HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Sichuan Kelun-Biotech Biopharm / Equity Bottom-Up

<ul>
<li>Since IPO, stock price of Kelun-Biotech has performed quite well. Then, the Company's valuation fluctuated. Investors seem not excited about <a href="https://www.smartkarma.com/entities/sichuan-kelun-biotech-biopharm" target="_blank" data-smartkarma-citation="entities:40071:1" rel="noopener">Sichuan Kelun-Biotech Biopharm (6990 HK)</a>’s 23H1 performance.</li>
<li>We won’t expect too much on A166 in such a difficult competitive landscape.Commercialization of SKB264 is also challenging.It's difficult to make up the story after A166/SKB264 begin to generate revenue.</li>
<li>After out-licensing all valuable/core assets to Merck, together with the departure of core R&amp;D personnel, Kelun-Biotech has been “hollowed out”.So, Kelun-Biotech's value lies in short-term trade rather than long-term hold.</li>
</ul>


Since IPO, stock price of Kelun-Biotech has performed quite well. Then, the Company's valuation fluctuated. Investors seem not excited about Sichuan Kelun-Biotech Biopharm (6990 HK)’s 23H1 performance.
We won’t expect too much on A166 in such a difficult competitive landscape.Commercialization of SKB264 is also challenging.It's difficult to make up the story after A166/SKB264 begin to generate revenue.
After out-licensing all valuable/core assets to Merck, together with the departure of core R&amp;D personnel, Kelun-Biotech has been “hollowed out”.So, Kelun-Biotech's value lies in short-term trade rather than long-term hold.


Sichuan Kelun-Biotech Biopharm (6990.HK) - Once the Products Hit the Market, Good Story May Stop

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Kelun-Biotech recorded RMB1.54bn revenue in FY23, primarily from licensing and collaboration agreements with MSD.</li><li>In Mar 2023, SKB received around RMB1.21bn upfront payment from MSD for out-licensing certain pre-clinical ADC assets, a portion of which was recognized in FY23.</li><li>Additionally, Kelun-Biotech received RMB215mn milestone payment from MSD related to SKB264 in 4Q23. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kelun-Biotech recorded RMB1.54bn revenue in FY23, primarily from licensing and collaboration agreements with MSD.In Mar 2023, SKB received around RMB1.21bn upfront payment from MSD for out-licensing certain pre-clinical ADC assets, a portion of which was recognized in FY23.Additionally, Kelun-Biotech received RMB215mn milestone payment from MSD related to SKB264 in 4Q23. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kelun-Biotech (6990 HK) - Intense Data Release to Further Validate the Global Potential of SKB264

<ul><li>MSD has announced three additional global Ph3 trials of SKB264. MSD is vigorously advancing the global clinical development of its prominent oncology asset, SKB264, through multiple global Ph3 trials. In late 2023, MSD launched three global Ph3 trials: 1) a Ph3 MRCT of SKB264 in 3L nsq-NSCLC with EGFR mutations or other genomic alterations (NCT06074588), 2) a Ph3 trial of SKB264+Keytruda vs Keytruda mono in 1L PD-L1 TPS ≥ 50% NSCLC (NCT06170788), and 3) a Ph3 trial of SKB264 in post chemo and/or PD(L)-1 endometrial carcinoma (NCT06132958).</li><li>Additionally, MSD has initiated three more trials, expanding the scope of SKB264's evaluation to include 1) 2L post TKI EGFRm nsq-NSCLC (NCT06305754), 2) adjuvant NSCLC (NCT06312137), and 3) 2L+ HR+/HER2- BC (NCT06312176).</li><li>These studies encompass a wide range of NSCLC stages and further probe SKB264's utility in breast and endometrial cancers, highlighting its global market potential.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

