HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>The third batch of TCM VBP expansion and successive price reduction will continue to be implemented. The price dominance of exclusive TCM patent medicines may collapse based on this VBP.</li>
<li>Since 2019, the ADC drug market has entered a period of rapid growth, the significance of which is that the good story of ADC CXO is able to continue.</li>
<li>Innovent divested important subsidiary at low price, which apparently "irritated" investors. Valuation of Innovent will move towards traditional enterprise such as CSPC. Time to offload Innovent as investment logic changes.</li>
</ul>


The third batch of TCM VBP expansion and successive price reduction will continue to be implemented. The price dominance of exclusive TCM patent medicines may collapse based on this VBP.
Since 2019, the ADC drug market has entered a period of rapid growth, the significance of which is that the good story of ADC CXO is able to continue.
Innovent divested important subsidiary at low price, which apparently "irritated" investors. Valuation of Innovent will move towards traditional enterprise such as CSPC. Time to offload Innovent as investment logic changes.


China Healthcare Weekly (Nov.3) - TCM VBP Update, ADC CXO's Logic Is Solid, "Ugly Move" Of Innovent

Equity Capital Markets

Sichuan Biokin Pharmaceutical Co Ltd / Equity Capital Markets

Sichuan Biokin Pharmaceutical Co Ltd (SBP12 HK)

<ul>
<li>Biokin's traditional chemical drug and TCM businesses would continue to shrink and their valuation contribution can be negligible. The collaboration agreement for BL-B01D1 with BMS changes the outlook of Biokin.</li>
<li>The clinical data of BL-B01D1 look good so far, but the R&amp;D failure risk of BL-B01D1 is not low. It is uncertain if BL-B01D1 would finally be druggable.</li>
<li>Biokin is overvalued and there is big bubble in valuation. If BL-B01D1 fails in R&amp;D or its clinical data fail to meet high expectation, Biokin’s market value will plummet.</li>
</ul>


Biokin's traditional chemical drug and TCM businesses would continue to shrink and their valuation contribution can be negligible. The collaboration agreement for BL-B01D1 with BMS changes the outlook of Biokin.
The clinical data of BL-B01D1 look good so far, but the R&amp;D failure risk of BL-B01D1 is not low. It is uncertain if BL-B01D1 would finally be druggable.
Biokin is overvalued and there is big bubble in valuation. If BL-B01D1 fails in R&amp;D or its clinical data fail to meet high expectation, Biokin’s market value will plummet.


Pre-IPO Sichuan Biokin Pharmaceutical - Would Investors Be Willing to Take a Gamble?

Sichuan Kelun Pharmaceutical / Equity Bottom-Up

<ul>
<li>The imagination brought to the market by Kelun’s traditional businesses (infusion business, antibiotics and bulk pharmaceutical chemicals, generic drugs) is not high. So, the only highlight is Kelun-bio’s ADC pipeline.</li>
<li>Considering that Kelun has lost pricing power due to VBP, and both Chuanning and Kelun bio have been spun off and listed independently, Kelun's valuation will not be too high.</li>
<li>Our forecast is net profit attributable to shareholders in 2024-2026 is in the range of RMB3-5 billion. Reasonable market value is RMB30-50 billion. Subsidiary Kelun Bio is a better bet.</li>
</ul>


The imagination brought to the market by Kelun’s traditional businesses (infusion business, antibiotics and bulk pharmaceutical chemicals, generic drugs) is not high. So, the only highlight is Kelun-bio’s ADC pipeline.
Considering that Kelun has lost pricing power due to VBP, and both Chuanning and Kelun bio have been spun off and listed independently, Kelun's valuation will not be too high.
Our forecast is net profit attributable to shareholders in 2024-2026 is in the range of RMB3-5 billion. Reasonable market value is RMB30-50 billion. Subsidiary Kelun Bio is a better bet.


Sichuan Kelun Pharmaceutical (002422.CH) - The Real Breakthrough Point in Valuation Is ADC Pipeline

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.

Duality Biotherapeutics / Equity Capital Markets

<ul>
<li>Duality Biotherapeutics, a China-based clinical-stage biotechnology company, plans to raise up to US$300m via a Hong Kong listing.</li>
<li>In this note, we examine the company's two core products, namely DB-1313 (HER2 ADC) and DB-1311 (B7-H3 ADC). We think the company's products are not yet convincing.</li>
<li>While the management has expertise as biotech investors, biotech-related operational experience seems to be lacking.</li>
</ul>


Duality Biotherapeutics, a China-based clinical-stage biotechnology company, plans to raise up to US$300m via a Hong Kong listing.
In this note, we examine the company's two core products, namely DB-1313 (HER2 ADC) and DB-1311 (B7-H3 ADC). We think the company's products are not yet convincing.
While the management has expertise as biotech investors, biotech-related operational experience seems to be lacking.


