A sudden change in investment strategy, Hillhouse quietly bets on the second-generation CXO head company

Gao Ling is famous for his "favorite" towards Aileying
.

On the evening of March 25, the listed company Asymchem announced that its subsidiary Asymchem has introduced strategic investors such as Hillhouse to become a global leader in biopharmaceuticals and advanced therapy CDMOs

In October 2020, Hillhouse subscribed for 4,405,300 shares through a new round of price inquiry (the allocation amount was about 1 billion yuan)
.

However, in 2021, Hillhouse has reduced some of Asymchem's positions and has withdrawn from the top ten shareholders

Based on the current round of valuation of Asymchem Biotech and the special subscription rights enjoyed by Hillhouse, it is not difficult to see that Hillhouse is very optimistic about the rapid development of Asymchem's macromolecule & CGT therapy CDMO business, and is confident that the company will be able to grow within two years.
Valuation can be doubled
.

In the past, the market's impression and positioning of Asymchem has always been "the second place in the domestic small molecule CDMO", and now the "high-profile" announcement to cooperate with Hillhouse to enter the field of macromolecules and cutting-edge therapies, what kind of confidence does it have?

1.
What is the gold content of Asymchem?

The gold content of Asymchem Bio?

Asymchem's ambitions in the field of macromolecules are well known in the industry.
As early as 2019, it started the Shanghai Jinshan Macromolecule R&D Center.
In 2020, it established a macromolecule business R&D and production team and built a GMP-regulated pilot workshop production line (200L, 500L disposable reactor production line); among the materials that have hit Hong Kong stocks many times, most of the plans for fundraising and investment are related to macromolecules; recently, Asymchem plans to invest 3 billion to build biopharmaceuticals in Fengxian, Shanghai CDMO R&D and commercialization base
.

At present, Asymchem has built 6 technology platforms, including analysis and development platform, cell line development and screening platform, stock solution process development platform, preparation development platform, aseptic filling and freeze-drying process development platform, and GMP pilot production platform.
Provide one-stop service from IND to NDA
.

In addition to the well-known monoclonal antibody drugs in the market, the company is also committed to providing CDMO services related to advanced therapies such as ADC, plasmid, and mRNA
.

According to the company's report, the company's one-stop CDMO service platform for ADC drugs shortened the project that is expected to take one year to complete to eight months, and won the "Excellent Project Award" from Mersana, an innovative drug company, and is expected to serve more domestic and foreign pharmaceutical companies in the future.

Different from the general macromolecule CDMO, Asymchem is born with the diversion and empowerment of the parent company
.

The parent company Asymchem has a global customer network, including Merck, BMS, AbbVie, Pfizer, Eli Lilly and other international pharmaceutical giants.
Asymchem can rely on the customer reputation and outsourcing service experience accumulated in the small molecule CDMO field to seek Undertake the macromolecule CDMO business of old customers
.

The 2020 annual report shows that Asymchem's macromolecule CDMO-related revenue in that year was 170 million yuan, a year-on-year increase of 53.
51%, and its revenue ratio increased to 6.
92%
.

According to the financial data of Asymchem in the announcement, the company will achieve revenue of 2.
8705 million yuan in 2021, corresponding to a net profit of -32.
5799 million; from January to February this year, the company's revenue has increased significantly (4.
4186 million), which is 2021.
1.
5 times annual revenue
.

The high orders and performance of the parent company Asymchem have also benefited the subsidiary Asymchem Bio
.

2.
The trend of CDMO concentration in biopharmaceuticals, there are still opportunities for latecomers?

The trend of CDMO concentration in biopharmaceuticals, there are still opportunities for latecomers?

At present, there are more than 600 CDMO industries in the world, but comparing the revenue structure of European and American CDMO companies with domestic CDMO companies, there is not a small difference.
The revenue and strategic focus of European and American CDMO companies focus on the field of preparations and biopharmaceuticals, and most domestic CDMOs are derived from small molecules.
API/Intermediate production of chemical drugs
.

Therefore, it is ultimately reflected in the data level of global market share concentration
.

In the field of biopharmaceutical CDMO in 2021, the combined market share of the top six companies will reach 63%, and it is expected to further increase to 80% in the next few years, showing a trend of ever-stronger players
.

In contrast, in the small molecule and CGT CDMO fields, the combined market share of the top ten global companies is still less than 50%, showing a more dispersed trend
.

From the perspective of CGT therapy, it is understandable that most CDMO companies in the world are in their infancy and infancy, and the leading companies have not achieved a solid lead

Why are small molecule CDMOs more fragmented in the competitive landscape of larger molecule CDMOs? (Diversification may mean more opportunities for new entrants)

The core reason is that the structure of macromolecular biopharmaceuticals is relatively complex and has poor stability.

