HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Recently, <a href="https://www.smartkarma.com/entities/cansino-biologics-inc" target="_blank" data-smartkarma-citation="entities:27739:1" rel="noopener">CanSino Biologics Inc (6185 HK)</a> released the performance announcement in 2020. CanSino is expected to achieve the revenue in 2020 of RMB24.89 million, up 990.06% YoY. The Company's net loss attributed to shareholders could reach RMB407 million, up 159.63% YoY. Net loss after deducting non-recurring gains and losses is expected to reach RMB522 million, up 199.09% YoY. Meanwhile, CanSino had filed an application with the NMPA for conditional marketing authorization of the Recombinant Novel Coronavirus Vaccine (Adenovirus Type 5 Vector) (“Ad5-nCoV”, trade name: Convidecia™) and NMPA had accepted the application. On the other hand, according to the listing rules of the SSE STAR Market, CanSino needs to become profitable or successfully commercialize its products by at least 2024, or it will trigger delisting conditions. So, will the COVID-19 vaccine be CanSino's turning point?

Recently, CanSino Biologics Inc (6185 HK) released the performance announcement in 2020. CanSino is expected to achieve the revenue in 2020 of RMB24.89 million, up 990.06% YoY. The Company's net loss attributed to shareholders could reach RMB407 million, up 159.63% YoY. Net loss after deducting non-recurring gains and losses is expected to reach RMB522 million, up 199.09% YoY. Meanwhile, CanSino had filed an application with the NMPA for conditional marketing authorization of the Recombinant Novel Coronavirus Vaccine (Adenovirus Type 5 Vector) (“Ad5-nCoV”, trade name: Convidecia™) and NMPA had accepted the application. On the other hand, according to the listing rules of the SSE STAR Market, CanSino needs to become profitable or successfully commercialize its products by at least 2024, or it will trigger delisting conditions. So, will the COVID-19 vaccine be CanSino's turning point?

CanSino Biologics (6185.HK) - Will the COVID-19 Vaccine Be the Turning Point?

Thematic (Sector/Industry)

Compared with innovative drugs, the R&amp;D and production barriers of vaccine products are higher, and the pace of technology and product iteration is slower than that of innovative drugs. Except for the herpes zoster vaccine, the global sales of top ten varieties in the past decade are all the upgrades of existing product lines by enterprises. On the other hand, limited by indications, methods of use and competition of similar drugs, new drugs usually need to experience a gentle sales climbing curve. Both the impact of generic drugs after the patent cliff and the competition of other new products could lead to a rapid decline in sales. Vaccine products, especially those blockbuster vaccines, usually don't have such situations, and the product cycle is more stable.

Compared with innovative drugs, the R&amp;D and production barriers of vaccine products are higher, and the pace of technology and product iteration is slower than that of innovative drugs. Except for the herpes zoster vaccine, the global sales of top ten varieties in the past decade are all the upgrades of existing product lines by enterprises. On the other hand, limited by indications, methods of use and competition of similar drugs, new drugs usually need to experience a gentle sales climbing curve. Both the impact of generic drugs after the patent cliff and the competition of other new products could lead to a rapid decline in sales. Vaccine products, especially those blockbuster vaccines, usually don't have such situations, and the product cycle is more stable.

Industry Report - Insights on China Vaccine Industry

Chongqing Zhifei Biological Products / Equity Bottom-Up

On December 29th, 2020, <a href="https://www.smartkarma.com/entities/chongqing-zhifei-biological-products-co-ltd" target="_blank" data-smartkarma-citation="entities:6245:1" rel="noopener">Chongqing Zhifei Biological Products (300122 CH)</a> announced that its self-developed 15-valent pneumococcal conjugate vaccine (PCV15) had completed the preparation work and officially entered the phase III clinical trial. As a number of products in the pipeline continue to advance, PCV15 into clinical phase III is an important step in the pipeline valuation remodeling of the Company. In addition, Zhifei also announced that, on December 23rd, 2020, the Company and MSD reached an agreement: MSD will exclusively supply the products under the agreement to Zhifei, and Zhifei is authorized to import, distribute and promote the products in mainland China as agreed. After the successful renewal of the contract, the performance of the key products would be improved with certainty.

