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News Jan 8, 2020 01:11 pm EqualOcean

With a loss of CNY 800 million in six months, can I-Mab Bio find a "good medicine" when they abandon Hong Kong and choose the United States for listing?

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Jun 17, 2020 12:44 pm ·

ImmVira Closes Series B of USD 58 Million Led by HG

ImmVira announced the closure of a Series B of USD 58 million this week. This deal was led by HG Capital, with participation from Apricot Capital and Cowin Capital, followed by the sequential investor Hillhouse Venture Capital. The Shenzhen-based startup will lever this bankroll to push the current five product pipelines, early-stage R&D in innovative drugs and potential cross-border cooperation. ImmVira’s first product, the oncolytic herpes simplex virus (oHSV) T3011 (given via intratumor injection), was granted the FDA’s implied approval this May. It is the first Chinese oncolytic virus vaccine that has ever been approved by FDA IND and is also the first one to be studied in the clinical stage in China, the US and Australia. Founded in 2015, this company was established by six scientists from the field of tumor oncolysis and immunity in the US. The Shenzhen-based startup has five ongoing pipelines with full coverage of all kinds of oncolytic tumors, including intravenous injection, intra-tumor injection, malignant brain tumors, oncolytic virus resistant to tumors and hematologic tumors. Among them, the pipelines specific to lung cancer and liver cancer are steadily being pushed forward. More and more product lines are expected to move into the clinical stages. Grace Zhou, the CEO and CSO of ImmVira, noted that the funding round is seen as a milestone for ImmVira to move from pre-clinical R&D to the clinical stage. “ImmVira has rich experience in the field of oncolytic viruses and has been dedicated to researching and developing the herpes oncolytic viruses and target oncolytic viruses,” says Mr. Zeng Zhiqiang, the managing partner of HG Capital. “Meanwhile, the rising strategy of China’s Grand Bay Area provides tremendous potential opportunities for this startup.” Indeed, biotechnology is no longer a scarce technological advantage solely dominated by foreign companies. Many Chinese startups backed up by many experienced scientists and researchers are continually seeking opportunities, and many have successfully hit an IPO even without profiting yet from the pipelines, such as I-Mab Bio (IMAB:Nasdaq), Burning Rock (BNR:Nasdq) and Legend Biotech (LEGN:Nasdaq). Equipped with China’s advantageous infrastructure and labor costs, made-in-China biotechs can explore more medical solutions to cure deadly diseases for the benefit of humankind.

