IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

SciClone Pharmaceuticals / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/sciclone-pharmaceuticals-holdings-limited" target="_blank" data-smartkarma-citation="entities:17351:1" rel="noopener">Sciclone Pharmaceuticals (6600 HK)</a> is a biopharmaceutical company with an integrated platform for product development and commercialisation of drugs in the oncology and severe infection therapeutic areas. </p></div><div><p>In <a href="https://www.smartkarma.com/insights/sciclone-pharmaceuticals-ipo-initiation-a-hard-sell" target="_blank" data-smartkarma-citation="insights:48114" rel="noopener">SciClone Pharmaceuticals IPO Initiation: A Hard Sell</a>, we stated that SciClone is a less than ideal IPO candidate. Despite efforts at diversification, SciClone is highly dependent on a single product, Zadaxin, which was launched in 1996. The risk to Zadaxin’s sales remains undiminished. The large pre-IPO dividends by existing shareholders in face of these challenges also sends the wrong message to potential IPO investors. Overall, on a fundamental basis, we are inclined to give this IPO a pass. </p></div><div><p>SciClone has launched its Hong Kong IPO at an indicative price range of HK$17.20-18.80 per share to raise net proceeds of HK$1,950.4 million ($252 million), at the mid-point of the price range. The raise is materially below the original target of a $500 million raise. Eleven cornerstone investors will subscribe for $133.7 million of the offer shares (49.65% of the offer shares at the mid-point of the IPO price). The cornerstone investors are largely domestic funds and lack international blue-chip names.</p></div><div><div><div class="content-highlight"><p>Relative valuation suggests that SciClone trades at a material discount to peers at the proposed IPO price range. We think that this discount is warranted due to SciClone's heavy reliance on Zadaxin, which faces ongoing challenges. Consequently, we are inclined to give this IPO a pass as our concerns on the fundamentals more than offset the "cheap" valuation.</p></div></div></div>

Sciclone Pharmaceuticals (6600 HK) is a biopharmaceutical company with an integrated platform for product development and commercialisation of drugs in the oncology and severe infection therapeutic areas. In SciClone Pharmaceuticals IPO Initiation: A Hard Sell, we stated that SciClone is a less than ideal IPO candidate. Despite efforts at diversification, SciClone is highly dependent on a single product, Zadaxin, which was launched in 1996. The risk to Zadaxin’s sales remains undiminished. The large pre-IPO dividends by existing shareholders in face of these challenges also sends the wrong message to potential IPO investors. Overall, on a fundamental basis, we are inclined to give this IPO a pass. SciClone has launched its Hong Kong IPO at an indicative price range of HK$17.20-18.80 per share to raise net proceeds of HK$1,950.4 million ($252 million), at the mid-point of the price range. The raise is materially below the original target of a $500 million raise. Eleven cornerstone investors will subscribe for $133.7 million of the offer shares (49.65% of the offer shares at the mid-point of the IPO price). The cornerstone investors are largely domestic funds and lack international blue-chip names.Relative valuation suggests that SciClone trades at a material discount to peers at the proposed IPO price range. We think that this discount is warranted due to SciClone's heavy reliance on Zadaxin, which faces ongoing challenges. Consequently, we are inclined to give this IPO a pass as our concerns on the fundamentals more than offset the "cheap" valuation.

SciClone Pharmaceuticals IPO: Valuation Insights

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

<p>SciClone Pharma, a pharmaceutical company with a focus on sales of oncology and infectious disease drugs in China, has started book building to raise up to USD 281m in its Hong Kong listing.</p><p>In our previous note, we discussed that the company has a long history but has a heavy reliance on a single drug Zadaxin which has dubious efficacy as it has not managed to obtain FDA approval for its otherwise approved indication in China. The company tried to expand the indication based on its ability to enhance the immune system to fight against diseases. The company's near-term revenue driver mainly comes from the consolidation of the sales from Pfizer products after the transfer of rights. However, we think the products from both Pfizer and Baxter are not attractive overall. The products from Baxter have been in the market for decades. Quality of the management team is mediocre with a focus on sales experience and not R&amp;D experience. So is the quality of financial investors which are mostly domestic private equity funds.</p><p>In this note, we look at the deal terms. We think the cornerstone is mediocre and the deal is fairly valued. We will avoid the deal.</p>

SciClone Pharma, a pharmaceutical company with a focus on sales of oncology and infectious disease drugs in China, has started book building to raise up to USD 281m in its Hong Kong listing.In our previous note, we discussed that the company has a long history but has a heavy reliance on a single drug Zadaxin which has dubious efficacy as it has not managed to obtain FDA approval for its otherwise approved indication in China. The company tried to expand the indication based on its ability to enhance the immune system to fight against diseases. The company's near-term revenue driver mainly comes from the consolidation of the sales from Pfizer products after the transfer of rights. However, we think the products from both Pfizer and Baxter are not attractive overall. The products from Baxter have been in the market for decades. Quality of the management team is mediocre with a focus on sales experience and not R&amp;D experience. So is the quality of financial investors which are mostly domestic private equity funds.In this note, we look at the deal terms. We think the cornerstone is mediocre and the deal is fairly valued. We will avoid the deal.

