China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>Novartis’s forfeit of option to license BeiGene’s (BGNE) Ociperlimab (TIGIT) likely suggested pessimism towards its year-end read-out.  </li>
<li>The priority of Tislelizumab in Novartis’s pipeline may also be sidelined; With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model.</li>
<li>BGNE’s pipeline faces an aging problem, which must be mitigated by smart licensing. We downgrade BGNE to SELL and ZLAB to BUY.</li>
</ul>


Novartis’s forfeit of option to license BeiGene’s (BGNE) Ociperlimab (TIGIT) likely suggested pessimism towards its year-end read-out.  
The priority of Tislelizumab in Novartis’s pipeline may also be sidelined; With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model.
BGNE’s pipeline faces an aging problem, which must be mitigated by smart licensing. We downgrade BGNE to SELL and ZLAB to BUY.


[Blue Lotus Innovative Drugs Sector Update]: Biotech-Biopharma Ecosystem Is Coming of Age in China

<ul>
<li>XPEV/NIO/LI/TSLA/1211HK: 16 major automakers pledge to jointly maintain order in China auto market (+/+/+/+/+)</li>
<li>XPEV: Xpeng G6's conversion rate exceeds 50%, outperforming the industry (+)</li>
<li>ZLAB：ZLAB’s FcRn Efgartigimod received NMPA approval. We expect 2023 revenue US$10mn (-)</li>
</ul>


XPEV/NIO/LI/TSLA/1211HK: 16 major automakers pledge to jointly maintain order in China auto market (+/+/+/+/+)
XPEV: Xpeng G6's conversion rate exceeds 50%, outperforming the industry (+)
ZLAB：ZLAB’s FcRn Efgartigimod received NMPA approval. We expect 2023 revenue US$10mn (-)


China TMT Update-XPEV/NIO/LI/TSLA/1211HK/ZLAB: 16 Automakers Pledge to Maintain Order;G6 Conversion

<ul>
<li>ZLAB: Laekna Therapeutics IPO’ed in HK with two AKT inhibitors. We believe it will complement PARP inhibitor (+)</li>
<li>LKNCY: COTTI Coffee opened its No.4k store，but may lack sustainability(/)</li>
<li>002202CH/601615CH：Siemens Gamesa’s wind turbine suffers quality recall, may benefit Chinese vendors (-)</li>
</ul>


ZLAB: Laekna Therapeutics IPO’ed in HK with two AKT inhibitors. We believe it will complement PARP inhibitor (+)
LKNCY: COTTI Coffee opened its No.4k store，but may lack sustainability(/)
002202CH/601615CH：Siemens Gamesa’s wind turbine suffers quality recall, may benefit Chinese vendors (-)


China TMT Update July 3-ZLAB/LKNCY/002202CH/601615CH: Laekna Therapeutics IPO’ed in HK

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

<ul>
<li>If you look up history, Laekna has certain connection with Novartis. However, Novartis seems to have not made much progress in small-molecule targeted oncology therapies in the past few years.</li>
<li>LAE001 would face fierce competition. Its new mechanism may not be accepted by doctors/patients in front of many mature drug options in the market. LAE002 has high R&amp;D failure risk.</li>
<li>Since the stock price performance of a number of innovative drug companies based on license-in model in HKEX is unsatisfactory, together with the weak sentiment, we remain conservative about Laekna. </li>
</ul>


If you look up history, Laekna has certain connection with Novartis. However, Novartis seems to have not made much progress in small-molecule targeted oncology therapies in the past few years.
LAE001 would face fierce competition. Its new mechanism may not be accepted by doctors/patients in front of many mature drug options in the market. LAE002 has high R&amp;D failure risk.
Since the stock price performance of a number of innovative drug companies based on license-in model in HKEX is unsatisfactory, together with the weak sentiment, we remain conservative about Laekna. 


Pre-IPO Laekna (PHIP Updates) - Some Key Points Worth the Attention

Cutia Therapeutics / Equity Capital Markets

<ul>
<li>Majority of Cutia’s products are based on license-in/distribution agreements. Cutia’s independent R&amp;D capability has yet to be proven. Stock prices of companies that completely rely on license-in are unsatisfactory.</li>
<li>Cutia's pipelines have unique characteristics. So, the requirements on team's ability are comprehensive. Purely medical background of Cutia's team could be a “hindrance” and may fail to commercialize them well.</li>
<li>There is a real need in the fields Cutia is focusing on, so the story is compelling. However, with limited commercialized products, it’s difficult to prove anything at current stage.</li>
</ul>


Majority of Cutia’s products are based on license-in/distribution agreements. Cutia’s independent R&amp;D capability has yet to be proven. Stock prices of companies that completely rely on license-in are unsatisfactory.
Cutia's pipelines have unique characteristics. So, the requirements on team's ability are comprehensive. Purely medical background of Cutia's team could be a “hindrance” and may fail to commercialize them well.
There is a real need in the fields Cutia is focusing on, so the story is compelling. However, with limited commercialized products, it’s difficult to prove anything at current stage.


Pre-IPO Cutia Therapeutics (CUT HK) - Outlook Is Uncertain Due to Unique Pipeline Characteristics

China

Zai Lab Limited operates as a bio-pharmaceutical company. The Company researches and develops therapeutic technology for antibody-based oncology, autoimmune, and infectious diseases treatments. Zai Lab also manufactures drugs in the form of capsules, injections, and liquids. Zai Lab serves patients worldwide.

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Zai Lab Ltd (ZLAB US)

[Blue Lotus Innovative Drugs Sector Update]: Biotech-Biopharma Ecosystem Is Coming of Age in China

With Chinese innovative drug sales subdued under NDRL, the global biotech model is gaining superiority over local biopharma model. We downgrade...

Blue Lotus Research Institute

China TMT Update-XPEV/NIO/LI/TSLA/1211HK/ZLAB: 16 Automakers Pledge to Maintain Order;G6 Conversion

XPEV/NIO/LI/TSLA/1211HK: 16 major automakers pledge to jointly maintain order;XPEV: Xpeng G6's conversion rate exceeds 50% (+)ZLAB：ZLAB’s FcRn...

Blue Lotus Research Institute

China TMT Update July 3-ZLAB/LKNCY/002202CH/601615CH: Laekna Therapeutics IPO’ed in HK

ZLAB: Laekna Therapeutics IPO’ed in HK. complement PARP inhibitor (+)；LKNCY: COTTI Coffee opened its No.4k store(/)002202CH/601615CH：Siemens...

Blue Lotus Research Institute

Pre-IPO Laekna (PHIP Updates) - Some Key Points Worth the Attention

Laekna's core products would face different challenges, which makes us hard to be optimistic about their prospects.As a biotech based on license-in...

Xinyao (Criss) Wang

Pre-IPO Cutia Therapeutics (CUT HK) - Outlook Is Uncertain Due to Unique Pipeline Characteristics

Cutia need to clarify whether its positioning is to sell drugs or consumer products,as their strategies will be different. Cutia has to strengthen...

Xinyao (Criss) Wang

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