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May 10, 2020 11:33 pm ·

China’s Healthcare ETF: The Next Limelight

The continued pandemic has whirled around the globe, leaving economic slumps and a desire to find solutions and explanations – and apportion blame. Hesitation is rife over the outlook of the coming one or two years. However, while the western market is struggling with frozen growth, stagnant investment processes and a deteriorated market for small- and medium businesses, the Chinese market has gradually picked up its usual hustle-and-bustle. One of the most remarkable performances among all the Chinese industries since the outbreak last December is that of the healthcare industry. It outperformed not only other domestic industries boards and its Nasdaq- and NYSE-listed peers, but also protected many China Healthcare ETF holders from severe financial distress, similar to 2018. The first exchange-traded fund (ETF) was launched on January 23, 1993 and the last few years have witnessed their maturity in the US market. Praised for many merits, e.g., wide diversity, lower costs and tax efficiency, etc., ETFs have been deemed an ideal asset for individual investors and popular products for traders. Indeed, faced with this global ‘black swan’ issue, the ETF funds have proved their resilience in the suffering marketplace. China healthcare-focused ETFs and their underlying indexes The ETF market started late in China, partly because of strict market regulations, partly investors’ insufficient expertise. Even though the Chinese ETF market is quite underdeveloped compare to the western ones, Chinese companies are usually blended into some international ETFs. The tremendous domestic market, stable social environment and growing consumption capabilities, etc. – all these merits of the emerging market are winning the favor of global investors. The MSCI China Health Care Index was launched on January 1, 2001, to measure the equity performances of large- and mid-cap Chinese companies engaged in the health care sector. It covers securities listed in Mainland China, Hong Kong and the US (technically, Chinese healthcare companies across H shares, B shares, P chips, Red chips and A-shares since June 2018). Since April 30, 2020, this healthcare-specific index has been exposed to 79 companies, at a market cap of HKD 789.597 million, and has outperformed MSCI China since July 2018. Together with the general health care index, related MSCI China healthcare indexes are underpinning two ETFs, KURE and CHIH, with a focus on China’s healthcare sectors. Both, listed in NYSE Arca, are based on the same securities pool of Chinese-listed healthcare companies, but are very different on the constraints of their underlying indexes. KURE, registered on January 31, 2018, seeks to measure the performance of MSCI China All Shares Health Care 10/40 Index by picking out 80 out of 81 portfolio companies. Comparable to KURE, CHIH is another ETF with a similar fundamental index – MSCI China Health Care 10/50 Index, holding 35 out of 79 portfolio entities. MSCI is not the only institute that has realized the value of the healthcare sector in this emerging market. A half month after the launch of KURE in early 2018, Loncar Funds established the Loncar BioPharma Index (LCHINA: INDEXNYSEGIS), an index of 36 securities specializing in China’s biopharma industry, and six months later introduced the related ETF, CHNA on Nasdaq. Instead of full exposure to a wide range of X-shares, Loncar China BioPharma Index only screened from China-related biopharma companies that were Nasdaq-listed and Hong Kong Stock Exchange-listed, with over USD 200 million market capitalization, as explained in the prospectus. The reconstitution is arranged every second Monday in February and August to weighted constituents by their market capitalization equally. Most promising healthcare segments in China The year of 2018 witnessed all these ETFs going public, a milestone when these Chinese healthcare companies gained more extensive exposure to overseas investors. Indeed, the growing aging population, accelerated urbanization and income growth and ever-open healthcare reform policies all convey very positive messages about the potential of this country’s healthcare future. But, faced with the broad sector, which is on track to be a good one, is investment simply a matter of common sense? Even though MSCI breaks the whole brick into fine segments, the ETF constituents vary a lot. KURE, the ETF backed by MSCI China Health Care 10/40, categorizes the Chinese healthcare ecosystem into six perspectives: patent and generic pharmaceuticals, medical equipment production, hospital administration, biotechnology, TCM (traditional Chinese medicines) and healthcare IT. In its portfolio, most weighted constituents are from pharmaceutical and biotechnology, representing 33.59% of the total fund as of March 31, 2020. Its comparable ETF, CHIH, has a slightly different matrix – it doesn’t segregate TCM solely but merges into pharmaceuticals, and especially adds a vertical named ‘life sciences tools & services.’ Among its top ten index constituents, it shared a similar structure with KURE of three pharmaceuticals, four biotechnologies, one medical device and one healthcare service IT, as of March 31, 2020. MSCI-backed ETFs are all trying to make the best out of high return and diversified risk. On the contrary, CHNA is a unique fund with a unique preference of the biopharma business in China. Eyeing the long-term prospectus of this field as early as February 2018, Loncar China BioPharma Index adopted a different screening mechanism to keep risks in control, with investable portfolio companies only listed in Nasdaq and HKSE and hurdle market cap of USD 200 million. The single-basket portfolio violates the universal diversification rule. But with a detailed look into this strategy, many biopharma names have a robust foundation, such as R&D spending, or innovative medicine in the pipelines,  to boost massive values soon. From pharmaceutical to biopharma The pharmaceutical segment is the most substantial portion among all these indexes and ETFs. In contrast with the top ten constituents of KURE, CHIH and CHNA, there is a wide overlap of constituent companies. Wuxi Biologics (Cayman) (2269: HKSE), WuXi AppTex Co (2359: HKSE) and Sinopharma Group (1177: HKSE) – three biopharmaceuticals – are all heavily weighted in these ETFs. When it comes to the typical pharmaceutical area without cutting-edge biotechnology, the two MSCI-generic ETFs have three additional overlapping companies, Jiangsu Hengrui Medicine (600276: SH), CSPC Pharmaceutical Group (1093: HKSE) and Alibaba Health Information (241: HKSE).  Biopharmaceutical products are explained as any pharmaceutical drug product manufactured in, extracted from, or semi-synthesized from biological sources. So, biotechnology allows a typical drug maker to be tagged as ‘high-tech’ together with a good reputation. Another commonly acknowledged fact about all biopharma players is that it takes a long time to monetize all those R&D investments – some listed companies haven’t benefited yet. However, for investors well-acquainted with the biopharma field, the real valuable assets are the R&D capability of innovative drugs to deal with rare critical diseases. In CHNA’s portfolios, eight out of the top ten most weighted companies are biotech pharmaceuticals, with CanSino Biologics (6185: HKSE) at 5.58% the most held. I-Mab (IMAB:Nasdaq), a biotech that just went to IPO this early January, is still expecting its first revenue fruit on the way. The Chinese healthcare industry, a large topic that came into the world’s sight last 2018, has been reported on over and over again amid the continued COVID-19 outbreak. After the large-scale domestic lockdowns, the economy has gained vitality via telehealthcare and now is moving on to its putative new normal. It seems that, as the way the investment world perceives the economy of China grows more divergent, one group remains trapped in a haze of prejudice while some minorities are trying to understand potentially healthy  – and health-giving – areas, with an open mind.