SciClone (赛生药业) IPO: A Mediocre Deal

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Joinn Laboratories China  Lt / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/joinn-laboratories-china-co-a" target="_blank" data-smartkarma-citation="entities:28273:1" rel="noopener">Joinn Laboratories China Co-A (603127 CH)</a> , the pioneer of commercial GLP laboratories in China has filed for a secondary listing to list its shares on the Hong Kong Stock Exchange. The company plans to issue 43.3m shares at an indicative IPO price range of HK$133-151 per share. At the above indicative price range, the company will raise net proceeds of HK$4.8-5.5bn (approx. US$625-710m). Joinn Laboratories shares are currently trading at RMB161.35 per share on the Shenzhen Stock Exchange (approx. HK$137 per share at an exchange rate of 0.83RMB/HK$).</p><p>The company intends to use the above proceeds on expanding the service capacity of its Suzhou facilities, strengthen its operations in the US (Biomere), further strengthening and expanding its facility network and service capabilities and broaden and deepen the company’s integrated CRO service offerings.</p><p>In our previous insight on the company’s IPO, we discussed Joinn Laboratories’ business model, segments and financials. Refer the extract below from our previous insight:</p><div class="content-highlight"><p><em>China’s CRO market is expanding rapidly and Joinn Laboratories stands to benefit from being the market leader in China’s non-clinical drug safety assessment services industry. The company’s revenues have seen strong growth over the past 2-3 years and the company has taken several initiatives to expand its revenue base through the launch of new services and also expanding into overseas markets. Although the company’s gross margin has declined slightly, due to expanding revenues from non-drug safety assessment services, we expect the company’s GPM to improve in the medium-term with clinical trials and related services achieving more scale. We will discuss the company’s valuation and risks in a follow-up insight</em></p></div>

Joinn Laboratories China Co-A (603127 CH) , the pioneer of commercial GLP laboratories in China has filed for a secondary listing to list its shares on the Hong Kong Stock Exchange. The company plans to issue 43.3m shares at an indicative IPO price range of HK$133-151 per share. At the above indicative price range, the company will raise net proceeds of HK$4.8-5.5bn (approx. US$625-710m). Joinn Laboratories shares are currently trading at RMB161.35 per share on the Shenzhen Stock Exchange (approx. HK$137 per share at an exchange rate of 0.83RMB/HK$).The company intends to use the above proceeds on expanding the service capacity of its Suzhou facilities, strengthen its operations in the US (Biomere), further strengthening and expanding its facility network and service capabilities and broaden and deepen the company’s integrated CRO service offerings.In our previous insight on the company’s IPO, we discussed Joinn Laboratories’ business model, segments and financials. Refer the extract below from our previous insight:China’s CRO market is expanding rapidly and Joinn Laboratories stands to benefit from being the market leader in China’s non-clinical drug safety assessment services industry. The company’s revenues have seen strong growth over the past 2-3 years and the company has taken several initiatives to expand its revenue base through the launch of new services and also expanding into overseas markets. Although the company’s gross margin has declined slightly, due to expanding revenues from non-drug safety assessment services, we expect the company’s GPM to improve in the medium-term with clinical trials and related services achieving more scale. We will discuss the company’s valuation and risks in a follow-up insight

JOINN Laboratories IPO: Attractive Valuation; Overseas Expansion Should Open Up Room for LT Growth

<p><a href="https://www.smartkarma.com/entities/sciclone-pharmaceuticals-holdings-limited" target="_blank" data-smartkarma-citation="entities:17351:1" rel="noopener">Sciclone Pharmaceuticals (1863447D HK)</a> , a biopharmaceutical company with an integrated platform for product development and commercialisation has filed for an IPO on the Hong Kong Stock Exchange to raise about US$500m.</p><p>The company focuses on oncology and severe infection as its key focus areas, two of the largest and fastest growing therapeutic areas in China. The company already has been generating revenues from the sale of its proprietary product Zadaxin, and at the same time, it also makes revenues from the sale of in-licensed products as well as from promotion products on behalf of its business partners in China.</p><p>Though Zadaxin possesses the first mover advantage as the first branded thymalfasin drug in China, we remain concerned about the future prospects for Zadaxin if it is chosen for volume-based procurement catalog in China.</p>