MSD has announced three additional global Ph3 trials of SKB264. MSD is vigorously advancing the global clinical development of its prominent oncology asset, SKB264, through multiple global Ph3 trials. In late 2023, MSD launched three global Ph3 trials: 1) a Ph3 MRCT of SKB264 in 3L nsq-NSCLC with EGFR mutations or other genomic alterations (NCT06074588), 2) a Ph3 trial of SKB264+Keytruda vs Keytruda mono in 1L PD-L1 TPS ≥ 50% NSCLC (NCT06170788), and 3) a Ph3 trial of SKB264 in post chemo and/or PD(L)-1 endometrial carcinoma (NCT06132958).Additionally, MSD has initiated three more trials, expanding the scope of SKB264's evaluation to include 1) 2L post TKI EGFRm nsq-NSCLC (NCT06305754), 2) adjuvant NSCLC (NCT06312137), and 3) 2L+ HR+/HER2- BC (NCT06312176).These studies encompass a wide range of NSCLC stages and further probe SKB264's utility in breast and endometrial cancers, highlighting its global market potential.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kelun-Biotech (6990 HK) - MSD Has Further Expedited Global Clinical Development of SKB264

<ul><li>Kelun-Biotech, a trailblazer in biotech innovation, boasts a diverse ADC pipeline with strategic backing from MSD.</li><li>Leveraging a robust integrated ADC platform, the company has developed several differentiated clinical-stage ADCs - including SKB264 (TROP2 ADC), A166 (HER2 ADC), SKB315 (CLDN18.2 ADC), and SKB410 (Nectin-4 ADC) - and numerous preclinical candidates.</li><li>This pipeline's potential is underscored by a strategic partnership with MSD, which includes the out-licensing of select ex-China rights for seven ADC assets in deals potentially worth up to US$11.8bn.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kelun-Biotech, a trailblazer in biotech innovation, boasts a diverse ADC pipeline with strategic backing from MSD.Leveraging a robust integrated ADC platform, the company has developed several differentiated clinical-stage ADCs - including SKB264 (TROP2 ADC), A166 (HER2 ADC), SKB315 (CLDN18.2 ADC), and SKB410 (Nectin-4 ADC) - and numerous preclinical candidates.This pipeline's potential is underscored by a strategic partnership with MSD, which includes the out-licensing of select ex-China rights for seven ADC assets in deals potentially worth up to US$11.8bn.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kelun-Biotech (6990 HK) - A Trailblazer in ADC Arena

<ul>
<li>Thanks to the continuous support of policies, the TCM industry has ushered in a harvest period. So, TCM remains to be a relatively certain field for investment in China healthcare. </li>
<li>Biotech companies must meet several conditions in order to have good long-term development, such as sufficient financial support, at least one blockbuster product and high moral standard of the management.</li>
<li>Reasonable valuation of <a href="https://www.smartkarma.com/entities/sichuan-kelun-biotech-biopharm" target="_blank" data-smartkarma-citation="entities:40071:1" rel="noopener">Sichuan Kelun-Biotech Biopharm (6990 HK) </a>is about RMB15 billion. So, we think it is now overvalued. Meanwhile, restricted shares will be lifted 12 months after the IPO.</li>
</ul>


Thanks to the continuous support of policies, the TCM industry has ushered in a harvest period. So, TCM remains to be a relatively certain field for investment in China healthcare. 
Biotech companies must meet several conditions in order to have good long-term development, such as sufficient financial support, at least one blockbuster product and high moral standard of the management.
Reasonable valuation of Sichuan Kelun-Biotech Biopharm (6990 HK) is about RMB15 billion. So, we think it is now overvalued. Meanwhile, restricted shares will be lifted 12 months after the IPO.


China Healthcare Weekly (Feb.23)- TCM Ushers in a Harvest Period, Biotech Bottom-Line, Kelun-Biotech

China

Sichuan Kelun-Biotech Biopharmaceutical Co., Ltd. operates biotechnology businesses. The Company develops and provides biological drugs, chemical raw materials, antibody conjugating drugs, innovative drugs, and other products. Kelun Biotech also operates import and export businesses.

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Sichuan Kelun-Biotech Biopharm (6990 HK)