HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shanghai Henlius Biotech  / Equity Bottom-Up

<ul>
<li>LVC increased its holding of Henlius by 1,110,900 shares on January 23, reflecting its high recognition of the Company and optimism on its prospects, despite the biosimilar VBP headwinds.</li>
<li>Even with concerns, LVC still repeatedly invested in Henlius at a valuation far higher than its actual value, offering support with real money during pre-IPO stage.</li>
<li>Lin Lijun’s dissenting vote was a deliberate decision. We are interested to see Lin's next move. Lin should have a very clear understanding of the true value of Henlius.</li>
</ul>


LVC increased its holding of Henlius by 1,110,900 shares on January 23, reflecting its high recognition of the Company and optimism on its prospects, despite the biosimilar VBP headwinds.
Even with concerns, LVC still repeatedly invested in Henlius at a valuation far higher than its actual value, offering support with real money during pre-IPO stage.
Lin Lijun’s dissenting vote was a deliberate decision. We are interested to see Lin's next move. Lin should have a very clear understanding of the true value of Henlius.


Shanghai Henlius Biotech (2696 HK) - LVC Increased Its Holding of Henlius Again

Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>Daiichi Sankyo received FDA approval for Datroway for the treatment of unresectable or metastatic hormone receptor (HR) positive, HER2 negative breast cancer who have received prior endocrine-based therapy and chemotherapy.</li>
<li>Sumitomo Pharma partnered with J&amp;J for co-promotion of the long-acting antipsychotic medication XEPLION. Shanghai Fosun Pharma’s proposed buyout of Shanghai Henlius Biotech for HK$5.4B (~$693M) failed to pass shareholders’ vote.</li>
<li>SK Bioscience signed a co-promotion and distribution agreement with Sanofi for RSV and hepatitis A vaccines. Hugel received approval for its botulinum toxin for five indications from the UAE.</li>
</ul>


Daiichi Sankyo received FDA approval for Datroway for the treatment of unresectable or metastatic hormone receptor (HR) positive, HER2 negative breast cancer who have received prior endocrine-based therapy and chemotherapy.
Sumitomo Pharma partnered with J&amp;J for co-promotion of the long-acting antipsychotic medication XEPLION. Shanghai Fosun Pharma’s proposed buyout of Shanghai Henlius Biotech for HK$5.4B (~$693M) failed to pass shareholders’ vote.
SK Bioscience signed a co-promotion and distribution agreement with Sanofi for RSV and hepatitis A vaccines. Hugel received approval for its botulinum toxin for five indications from the UAE.


APAC Healthcare Weekly (Jan 26)- Daiichi Sankyo, Sumitomo Pharma, Fosun Pharma, SK Bioscience, Hugel

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The question was asked in <a href="https://skr.ma/2qNon" target="_blank" rel="noopener">Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal?</a> Well, now we have one as LVC inexplicably <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2025/0122/2025012200662.pdf" target="_blank" rel="noopener">blocked</a>.</li>
<li>It didn’t appear to make economic rationale for LVC to crash the party - knowing they would do so, and not bother to reduce their position accordingly.</li>
<li>In tandem with the <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">TCM (570 HK)</a> debacle, it sets another bad precedent for future/existing Hong Kong  events. Expect spreads for HK arbs to widen. And Henlius to crater.</li>
</ul>


The question was asked in Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal? Well, now we have one as LVC inexplicably blocked.
It didn’t appear to make economic rationale for LVC to crash the party - knowing they would do so, and not bother to reduce their position accordingly.
In tandem with the TCM (570 HK) debacle, it sets another bad precedent for future/existing Hong Kong  events. Expect spreads for HK arbs to widen. And Henlius to crater.


