KINTOR PHARMA-B(09939): Cross-border beauty makeup attracts bottom-fishing funds, while southbound funds become the main short-term selling pressure.

Since the end of September, KINTOR PHARMA-B (09939) has been following the Hang Seng Index to produce a continuous uptrend. Although the company's stock price touched a new low of 0.79 Hong Kong dollars on September 11, it quickly recovered following the market and rose to a high of 1.7 Hong Kong dollars on October 7, with a maximum increase of 115.2% in the past month. However, with the Hang Seng Index pulling back from October 8, KINTOR PHARMA-B's stock price quickly fell by 34.7% in the following five trading days, and then traded sideways until early November. However, on November 12, KINTOR PHARMA-B suddenly gained momentum around 3:30 pm in the afternoon, with its stock price showing a significant increase on high volume, rising by over 16% in half an hour and eventually closing up by 16.36%, with a trading volume of 4.511 million shares, the highest since October 10 this year. On November 13, KINTOR PHARMA-B opened high with an increase of 10.16%. Just when investors thought it could continue the previous day's trend, the stock price started to decline continuously and ended up falling by 2.34%; and on November 14, KINTOR PHARMA-B's stock price fell further to 1.16 Hong Kong dollars, a drop of 7.2%, basically giving up all the gains from the 12th. Hong Kong Stock Connect funds as the biggest selling pressure The issue of liquidity pressure in the Hong Kong stock market has long been a problem, especially for small-market companies facing long-term liquidity constraints, once a company fails to gain access to the Stock Connect or is removed from the list, losing the support of southbound funds could put pressure on its liquidity. Since being removed from the Stock Connect list in March this year, KINTOR PHARMA-B's stock price has experienced a significant decline. Observing that 27 stocks removed from the Stock Connect list in March this year had average price drops of 24% from March 4th to March 28th, with a 52% average decrease in trading volume. Among them, KINTOR PHARMA-B's price fell by 12.21% on the day it was removed from the Stock Connect, with a cumulative decline of 34.35% in the period, exceeding the average; within the period, the trading volume of KINTOR PHARMA-B declined by 89% after being removed from the Stock Connect, also exceeding the average mentioned above. According to the rules, once a company is removed from the Stock Connect, mainland investors cannot buy its shares but only sell the ones they hold. This means that as a company is removed from the Stock Connect, mainland investors not only cannot contribute to liquidity, but may become a selling pressure. This is the main reason for the "roller coaster" trend seen in KINTOR PHARMA-B in recent days. Looking at the trading seats of KINTOR PHARMA-B in the past five days, the top three buyers were Merrill Lynch, BNP Paribas, and Bank Of China, buying 639,000 shares, 562,500 shares, and 326,500 shares respectively; whereas in terms of sellers, the Hong Kong Stock Connect (Shenzhen) was the largest seller, selling 1.5665 million shares, and the Hong Kong Stock Connect (Shanghai) was the second largest seller, selling 512,000 shares. In terms of funds, on November 13, KINTOR PHARMA-B's trading volume reached 11.8035 million shares, with a turnover of 15.7178 million Hong Kong dollars, and a net outflow of 26.479 million Hong Kong dollars on that day. Looking at the percentage of KINTOR PHARMA-B's shares held by the Hong Kong Stock Connect, although the percentage has been declining this year, as of November 13, it was still at 26.55%, and the large selling pressure formed from this could continue to have a negative impact on KINTOR PHARMA-B's future stock price fluctuations. From hair loss products to beauty products, can KINTOR PHARMA-B hold up its fundamentals? On November 27 last year, KINTOR PHARMA-B (09939) opened sharply lower, with its stock price plummeting by over 30% at the opening, hitting a low of 2.01 Hong Kong dollars during the day, setting a new record low for the company's stock price since going public, with a maximum drop of over 40%. The reason for such market panic was that KINTOR PHARMA-B disclosed the top-line data of its core product KX-826 for the treatment of androgenetic alopecia in Phase III clinical trials before