Sciclone Pharmaceuticals (1863447D HK) , a biopharmaceutical company with an integrated platform for product development and commercialisation has filed for an IPO on the Hong Kong Stock Exchange to raise about US$500m.The company focuses on oncology and severe infection as its key focus areas, two of the largest and fastest growing therapeutic areas in China. The company already has been generating revenues from the sale of its proprietary product Zadaxin, and at the same time, it also makes revenues from the sale of in-licensed products as well as from promotion products on behalf of its business partners in China.Though Zadaxin possesses the first mover advantage as the first branded thymalfasin drug in China, we remain concerned about the future prospects for Zadaxin if it is chosen for volume-based procurement catalog in China.

SciClone Pharmaceutical IPO: Future Prospects for Zadaxin Troubling

<p><a href="https://www.smartkarma.com/entities/sciclone-pharmaceuticals-holdings-limited" target="_blank" data-smartkarma-citation="entities:17351:1" rel="noopener">Sciclone Pharmaceuticals (1863447D HK)</a> is a biopharmaceutical company with an integrated platform for product development and commercialisation of drugs in the oncology and severe infection therapeutic areas. The predecessor company, SciClone US, listed on NASDAQ in March 1992 and was subsequently privatised and delisted in October 2017. SciClone is pre-marketing a Hong Kong IPO to raise $500 million, according to press reports. </p><div class="content-highlight"><p>SciClone is a less than ideal IPO candidate. Despite efforts at diversification, SciClone is highly dependent on a single product, Zadaxin, which was launched in 1996. Commendably, Zadaxin sales have increased despite several challenges, including generic competition, changes in reimbursement policies and the centralised tender processes. However, the risk to Zadaxin’s sales remains undiminished. The large pre-IPO dividends by existing shareholders in face of these challenges also sends the wrong message to potential IPO investors. Overall, on a fundamental basis, we are inclined to give this IPO a pass. </p></div>

Sciclone Pharmaceuticals (1863447D HK) is a biopharmaceutical company with an integrated platform for product development and commercialisation of drugs in the oncology and severe infection therapeutic areas. The predecessor company, SciClone US, listed on NASDAQ in March 1992 and was subsequently privatised and delisted in October 2017. SciClone is pre-marketing a Hong Kong IPO to raise $500 million, according to press reports. SciClone is a less than ideal IPO candidate. Despite efforts at diversification, SciClone is highly dependent on a single product, Zadaxin, which was launched in 1996. Commendably, Zadaxin sales have increased despite several challenges, including generic competition, changes in reimbursement policies and the centralised tender processes. However, the risk to Zadaxin’s sales remains undiminished. The large pre-IPO dividends by existing shareholders in face of these challenges also sends the wrong message to potential IPO investors. Overall, on a fundamental basis, we are inclined to give this IPO a pass. 

SciClone Pharmaceuticals IPO Initiation: A Hard Sell

China

SciClone Pharmaceuticals is a biopharmaceutical company focused on developing and commercializing pharmaceutical products for oncology and severe infection in Mainland China and internationally. Its portfolio includes proprietary product Zadaxin, used for hepatitis B, hepatitis C, and certain cancers, as well as in-licensed products like Zometa, DANYELZA, and Angiomax. The company was founded in 1990 and is headquartered in Shanghai, China.

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SciClone Pharmaceuticals (SCICLONE HK)

SciClone Pharmaceuticals IPO: Valuation Insights

SciClone has launched its IPO to raise net proceeds of $252m, at the mid-point of the price range. We recommend a pass as our concerns on the...

Arun George

SciClone (赛生药业) IPO: A Mediocre Deal

We think the cornerstone is mediocre and the deal is fairly valued. The recent reference deal of its close peer, Simcere, has done poorly. We will...

Ke Yan, CFA, FRM

JOINN Laboratories IPO: Attractive Valuation; Overseas Expansion Should Open Up Room for LT Growth

Joinn Laboratories, the pioneer of commercial GLP laboratories in China has filed for a secondary listing to list its shares on the Hong Kong Stock...

Shifara Samsudeen, FCMA, CGMA

SciClone Pharmaceutical IPO: Future Prospects for Zadaxin Troubling

SciClone Pharmaceuticals, a biopharmaceutical company with an integrated platform for product development and commercialisation has filed for an...

Shifara Samsudeen, FCMA, CGMA

SciClone Pharmaceuticals IPO Initiation: A Hard Sell

SciClone is pre-marketing a Hong Kong IPO to raise $500 million, according to press reports. Overall, on a fundamental basis, we are inclined to...

Arun George

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