In the short and medium term, it is difficult for domestic companies in the macromolecule CDMO field to challenge WuXi Biologics, but Asymchem, as a veteran small molecule CDMO leader, has the opportunity to compete with GenScript and other companies for the remaining two top three players.

3.

Reducing the holding of Asymchem and then "repurchasing alternatives", Hillhouse's investment strategy is changing

Most market investors may find that Hillhouse's investment strategy is changing

From 2020 to 2021, Hillhouse will actively participate in the fixed increase of medical listed companies through the secondary market, and has transformed into the most potential sub-business sector that actively invests in the incubation of listed companies

What are the benefits of this strategic shift? Or in what kind of consideration?

One is due to the consideration of market conditions.

The second is the ingenuity of the new investment method.

Such a strategy, Gao Leng has already used "consummate skill":

● In March 2020, Hillhouse and Chenyi invested in Hualan Vaccine, and in April 2020, Hualan Bio spun off Hualan Vaccine and went public;

● In January 2021, Hillhouse Youheng invested 80 million in Gloria Spectrum (mass spectrometry) under Dean Diagnostics;

● In April 2021, Hillhouse Chenjun invested 110 million in Proton Bio (CGT CDMO), a subsidiary of Proton;

● In May 2021, Hillhouse subscribed for GenScript's US$70 million convertible bonds and US$150 million Class A preference shares;

From the perspective of verifying the record, Hualan Vaccine has now achieved an IPO on the Growth Enterprise Market, with a current market value of 21.

For the capital increase of Asymchem, the announcement mentioned that Asymchem will try its best to promote its subsidiary to realize an IPO by the end of 2026, so Hillhouse’s achievements in companies such as Asymposium and Proton Biotech often have to wait until After 4-5 years, it is a long-term investment strategy
.

4.
The second-generation head biological CXO is advancing

The second-generation head biological CXO is advancing

Looking at the top CXO companies with a market value of more than 40 billion in China, it is surprisingly found that most players have begun to focus on cultivating their own "new curve business" in recent years, and have initially planned plans for future spin-off IPOs
.

WuXi is a pair of heroes.
WuXi Biologics formed WuXi Hyde in the field of vaccine CDMO, and in the field of antibody-conjugated drug CDMO, it formed WuXi United with WuXi AppTec; WuXi AppTec started several years ago.
Cultivate the CGT CDMO business, making WuXi Pharma currently the leader in CGT CDMO in China
.

The layout of Asymchem, as mentioned above, has poured all the layout of macromolecules and cutting-edge therapies into Asymchem Bio, and has obtained the strong backing support of Gao Lian
.

Pharmaron seems to be a step slower in the frontier field, but the direction of acquisitions in the past two years has also focused on the direction of CGT CDMO production capacity and macromolecule CRO assets
.

Proton shares directly skipped the large-molecule CDMO, and directly deployed the CGT CDMO business in 2018.
Its subsidiary Proton Bio also won the A round of investment from SDIC Investment, Hillhouse and other institutions in April 2021.
It is estimated that The value is 770 million RMB
.

Zhaoyan New Drug may be the most inconspicuous incubator.
Its management has quietly incubated a large-molecule CDMO asset, Zhao Derivatives (Zhaoyan New Drug holds 4.
8%), and Zhao Derivatives has invested in both China and the United States.
A large amount of production capacity has been built, and the post-investment valuation of the B+ round of financing in August 2021 has reached 1.
05 billion US dollars.
It is expected to be the fastest new bio CDMO force to achieve IPO
.

GenScript's Boom Bio has always been a hidden powerhouse in biological CDMO.
Its biologics development service (large molecule + CGT therapy) has doubled in 2021 (revenue is about 81.
4 million US dollars), which has established the company in one fell swoop.
The status of "top three domestic bio CDMOs"; in May 2021, Hillhouse acquired a 17.
05% stake in Boom Bio for US$150 million, with a post-investment valuation of US$880 million
.

Epilogue

Epilogue

The capital increase method of Asymchem this time is only a remarkable microcosm of the transformation of Hillhouse’s investment strategy.
We may see more and more investment cases like Hillhouse in the future.
Give your own answer to a play strategy
.

From the rules of the layout of the track at Hillhouse, will the next one be WuXishengji and Zhao derivatives? We will wait and see
.

References

reference material reference material

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1.
Official website of the Food and Drug Administration

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In vitro diagnostic industry chain (with the layout of various enterprises), perspective financial report, 2020.
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In vitro diagnostic industry chain (with the layout of various enterprises), perspective financial report, 2020.
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Inventory of 17 domestic in vitro diagnostic listed companies, we found three major characteristics, Yiou Health, 2017.
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Inventory of 17 domestic in vitro diagnostic listed companies, we found three major characteristics, Yiou Health, 2017.
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27