the market opened that day. The results showed that compared to the placebo, the KX-826 group TAHC showed improvement at various visit points, but the differences did not reach statistical significance. This was the third time KINTOR PHARMA-B had encountered problems in crucial product Phase III clinical trials, following after Puclopramine. However, unlike many pharmaceutical companies that choose to abandon products after clinical failures, KINTOR PHARMA-B continued to expand the market for KX-826. It announced on July 10 this year that it would launch cosmetics containing KX-826 as the main ingredient. Its first product is an external anti-hair loss liquid for androgenetic alopecia (AGA). It is evident that although this product falls under cosmetics, it still targets the same market of hair loss products. According to a research report by GrandViewResearch, the global hair loss treatment market was worth $8.2 billion in 2022, and is expected to grow at a compound annual growth rate (CAGR) of 9.0% from 2023 to 2030, reaching a market size of $16.02 billion in 2030. In China, according to the latest data from the National Health Commission, the number of people suffering from hair loss has exceeded 250 million, equivalent to one in every six people facing hair loss problems. Among them, about 163 million are male and 90 million are female, with male pattern hair loss patients accounting for 90%; and the hair loss group is getting younger, with 84% of people under 30 experiencing hair loss, with the largest proportion being young people aged 26 to 30, accounting for 41.9%. According to the "2023 Hair Loss Industry Market In-Depth Analysis Report," the hair health industry in China is expected to grow at a rate of 260% per year over the next 10 years. The domestic hair loss drug treatment market is expected to reach 15.5 billion yuan by 2031, with an expected annual compound growth rate of 32% from 2021 to 2031. In terms of competition in the drug market, it is understood that currently all...More than 20 drugs under research have entered the clinical Phase II stage of male pattern baldness, with a variety of types of drugs, including domestic companies such as Jiangsu Hengrui Pharmaceuticals, Kelun Pharmaceutical, and Zejing Pharmaceutical, as well as multinational pharmaceutical companies Pfizer and Eli Lilly. Last year, Eli Lilly's JAK inhibitor baricitinib (Olumiant) for the treatment of severe adult male pattern baldness and Pfizer's tofacitinib sulfate capsules (Lefunuo) for the treatment of severe male pattern baldness in adolescents and adults aged 12 and above were approved in China, further intensifying the competition in the domestic male pattern baldness drug market. Therefore, by launching KX-826 in a similar form to "cosmeceutical" products, it may achieve a certain degree of overtaking on a bend.However, just as the market thought that KX-826's entry into the cosmetics field was just an attempt by Kaituo Pharmaceuticals to overtake in the pharmaceutical industry, on October 29, Kaituo Pharmaceuticals announced that its independently developed KT-939 had obtained approval from the International Cosmetic Ingredient Naming Committee for review and approval of international cosmetic ingredient names (INCI), officially notifying that KT-939's Mono ID is 39815. According to the announcement, KT-939 is a tyrosinase inhibitor developed by Kaituo Pharmaceuticals, which can inhibit melanin production and also has antioxidant and anti-inflammatory effects. Previous enzyme studies and cell melanin generation experiments have shown that KT-939 has the strongest tyrosinase inhibition activity reported to date, with a more effective inhibition of melanin production than compounds targeting the same point that have already been used in cosmetics and pharmaceuticals, including peptide anmito, 577, 377, bearberry extract, hydroquinone, and kojic acid. It is easy to see that Kaituo Pharmaceuticals' development strategy has shifted from the biomedical industry to the cosmetics industry, which may be related to its current fundamental situation. It is understood that as of the first half of this year, Kaituo Pharmaceuticals has not commercialized any products, and despite a 76.1% decrease in research and development expenses, the company still incurred a net loss of 71.493 million yuan. At that time, the company had only 320 million yuan in cash and cash equivalents.