On December 29th, 2020, Chongqing Zhifei Biological Products (300122 CH) announced that its self-developed 15-valent pneumococcal conjugate vaccine (PCV15) had completed the preparation work and officially entered the phase III clinical trial. As a number of products in the pipeline continue to advance, PCV15 into clinical phase III is an important step in the pipeline valuation remodeling of the Company. In addition, Zhifei also announced that, on December 23rd, 2020, the Company and MSD reached an agreement: MSD will exclusively supply the products under the agreement to Zhifei, and Zhifei is authorized to import, distribute and promote the products in mainland China as agreed. After the successful renewal of the contract, the performance of the key products would be improved with certainty.

Chongqing Zhifei Biological Products- Promising Future After Successful Renewal of Contract with MSD

1.Industry viewpoints:<ul>
<li>Recently, the National Medical Products Administration has released a new policy (draft version) about the online drug sales.</li>
<li>Vaccine is a hot topic in 2020, so let’s talk about vaccine.</li>
<li>The upsurge in the application of AI in medical imaging in China provides a new direction for the development, which may be the most promising field for China to surpass foreign countries.</li>
</ul>2. Company news:News about the updated progress of new drugs and the marketing approval of new products from <a href="https://www.smartkarma.com/entities/betta-pharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:25883:1" rel="noopener">Betta Pharmaceuticals (300558 CH)</a>, <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a> , Kangpu Biopharmaceuticals, and <a href="https://www.smartkarma.com/entities/venus-medtech-hangzhou-inc" target="_blank" data-smartkarma-citation="entities:28257:1" rel="noopener">Venus MedTech (2500 HK).</a>3. Market review:Last week, stock price for healthcare sector in A share decreased 1.43%, while CSI 300 increased 1.78% over the same period of time.4. Risk Disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1.Industry viewpoints:
Recently, the National Medical Products Administration has released a new policy (draft version) about the online drug sales.
Vaccine is a hot topic in 2020, so let’s talk about vaccine.
The upsurge in the application of AI in medical imaging in China provides a new direction for the development, which may be the most promising field for China to surpass foreign countries.
2. Company news:News about the updated progress of new drugs and the marketing approval of new products from Betta Pharmaceuticals (300558 CH), BeiGene Ltd (6160 HK) , Kangpu Biopharmaceuticals, and Venus MedTech (2500 HK).3. Market review:Last week, stock price for healthcare sector in A share decreased 1.43%, while CSI 300 increased 1.78% over the same period of time.4. Risk Disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1.Industry viewpoints
<ul>
<li>China's biopharmaceutical market is still in its early days, but it has a strong growth potential.</li>
<li>Q3 earning season kicks off.</li>
<li>Favorable policies may still not ensure the golden time for the industry of Chinese traditional medicine.</li>
</ul>
2.Company news
News of Shanghai Henlius Biotech, Innovent Biologics and BeiGene on the progress of new drugs and amended agreement.
3.Market review
Last week, stock price for healthcare sector rose 2.86%, while CSI 300 rose 2.04% over the same period of time.
4.Risk Disclosure 
Policy risk, R&amp;D risk, company risk and COVID-19 risk

1.Industry viewpoints

China's biopharmaceutical market is still in its early days, but it has a strong growth potential.
Q3 earning season kicks off.
Favorable policies may still not ensure the golden time for the industry of Chinese traditional medicine.

2.Company news
News of Shanghai Henlius Biotech, Innovent Biologics and BeiGene on the progress of new drugs and amended agreement.
3.Market review
Last week, stock price for healthcare sector rose 2.86%, while CSI 300 rose 2.04% over the same period of time.
4.Risk Disclosure 
Policy risk, R&amp;D risk, company risk and COVID-19 risk

China

Shenzhen Kangtai Biological Products Co., Ltd. operates biological product manufacturing businesses. The Company produces biological vaccines and other vaccine products. Shenzhen Kangtai Biological Products conducts businesses in China.

Shenzhen Kangtai Biological Pr (300601 CH)

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Shenzhen Kangtai Biological Pr (300601 CH)

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