C4Q24;
We don’t think a leading biotech from the wealthy city of Yantai will run out of cash. We assume RemeGen will be able to mitigate its liquidity problem.


[RemeGen (9995 HK, BUY, TP HK$34) Rating Change]: Time to Do Some Bottom Fishing…UG to BUY

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>One direct reason for the sharp drop in stock prices is that RemeGen's performance in 23Q4 would miss expectation, thus leading to disappointing performance for the entire year of 2023.</li>
<li>Due to low competitiveness of pipelines, product sales are hard to bring sufficient cashflow.Prospects for future license-out deals are still uncertain. RemeGen may find it difficult to turn the tide.</li>
<li>Reasonable market value of Remegen should be above RMB12 billion. Investors can participate in the rebounds after stock price plunge, but we do not recommend holding for the long term.</li>
</ul>


One direct reason for the sharp drop in stock prices is that RemeGen's performance in 23Q4 would miss expectation, thus leading to disappointing performance for the entire year of 2023.
Due to low competitiveness of pipelines, product sales are hard to bring sufficient cashflow.Prospects for future license-out deals are still uncertain. RemeGen may find it difficult to turn the tide.
Reasonable market value of Remegen should be above RMB12 billion. Investors can participate in the rebounds after stock price plunge, but we do not recommend holding for the long term.


Remegen (9995.HK/688331.CH) - The Real Reasons for the Stock Price Collapse and the Future Prospects

<ul>
<li>Although RemeGen’s 23Q1-Q3 sales was better-than-expected, the Company is difficult to achieve management's performance guidance for 2023. Since RemeGen’s commercialization logic has “undeniable flaws”, net loss would be further widened.</li>
<li>Cash balance of RemeGen was just RMB600 million by 23Q3, which is not enough to cover its high R&amp;D/SG&amp;A expenses. If RemeGen cannot secure sufficient financing timely, risks are significant.</li>
<li>The current valuation and investors’ expectations for RemeGen largely rely on the potential license-out deal of RC18. However, we remain caution until RC18 has sufficient evidence to win head-to-head trial.</li>
</ul>


Although RemeGen’s 23Q1-Q3 sales was better-than-expected, the Company is difficult to achieve management's performance guidance for 2023. Since RemeGen’s commercialization logic has “undeniable flaws”, net loss would be further widened.
Cash balance of RemeGen was just RMB600 million by 23Q3, which is not enough to cover its high R&amp;D/SG&amp;A expenses. If RemeGen cannot secure sufficient financing timely, risks are significant.
The current valuation and investors’ expectations for RemeGen largely rely on the potential license-out deal of RC18. However, we remain caution until RC18 has sufficient evidence to win head-to-head trial.


Remegen (9995.HK/688331.CH) - The Survival Problem Is Becoming Imminent

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 monthly Hong Kong Connect flows with our data engine.</li>
<li>We tabulate the top stocks by inflows, outflows, and holding by mainland investors.</li>
<li>We highlight flows for BOC, Tencent, China Mobile, ZTO Express, Anta Sports.</li>
</ul>


We analyze the monthly Hong Kong Connect flows with our data engine.
We tabulate the top stocks by inflows, outflows, and holding by mainland investors.
We highlight flows for BOC, Tencent, China Mobile, ZTO Express, Anta Sports.


Hong Kong Connect Flows (April): 12M High of $10.7bn Inflows

<ul>
<li>RemeGen’s 23H1 results were unsatisfactory. We also have concerns about its future sales performance. The core reason behind is the disorganized pipeline layout, leading to inefficient sales system/high cost.</li>
<li>RemeGen's core technologies are mostly in-licensed from third parties. At first, RemeGen just hoped to develop drugs/build pipeline through these technologies, without considering the potential challenges of commercialization ahead.</li>
<li>The anti-corruption campaign could negatively affected RemeGen's 23H2 performance. The Company could fail to meet management's guidance for 2023. We lowered our valuation of RemeGen to RMB12 billion-18 billion.</li>
</ul>


