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<Research> CMSI: Three Reasons for Recent Underperformance of Pharma Sector vs HSI; Top Picks INNOVENT BIO (01801.HK), HANSOH PHARMA (03692.HK) and KEYMED BIO-B (02162.HK)
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CMSI released a report stating that since May, the Hang Seng Biotechnology Index has underperformed the HSI by about 1,300 bps, becoming the biggest laggard sector and marking the industry’s entry into a downturn phase. The broker summarized three reasons for the significant recent underperformance of Hong Kong-listed pharma/biotech stocks: liquidity constraints, rising policy uncertainty over overseas BD cooperation, and valuation markdowns for certain clinical assets. On the macro level, amid increasing market polarization, liquidity has continued to flow into AI-related themes, driving strong outperformance in those sectors, while other sectors have experienced notable valuation compression. Meanwhile, overseas BD deals for China’s innovative drugs are facing heightened policy uncertainty. John Moolenaar, Chairman of the US House Select Committee on the Chinese Communist Party, has proposed including biotechnology-related technologies in the COINS Act to restrict cross-border intellectual property licensing. He specifically noted that multinational pharmaceutical companies, including Bristol Myers Squibb, have recently stepped up outbound licensing and co-development partnerships with Chinese companies. From a bottom-up perspective, at the ASCO 2026 conference held in Chicago in late May, clinical data disclosure for AKESO (09926.HK)’s core pipeline AK-112 triggered divergence and controversy in data interpretation within the global oncology community. Combined with weak short-term market sentiment, companies involved in tumor bispecific and trispecific antibodies saw pronounced share price corrections. The report noted that AKESO (09926.HK) announced interim data from the Harmoni-6 study at ASCO 2026. The trial was conducted in mainland China, and its data readout attracted significant investor attention. Some Western oncology experts questioned aspects of the trial design, including patient enrollment criteria (with male patients accounting for a relatively high proportion and female patients only about 7%), the choice of control group, and preset exclusion criteria in the protocol. Such rigorous scrutiny and skepticism from the Western medical community have cast a shadow over the prospects of the global registrational Phase III Harmoni-3 trial for the same type of lung cancer being advanced by AKESO and Summit. During conference discussions, experts expressed a cautious view on the potential applicability of H6 results to H3, citing immature interim data, higher-than-benchmark survival performance in the control group, and possible bias in sample structure. The broker believes that the Harmoni-6 study has sufficiently validated the progression-free survival benefits brought by a bispecific antibody incorporating a VEGF target and is expected to translate into overall survival benefits in squamous non-small cell lung cancer. However, differing interpretations of the same data between Chinese and Western physicians highlight the next-stage core challenges faced by China’s innovative drugs going global. The broker believes that recent macro disturbances and sector volatility provide a good opportunity for long-term investors to accumulate leading high-quality Chinese biopharmaceutical companies at lower levels. Its top picks are INNOVENT BIO (01801.HK), HANSOH PHARMA (03692.HK) and KEYMED BIO-B (02162.HK). It is also monitoring AKESO (09926.HK) and HENGRUI PHARMA (01276.HK), which are not yet under its coverage. (ha/u) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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