HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

BioRay Biopharmaceutical / Equity Capital Markets

<ul>
<li>Once cost control policies and biosimilars VBP continue to be deepened, the growth of established products will decline.BioRay's future hinges on whether it can achieve further innovative leaps beyond biosimilars.</li>
<li>BioRay’s business model distinguishes it from a large number of biotech companies that have not yet turned a profit. So, its valuation method is more similar to traditional pharmaceutical companies.</li>
<li>Given the concerns on growth outlook and pressure on profit margins, but with stable cash flow/potential for business transformation, valuation of BioRay would be lower than peers Henlius, Hansoh, 3SBio. </li>
</ul>


Once cost control policies and biosimilars VBP continue to be deepened, the growth of established products will decline.BioRay's future hinges on whether it can achieve further innovative leaps beyond biosimilars.
BioRay’s business model distinguishes it from a large number of biotech companies that have not yet turned a profit. So, its valuation method is more similar to traditional pharmaceutical companies.
Given the concerns on growth outlook and pressure on profit margins, but with stable cash flow/potential for business transformation, valuation of BioRay would be lower than peers Henlius, Hansoh, 3SBio. 


Pre-IPO BioRay Biopharmaceutical - The Core Business Is Facing Challenges

Zhejiang Jingxin Pharmaceutical Co., / Equity Capital Markets

Zhejiang Jingxin Pharmaceutical Co., (002020 CH)

<ul>
<li>Jingxin isn’t a purely innovative drug company. Instead, it adopts a "generic + innovative" approach.Its competitive advantage doesn’t lie in disruptive technologies, but deep market penetration in specific therapeutic areas.</li>
<li>Due to VBP, profit margin is not satisfactory, but as Dimdazenil has been included in the NRDL, this product is expected to become an important growth point in the future.</li>
<li>Peers include CSPC, <a href="https://www.smartkarma.com/entities/simcere-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:29186:1" rel="noopener">Simcere Pharmaceutical (2096 HK)</a>, <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-pharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:44224:1" rel="noopener">Hengrui (1276 HK)</a>, <a href="https://www.smartkarma.com/entities/sino-biopharmaceutical" target="_blank" data-smartkarma-citation="entities:230:1" rel="noopener">Sino Biopharmaceutical (1177 HK)</a>. Based on our analysis, we think valuation of Jingxin would be lower than these four companies.</li>
</ul>


Jingxin isn’t a purely innovative drug company. Instead, it adopts a "generic + innovative" approach.Its competitive advantage doesn’t lie in disruptive technologies, but deep market penetration in specific therapeutic areas.
Due to VBP, profit margin is not satisfactory, but as Dimdazenil has been included in the NRDL, this product is expected to become an important growth point in the future.
Peers include CSPC, Simcere Pharmaceutical (2096 HK), Hengrui (1276 HK), Sino Biopharmaceutical (1177 HK). Based on our analysis, we think valuation of Jingxin would be lower than these four companies.


Pre-IPO Zhejiang Jingxin Pharmaceutical (A/H Listing) - Growth Path Returns as VBP Will Subside

Betta Pharmaceuticals / Equity Capital Markets

<ul>
<li>Betta is facing difficulties. Old products have a decline in sales due to competition, while the new products have been struggling to break through, failing to contribute expected revenue scale.</li>
<li>The loss of core talent would have negative impact on Betta’s development, which would be gradually revealed in the future in terms of R&amp;D capability/product iteration/capital operation/licensing cooperation.</li>
<li>Valuation of Betta would be lower than peers, as these companies have relatively diversified pipelines, and have already reached high-quality licensing cooperation with MNCs, demonstrating optimistic internationalization outlook.  </li>
</ul>


Betta is facing difficulties. Old products have a decline in sales due to competition, while the new products have been struggling to break through, failing to contribute expected revenue scale.
The loss of core talent would have negative impact on Betta’s development, which would be gradually revealed in the future in terms of R&amp;D capability/product iteration/capital operation/licensing cooperation.
Valuation of Betta would be lower than peers, as these companies have relatively diversified pipelines, and have already reached high-quality licensing cooperation with MNCs, demonstrating optimistic internationalization outlook.  


Pre-IPO Betta Pharmaceuticals (A/H Listing) - Thoughts on the Pipeline, the Outlook, and Valuation

Convalife Pharmaceuticals / Equity Capital Markets

<ul>
<li>Convalife’s business model is based on the Right-6D framework. Convalife aims to improve R&amp;D efficiency and shorten commercialization time by collaborating with industry partners for product commercialization after approval.</li>
<li>Hannaijia, CVL009, CVL218, CVL237 are facing different challenges in R&amp;D and commercialization. Our forecast for their peak sales is about RMB500-800 million, RMB300-500 million, RMB1-1.5 billion, RMB400-600 million, respectively.</li>
<li>Post-Money valuation after Series C2 Financing is RMB3.2 billion. A neutral scenario is valuation of RMB3.5-4 billion. Valuation upside potential depends on clinical and commercalization success of the core products.</li>
</ul>


Convalife’s business model is based on the Right-6D framework. Convalife aims to improve R&amp;D efficiency and shorten commercialization time by collaborating with industry partners for product commercialization after approval.
Hannaijia, CVL009, CVL218, CVL237 are facing different challenges in R&amp;D and commercialization. Our forecast for their peak sales is about RMB500-800 million, RMB300-500 million, RMB1-1.5 billion, RMB400-600 million, respectively.
Post-Money valuation after Series C2 Financing is RMB3.2 billion. A neutral scenario is valuation of RMB3.5-4 billion. Valuation upside potential depends on clinical and commercalization success of the core products.