RemeGen’s 23H1 results were unsatisfactory. We also have concerns about its future sales performance. The core reason behind is the disorganized pipeline layout, leading to inefficient sales system/high cost.
RemeGen's core technologies are mostly in-licensed from third parties. At first, RemeGen just hoped to develop drugs/build pipeline through these technologies, without considering the potential challenges of commercialization ahead.
The anti-corruption campaign could negatively affected RemeGen's 23H2 performance. The Company could fail to meet management's guidance for 2023. We lowered our valuation of RemeGen to RMB12 billion-18 billion.


Remegen (9995.HK/688331.CH) 23H1 - This Is Why RemeGen’s Commercialization Performance Is so Weak

China

RemeGen Co., Ltd. operates biotechnology businesses. The Company develops therapeutic antibody drugs such as antibody drug conjugates (ADC), antibody fusion proteins, monoclonal antibodies and double antibodies. RemeGen provides solutions autoimmune diseases, tumor diseases, and ophthalmic diseases.

Remegen (9995 HK)

[RemeGen (9995 HK, BUY, TP HK$34) Rating Change]: Time to Do Some Bottom Fishing…UG to BUY

RemeGen's approved SLE drug in China and available data from clinical trials suggest potential value, despite liquidity concerns.We thus upgrade...

Blue Lotus Research Institute

Remegen (9995.HK/688331.CH) - The Real Reasons for the Stock Price Collapse and the Future Prospects

RemeGen's 23Q4 results will miss expectation, leading to poor performance for 2023.The pain point isn't cashflow shortage but weak...

Xinyao (Criss) Wang

Remegen (9995.HK/688331.CH) - The Survival Problem Is Becoming Imminent

Due to “undeniable flaw” in commercialization logic, RemeGen has to face high cost/low efficiency, leading to increasing net loss.RemeGen is short...

Xinyao (Criss) Wang

Hong Kong Connect Flows (April): 12M High of $10.7bn Inflows

We analyzed the Hong Kong Connect Scheme for April and highlight flows for BOC, Tencent, China Mobile, ZTO Express, Anta Sports.

Ke Yan, CFA, FRM

Remegen (9995.HK/688331.CH) 23H1 - This Is Why RemeGen’s Commercialization Performance Is so Weak

RemeGen's share price performed well recently. But we think it could be a good time for investors to consider offload - The Company is actually...

Xinyao (Criss) Wang

[RemeGen (9995 HK, BUY, TP HK$34) Rating Change]: Time to Do Some Bottom Fishing…UG to BUY

​RemeGen's approved SLE drug in China and available data from clinical trials suggest potential value, despite liquidity concerns.We thus upgrade...

Blue Lotus Research Institute

Remegen (9995.HK/688331.CH) - The Real Reasons for the Stock Price Collapse and the Future Prospects

RemeGen's 23Q4 results will miss expectation, leading to poor performance for 2023.The pain point isn't cashflow shortage but weak...

Xinyao (Criss) Wang

Remegen (9995.HK/688331.CH) - The Survival Problem Is Becoming Imminent

Due to “undeniable flaw” in commercialization logic, RemeGen has to face high cost/low efficiency, leading to increasing net loss.RemeGen is short...

Xinyao (Criss) Wang

Hong Kong Connect Flows (April): 12M High of $10.7bn Inflows

We analyzed the Hong Kong Connect Scheme for April and highlight flows for BOC, Tencent, China Mobile, ZTO Express, Anta Sports.

Ke Yan, CFA, FRM

Remegen (9995.HK/688331.CH) 23H1 - This Is Why RemeGen’s Commercialization Performance Is so Weak

RemeGen's share price performed well recently. But we think it could be a good time for investors to consider offload - The Company is actually...

Xinyao (Criss) Wang

RemeGen's approved SLE drug in China and available data from clinical trials suggest potential value, despite liquidity concerns.We thus upgrade...