Henlius (2696)'s Fail Sets (Another) Bad Precedent

<ul>
<li>Fosun hopes to privatize Henlius at a low price. As usual, it does not consider the interests of long-term investors, who may express their "dissatisfaction" by opposing the privatization.</li>
<li>Lin Lijun clearly has bargaining chips. He may ask Fosun to provide a clear plan for future relisting/asset restructuring, and how the Share Alternative will be linked to this plan.</li>
<li>There is a possibility this privatization may fail. Such possibility is not low, because investors will only support the privatization if they can be sure that their interests are protected.</li>
</ul>


Fosun hopes to privatize Henlius at a low price. As usual, it does not consider the interests of long-term investors, who may express their "dissatisfaction" by opposing the privatization.
Lin Lijun clearly has bargaining chips. He may ask Fosun to provide a clear plan for future relisting/asset restructuring, and how the Share Alternative will be linked to this plan.
There is a possibility this privatization may fail. Such possibility is not low, because investors will only support the privatization if they can be sure that their interests are protected.


Shanghai Henlius Biotech (2696 HK)- These Are the Reasons Why LVC May Vote Against the Privatization

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-henlius-biotech-inc" target="_blank" data-smartkarma-citation="entities:27888:1" rel="noopener">Shanghai Henlius Biotech (2696 HK)</a> shareholders have voted against <a href="https://www.smartkarma.com/entities/shanghai-fosun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:8045:1" rel="noopener">Shanghai Fosun Pharmaceutical (Group) (2196 HK)</a>’s HK$24.60 offer. The minority participation rate was high, and the NO vote comfortably cleared the threshold.</li>
<li>The <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> and Henlius deal breaks have rewritten the HKEx merger arb rulebook. The Henlius deal break offers several lessons.</li>
<li>The 27.5% share price decline since 9 January points to a well-flagged deal break. Nevertheless, precedent deal-breaks suggest that the shares remain vulnerable and could touch HK$15.  </li>
</ul>



Shanghai Henlius Biotech (2696 HK) shareholders have voted against Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s HK$24.60 offer. The minority participation rate was high, and the NO vote comfortably cleared the threshold.
The China Traditional Chinese Medicine (570 HK) and Henlius deal breaks have rewritten the HKEx merger arb rulebook. The Henlius deal break offers several lessons.
The 27.5% share price decline since 9 January points to a well-flagged deal break. Nevertheless, precedent deal-breaks suggest that the shares remain vulnerable and could touch HK$15.  


Henlius (2696 HK): Deal Break as HKEx Merger Arb Rulebooks Are Rewritten

China

Shanghai Fosun Pharmaceutical (Group) Co., Ltd. is a pharmaceutical company. Through its subsidiaries, the Company manufactures genetic medicines, Chinese traditional medicines, diagnostic products, and medical instruments, provides technology, marketing, and advertising services, as well as invests in import and export trading.

Shanghai Fosun Pharmaceutical (Group) (2196 HK)

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Shanghai Fosun Pharmaceutical (Group) (2196 HK)

Shanghai Henlius Biotech (2696 HK) - LVC Increased Its Holding of Henlius Again

Share price of Henlius has rebounded rapidly to above HK$20/share after the deal break. LVC/Lin Lijun repeatedly increased holding of Henlius,...

Xinyao (Criss) Wang

APAC Healthcare Weekly (Jan 26)- Daiichi Sankyo, Sumitomo Pharma, Fosun Pharma, SK Bioscience, Hugel

APAC healthcare companies got approvals for new products as well as clinical trials. The companies continued with acquisitions and collaborations...

Tina Banerjee

Henlius (2696)'s Fail Sets (Another) Bad Precedent

What a massive disappointment. Expect Hong Kong arb spreads to widen today. Post TCM, and now Henlius, many investors simply cannot take the risk...

David Blennerhassett

Shanghai Henlius Biotech (2696 HK)- These Are the Reasons Why LVC May Vote Against the Privatization

The privatization failed, and Lin Lijun voted against the deal, which is in line with our analysis in this insight. Sometimes, Chinese deals could...

Xinyao (Criss) Wang

Henlius (2696 HK): Deal Break as HKEx Merger Arb Rulebooks Are Rewritten

The 27.5% share price decline since 9 January points to a well-flagged deal break. Nevertheless, precedent deal-breaks suggest that the shares...

Arun George

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