To The Moon

Major news in the innovative drug sector! Recently, Eli Lilly plans to acquire Kelonia for $7 billion ($3.25 billion upfront). Kelonia's in vivo approach breaks the "impossible trinity" of traditional autologous CAR-T, which involves a 4-5 week preparation cycle and million-dollar price tags, and delivered impressive results in its latest clinical trial with a 100% MRD-negative rate at one month across 18 patients.

Analysis indicates that Eli Lilly's acquisition, with its extreme premium, shatters the previous average price ceiling of $300-$425 million for similar platforms. This suggests the technology is on the cusp of industrialization and holds potential to expand into the hundred-billion-dollar autoimmune market. The aggressive acquisition by a major multinational corporation sets a very high valuation benchmark for clinical-stage leaders with core patents.

In the secondary market, on the morning of June 4th, Hong Kong stocks continued their deep correction. However, Hong Kong Connect innovative drug stocks performed significantly stronger than the broader market. The HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (ETF 520880), which invests 100% in innovative drug R&D companies, opened higher and rose over 1% before retreating and turning negative, probing new lows.

Among its constituent stocks, leading weighted stocks mostly declined. Akeso fell over 2%, while Innovent Biologics, Sino Biopharmaceutical, and 3SBio fell over 1%. BeiGene bucked the trend, rising over 2%, and Zai Lab gained over 3%.

Notably, the Hong Kong Connect innovative drug sector has recently accelerated its bottoming process, with capital starting to accumulate high-value chips at low levels. Over the previous two trading sessions, the HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (ETF 520880) continuously attracted capital inflows, totaling over 128 million yuan.

Leveraged funds have also taken action. On June 3rd, margin buying reached 46.69 million yuan, hitting a nearly four-month high for a single day! The latest margin balance for the HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (ETF 520880) stands at 99.8947 million yuan, its second-highest level in history!

Market analysts believe the current volatility in the innovative drug sector is more due to trading factors rather than a reversal of the industry's long-term fundamentals. From a medium-to-long-term perspective, the global competitiveness of China's innovative drug industry remains intact. It is suggested to take advantage of market dips and use ETF tools to allocate to platform-type leading companies with global business development capabilities and scarce core pipelines, especially after market volatility subsides and sentiment hits a low point.

Data sourced from the Shanghai, Shenzhen, and Hong Kong exchanges, China Securities Index Co., Ltd., and Hang Seng Indexes Company.

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Risk Disclosure: Constituent stocks mentioned herein are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form, nor do they represent the holdings or trading动向 of any fund managed by the asset manager. The asset manager assesses the risk rating of the Pharmaceutical ETF Huabao and its feeder funds as R3-Medium Risk, suitable for Balanced (C3) and above investors. The risk rating for the Hong Kong Stock Connect Innovative Drug ETF Huabao and its feeder funds is R4-Medium to High Risk, suitable for Aggressive (C4) and above investors. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are solely responsible for any independent investment decisions. Furthermore, any views, analysis, or predictions herein do not constitute investment advice of any kind to readers, and no liability is accepted for any direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Past performance of a fund is not indicative of its future performance. Fund investment carries risks.