Duality Biotherapeutics (映恩生物) Pre-IPO: Too Early, Too Ambitious

Event-Driven

<ul>
<li>The Share Alternative is necessary to improve success rate of privatization. Our guess is Henlius Biopharmaceuticals/Lin Lijun would vote for this privatization, but we’re not sure about Qatar Investment’s decision.</li>
<li>Due to its "flaws", undervaluation of Henlius is difficult to fundamentally change. So, those conservative and cautious investors would choose the Cash Alternative considering the risks behind the Share Alternative.</li>
<li>Even if there’re plans of re-listing, it may be based on a new entity formed after integrating Henlius and other assets within Fosun Pharma. So, the value of Rollover Entities/Securities remains uncertain.</li>
</ul>


The Share Alternative is necessary to improve success rate of privatization. Our guess is Henlius Biopharmaceuticals/Lin Lijun would vote for this privatization, but we’re not sure about Qatar Investment’s decision.
Due to its "flaws", undervaluation of Henlius is difficult to fundamentally change. So, those conservative and cautious investors would choose the Cash Alternative considering the risks behind the Share Alternative.
Even if there’re plans of re-listing, it may be based on a new entity formed after integrating Henlius and other assets within Fosun Pharma. So, the value of Rollover Entities/Securities remains uncertain.


Shanghai Henlius Biotech (2696.HK) - Privatization Has Taken a Positive Step Forward

China

Sichuan Kelun-Biotech Biopharmaceutical is a biopharmaceutical company focused on the research, development, manufacturing, and commercialization of innovative biological and small molecule drugs, particularly Antibody-Drug Conjugates (ADCs). It addresses unmet medical needs in oncology, autoimmune disorders, and metabolic diseases, with key products including sacituzumab tirumotecan and trastuzumab botidotin. The company is headquartered in Chengdu, Sichuan, China, and was founded in 2016.

Sichuan Kelun-Biotech Biopharmaceutical (6990 HK)

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Sichuan Kelun-Biotech Biopharmaceutical (6990 HK)

China Healthcare Weekly (Nov.3) - TCM VBP Update, ADC CXO's Logic Is Solid, "Ugly Move" Of Innovent

The 3rd batch of TCM VBP will hit the performance of exclusive TCM varieties.Due to the "ugly move" of Innovent's management, we advise investors...

Xinyao (Criss) Wang

Pre-IPO Sichuan Biokin Pharmaceutical - Would Investors Be Willing to Take a Gamble?

Biokin's future hinges on collaboration with BMS for BL-B01D1, as traditional business shrink due to VBP/fierce competition.Overvaluation poses...

Xinyao (Criss) Wang

Sichuan Kelun Pharmaceutical (002422.CH) - The Real Breakthrough Point in Valuation Is ADC Pipeline

Kelun's traditional businesses lack imagination, but Kelun-bio's ADC pipeline is a highlight. Valuation may not be high due to lost pricing power...

Xinyao (Criss) Wang

Duality Biotherapeutics (映恩生物) Pre-IPO: Too Early, Too Ambitious

Duality biotherapeutics is looking to raise USD 300m in a Hong Kong listing. We look at its core products and key products, as well as its investor...

Ke Yan, CFA, FRM

Shanghai Henlius Biotech (2696.HK) - Privatization Has Taken a Positive Step Forward

Share Alternative is necessary to improve success rate of privatization, but there're risk behind. As undervaluation of Henlius is difficult to...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Healthcare Weekly (Nov.3) - TCM VBP Update, ADC CXO's Logic Is Solid, "Ugly Move" Of Innovent

The 3rd batch of TCM VBP will hit the performance of exclusive TCM varieties.Due to the "ugly move" of Innovent's management, we advise investors...

Xinyao (Criss) Wang

Pre-IPO Sichuan Biokin Pharmaceutical - Would Investors Be Willing to Take a Gamble?

​Biokin's future hinges on collaboration with BMS for BL-B01D1, as traditional business shrink due to VBP/fierce competition.Overvaluation poses...

Xinyao (Criss) Wang

Sichuan Kelun Pharmaceutical (002422.CH) - The Real Breakthrough Point in Valuation Is ADC Pipeline

​Kelun's traditional businesses lack imagination, but Kelun-bio's ADC pipeline is a highlight. Valuation may not be high due to lost pricing power...

Xinyao (Criss) Wang

Duality Biotherapeutics (映恩生物) Pre-IPO: Too Early, Too Ambitious

Duality biotherapeutics is looking to raise USD 300m in a Hong Kong listing. We look at its core products and key products, as well as its investor...

Ke Yan, CFA, FRM

Shanghai Henlius Biotech (2696.HK) - Privatization Has Taken a Positive Step Forward

Share Alternative is necessary to improve success rate of privatization, but there're risk behind. As undervaluation of Henlius is difficult to...

Xinyao (Criss) Wang

Biokin's future hinges on collaboration with BMS for BL-B01D1, as traditional business shrink due to VBP/fierce competition.Overvaluation poses...

Kelun's traditional businesses lack imagination, but Kelun-bio's ADC pipeline is a highlight. Valuation may not be high due to lost pricing power...