Pre-IPO Convalife Pharmaceuticals - The Pipeline, the Concerns, and the Peak Sales

<ul>
<li>Despite the recovery of financing situation, vast majority of small/ medium-sized Biotech companies are still in long and cold winter. The “wealth gap” within industry has been further widened.</li>
<li>If based on the threshold of HK$9 billion, the companies with a relatively high probability of entering the Hong Kong Stock Connect program at present include <a href="https://www.smartkarma.com/entities/carsgen-therapeutics-ltd" target="_blank" data-smartkarma-citation="entities:32213:1" rel="noopener">CARSgen </a>and <a href="https://www.smartkarma.com/entities/ascletis-pharma-inc" target="_blank" data-smartkarma-citation="entities:27265:1" rel="noopener">Ascletis</a>.</li>
<li>WuXi Bio plans to place 150 million existing shares at a price of HK$38.52 each. However, the reduction in holdings by major shareholders is usually interpreted as a negative signal.</li>
</ul>


Despite the recovery of financing situation, vast majority of small/ medium-sized Biotech companies are still in long and cold winter. The “wealth gap” within industry has been further widened.
If based on the threshold of HK$9 billion, the companies with a relatively high probability of entering the Hong Kong Stock Connect program at present include CARSgen and Ascletis.
WuXi Bio plans to place 150 million existing shares at a price of HK$38.52 each. However, the reduction in holdings by major shareholders is usually interpreted as a negative signal.


China Healthcare Weekly (Jan.18)-Biotechs to Enter Hong Kong Stock Connect, Wuxi Biologics Placement

China

Shanghai Henlius Biotech is a global, innovation-driven biopharmaceutical company focused on delivering high-quality, affordable biologic therapies for oncology, autoimmune diseases, and ophthalmic diseases. The company is engaged in biopharmaceutical research and development, manufacturing, and commercialization, offering products such as the biosimilars HANLIKANG (rituximab), HANQUYOU (trastuzumab), HANDAYUAN (adalimumab), and HANBEITAI (bevacizumab), as well as the innovative biologic HANSIZHUANG (serplulimab). Headquartered in Shanghai, China, the company was founded in 2010.

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Shanghai Henlius Biotech (2696 HK)

Pre-IPO BioRay Biopharmaceutical - The Core Business Is Facing Challenges

As cost control policy and biosimilar VBP deepen, BioRay's future success hinges on innovative leaps beyond biosimilars, with a valuation closer...

Xinyao (Criss) Wang

Pre-IPO Zhejiang Jingxin Pharmaceutical (A/H Listing) - Growth Path Returns as VBP Will Subside

Jingxin's "generic + innovative" approach focus on market penetration rather than disruptive technology. Dimdazenil's inclusion in NRDL will drive...

Xinyao (Criss) Wang

Pre-IPO Betta Pharmaceuticals (A/H Listing) - Thoughts on the Pipeline, the Outlook, and Valuation

Betta face challenges due to pipeline with insufficient competitiveness and loss of core talent. Valuation will be lower than peers with more...

Xinyao (Criss) Wang

Pre-IPO Convalife Pharmaceuticals - The Pipeline, the Concerns, and the Peak Sales

Convalife’s business model based on Right-6D framework. We shared views on the peak sales of Hannaijia/CVL009/CVL218/CVL237. A neutral scenario is...

Xinyao (Criss) Wang

China Healthcare Weekly (Jan.18)-Biotechs to Enter Hong Kong Stock Connect, Wuxi Biologics Placement

We shared our views about the biotechs that would be included in Hong Kong Stock Connect. WuXi Bio's Placement is interpreted negative as its...

Xinyao (Criss) Wang

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52-week Range

Market Cap (USDm)

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Pre-IPO BioRay Biopharmaceutical - The Core Business Is Facing Challenges

​As cost control policy and biosimilar VBP deepen, BioRay's future success hinges on innovative leaps beyond biosimilars, with a valuation closer...

Xinyao (Criss) Wang

Pre-IPO Zhejiang Jingxin Pharmaceutical (A/H Listing) - Growth Path Returns as VBP Will Subside

​Jingxin's "generic + innovative" approach focus on market penetration rather than disruptive technology. Dimdazenil's inclusion in NRDL will drive...

Xinyao (Criss) Wang

Pre-IPO Betta Pharmaceuticals (A/H Listing) - Thoughts on the Pipeline, the Outlook, and Valuation

​Betta face challenges due to pipeline with insufficient competitiveness and loss of core talent. Valuation will be lower than peers with more...

Xinyao (Criss) Wang

Pre-IPO Convalife Pharmaceuticals - The Pipeline, the Concerns, and the Peak Sales

Convalife’s business model based on Right-6D framework. We shared views on the peak sales of Hannaijia/CVL009/CVL218/CVL237. A neutral scenario is...

Xinyao (Criss) Wang

China Healthcare Weekly (Jan.18)-Biotechs to Enter Hong Kong Stock Connect, Wuxi Biologics Placement

We shared our views about the biotechs that would be included in Hong Kong Stock Connect. WuXi Bio's Placement is interpreted negative as its...

Xinyao (Criss) Wang

As cost control policy and biosimilar VBP deepen, BioRay's future success hinges on innovative leaps beyond biosimilars, with a valuation closer...

Jingxin's "generic + innovative" approach focus on market penetration rather than disruptive technology. Dimdazenil's inclusion in NRDL will drive...

Betta face challenges due to pipeline with insufficient competitiveness and loss of core talent. Valuation will be lower than peers with more...