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Apr 16, 2020 09:37 am ·

First Come, First Cured: Chinese Drugmakers Race for COVID-19 Solutions

As the pandemic further ravages this world, global medical researchers and developers are trying to save people from fear and pain. According to the WHO (World Health Organization), three candidate vaccines are already being tested on humans, with the other 67 candidates at the pre-clinical stage. Among the three quick actors, China’s CanSino Bio has moved along the furthest, into Phase II, followed by Inovio Pharmaceuticals and Moderna at Phase I.  CanSino Biologics announced on April 9 the initiation of a Phase II clinical trial on human bodies in a joint effort with the Academy of Military Medical Sciences. It claimed to have obtained periodic achievements in Phase I clinical trial for the Recombinant Novel Coronavirus Disease Vaccine (Adenovirus Type 5 Vector, or the ‘Ad5-nCoV’), in a joint effort with Academy of Military Medical Sciences.  The Phase I trial started from March 16 and gave preliminary safety data based on 108 samples aged between 18 and 60. The second study is designed for a more profound objective, to evaluate the immunogenicity for Adenovirus Vector in healthy adults over 18, and on a larger sample group of 500 people. As disclosed on ChiCTR (Chinese Clinical Trial Registry), blood and urine are collected at Phase II, instead of serum and PBMC (Peripheral Blood Mononuclear Cell) at Phase I. Future test participants will be recruited in a randomized and blinded method for experimental vaccines.  Like it or not, most vaccines take more than a few months to reach the public’s hands, or between five years and 15 years to go perfect. As stated by Anthony Fauci, the director of the National Institute of Allergy and Infectious Disease in the US expects, a vaccine takes 18 months to go public. As shown on the WHO, the pre-licensure studies assess three mandatory clinical trial phases before the vaccine introduction and monitor acute undesirable reactions with over one in 10,000 vaccines. More Chinese names on the WHO list Financially supported by the Ministry of Science and Technology, the biotechnology CanSino Bio will conduct this ‘randomized, double-blinded, placebo-controlled’ clinical trial in three hospitals in Wuhan, the epicenter.  The Tianjin-based generic manufacturer previously developed the first-ever Asian vaccine against the Ebola virus early in 2014  (Ad5-EBOV)  and was approved for national stockpile and emergency use in 2017. Since being listed on the Hong Kong public market in March in 2019, the company has been eyeing another IPO in China’s Star Market this year, seeking a sufficient bankroll for scaling up vaccine research and production.   The WHO’s approved candidate list mentions that other Chinese biotechnologies are also running in the race of developing vaccines, while most are at the pre-clinical stage.  Fosun Pharma (2196: HKSE), in collaboration with BioNTech and Pfizer, is working on the vaccine based on micro RNA at the pre-clinical stage. Innovax (2680: HKSE), together with Xiamen University and GSK, is researching a vaccine in the type of truncated S (spike) proteins. Beijing CC-Pharming and iBio, Inc (IBIO: NYSE) are working together on the subunit protein-based vaccine by leveraging CC-Pharming’s 25 R&D experience in Middle East Respiratory Syndrome (MERS-CoV) and iBio’s FastPharming System  for fast plant-based biopharmaceutical production. Sinovac Biotech (SVA: Nasdaq), known as the first company with approved SARS vaccine trials on humans back in 2004, headed into this meaningful project immediately. It is also the only Chinese company seeking an inactivated vaccine solution. What is behind these names is the ever-expanding vaccine market in China. The vaccine market size is projected to grow at a compound annual growth rate of 11.88% going forward. Private vaccine business expects to serve as the primary market driving force, considering that two vaccine-related scandals in 2016 and 2018 have left confidence stains on the public vaccine system. Drugs for current unmet needs The vaccine is about precaution strategy – how to prevent diseases for the non-infected people, while therapeutic drugs are for infected patients. Unfortunately, there is no special treatment for this deadly pathogen yet. WHO initiated an international clinical trial called ‘Solidarity’ to test and find an effective solution. This global initiative, involving over 90 countries, provides four options: Remdesivir; Lopinavir/Ritonavir; Lopinavir/Ritonavir with Interferon beta-1a; and Chloroquine or Hydroxychloroquine. As reported, these drugs have been tested in many Wuhan-based hospitals since the outbreak. Although it is still too early to talk about a specific drug for COVID-19, a treatment for the pathogen-associated complication is within sight. Empirical research into severe COVID-19 cases points out that the cytokine release syndrome (CRS) is one of the major reasons for the fatality of the new coronavirus. University College London’s article in the Lancet also mentioned the positive correlation between the severity of the cases and the occurrence of the cytokine storm. There is a nearly 20% chance that the attacked immune system overwhelmingly fights against the virus in a ‘suicidal’ manner, resulting in an overall systematic dysfunction.  I-Mab Biopharma (IMAB: Nasdaq), a Chinese biotech company, is currently focusing on developing medical solutions to contain this immuno-overreaction. Understanding the unmet needs for treating CRS on the anti-epidemic frontline, the team initiated studies into TJM2, an antibody to prevent overreaction of the immune cells and stem further circulatory collapse and organic degeneration. This Shanghai-based firm just went to list on the Nasdaq stock exchange this January. From 2016, the young biotech has exclusively studied innovative drugs for oncological and autoimmune disorders. Though no drug has been introduced to the market yet, it has won the favor of long-term investors by its dedication in drug innovation, indicated by 12 promising pipelines and CNY 426 million R&D expenses in 2018, or 86.5% of total expenses. Undoubtedly, there is a robust correlation between R&D expenses and the value of a tech-driven company. China’s Star Market sets 15% as the alert benchmark for evaluating candidate companies’ IPO status quo. The total pharmaceutical R&D spending by Chinese companies is projected to outnumber that of US peers in 2023, reaching USD 50 billion. Reaping the reward of the policy reform and early investment It is notorious that in old days a new drug could take decades to complete the approval process, leaving a lag of between six and eight years compared to other countries. Since 2015, the China Food and Drug Administration (CFDA) has issued several policies to facilitate the drug innovation, proposing a fast-track approval procedure for clinical trials. A direct result is that the new drug approval process in 2018 is shortened to a little over three years, compared to the average 12 years in the US.   The year 2019 witnessed a more profound reform with laws on vaccine management and drug management. A total of 56 new drugs were approved last year by CFDA, outnumbering 48 newly licensed medicines in the US. Another driver is the increasing capital activities. There is a clear upward trend of investment in China’s healthcare industry, including both VC/PE investors and secondary market watchers. In 2018, the capital injection flowing into the China life-science industry reached a new high record of USD 17.3 billion in a total of 696 investment deals. Among all these targets, the drug business segment was the winner portfolio for VC institutions, representing 44% of the total investment amount, followed by the Internet healthcare segment of 29%. As for the public market in China’s healthcare industry, the year 2018 was also a milestone in terms of IPO activities. There is a Chinese saying that an old man lost his horse but eventually gained good fortune,   similar to a blessing in disguise. While there is no ending in sight for this turbulent global situation for now, with the extreme phase of the Chinese outbreak under control, it seems that first experience with the unknown virus has brought Chinese scientists precious time to study. If treatments or vaccines are rushed to market or testing without proper preparation however, they may still finish up the race as losers.

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Jan 16, 2020 06:42 pm ·

Chinese Immuno-Oncology Firm I-Mab's IPO Lands on NASDAQ

Chinese antibody developer I-Mab Biopharma's (IMAB) long-anticipated IPO lands on NASDAQ on 16 January, in a move to bankroll its ongoing oncological drug pipelines following the successful landing of USD 100 million. The company is the first Chinese biotech company to do so in around two years, as most of the companies from the mainland have forayed into the Hong Kong Stock Exchange, thanks to the updated regulatory approval process at the Fragrant Harbour's bourse. The IPO date is pregnant with meaning, in the sense that it is just after JPMorgan's healthcare event in SF – healthcare private equity heavyweights have whispered for the entire week on what they think may be a lucrative deal to take. Prior to its initial public offering, the cancer drug developer has issued over USD 300 million worth of shares to a plethora of venture capitalists and private equity arms of pharmaceutical behemoths, including Wuxi Apptec's (SH: 603259) venture capital arm and Ally Bridge Group, a new amendment onto the company's IPO filing revealed. The company's primary market investors, Caesar Pro Holdings Limited, Wuxi Biologics, and Hongkong Tigermed, overvalued the company in its Series C-1 by offering USD 16.1 per ADS in the fall of 2019, the amendment has also revealed. The firm is expecting to price its shares within a price range of USD 12 to USD 15 by offering 7.4 million in ADS to the public. The company sees its novel or "highly differentiated" drugs TJ202, TJ107, enoblituzumab, and TJ101, as the four anchor assets in its China Portfolio, and planning to support them by the windfall of the public funds. China is one of the flag-carriers of cancer immunotherapy and the number of active drugs in development grew 91% between 2017-2019. I-Mab will be representing China's IO advancements in the US, and EqualOcean will keep watching this firm: as we have been doing from the get-go.. 

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