After the boots have been washed and landed, is the TENNOR THERAP-B (06872) fund in the bag after the emotional tide recedes?

Thanks to the short-term rapid inclusion mechanism of the Hong Kong Stock Connect, since late June this year, more than 10 companies from different industries in Hong Kong have seized the "inclusion" golden window period to concentrate on landing in the Hong Kong market. According to the official review rules of the Hang Seng Index, the quarterly review of small and medium-sized companies only counts the trading data from the listing date to June 30 of the current year, and does not backdate after the deadline. Therefore, for IPO companies queuing for listing, the closer the listing date is to June 30, the shorter the assessment period and the less pressure to meet the standards. Especially for the innovative pharmaceutical sector, from the second half of 2025 to the first half of this year, the Hong Kong stock market's innovative pharmaceutical sector has shifted from a bull market to a trend of oscillation and decline, especially after mid-April this year, it has been continuously falling. The Hang Seng Healthcare Index has fallen continuously since mid-April this year, with the index reaching a low of 2938.07 points on June 22. Looking back from the second half of 2025 to the present, the maximum decline in the index has exceeded 35%. This market trend for the pharmaceutical sector means that the earlier an innovative pharmaceutical company goes public, the greater the disadvantage of facing price fluctuations and unstable trading volume, and the higher the risk. However, TENNOR THERAP-B (06872) is an exception. After going public in May this year, the company's stock price rose from HK$75.7 at the issue price to a high of HK$287, and successfully entered the market. However, after the "shoe fell" into the market, the company's stock price fell significantly after the decline in sentiment on the exchange, eventually forming a typical "inverted V" trend. Rare Pipeline "Ignites" Market Sentiment As mentioned earlier, due to the recent mixed performance of the pharmaceutical sector in the Hong Kong stock market, there has been a significant differentiation in the performance of pharmaceutical IPOs, with some 18A companies that have poor fundamentals failing to meet the average performance of new stocks in Hong Kong. In terms of financial performance, the prospectus of Denn Medicine shows that the company recorded a net loss of 192 million yuan, 146 million yuan, and 38 million yuan respectively from 2023 to the first quarter of 2025, with a total loss of 376 million yuan; in the two complete years of 2023 and 2024, the research and development expenses of the company's core products were 98 million yuan and 57 million yuan respectively, accounting for 90.7% and 82% of the total research and development expenses, and 76.9% and 69% of the total operating expenses respectively; in addition, during the reporting period, the company's operating cash flow continued to be negative. If we only refer to the normalized financial performance of the 18A companies mentioned above, Denn Medicine has basically "no highlights," which explains why the stock's oversubscription on the first day was only 21.8 times, indicating moderate market interest. However, a significant reversal in market sentiment occurred in the final stages of Denn Medicine's IPO. It was observed that the stock saw dramatic frenzy in funding in the last two days of the IPO. In the end, Denn Medicine was oversubscribed 9015.11 times, with nearly HK$570 billion invested, firmly ranking among the top in new pharmaceutical stocks listed in Hong Kong this year; with a fixed public offering of 9.35%, and a 15% greenshoe option; about 276,000 people subscribed, with a first-hand success rate compressed to 0.8%, indicating a strong interest in the market. The core reason for the surge in market investor interest in Denn Medicine lies in its soon-to-be-commercialized core product "the world's first and only" new molecular entity developed specifically to treat Helicobacter pylori, called Lefu Tongnizuo. This drug is the world's first new molecular entity developed specifically for this indication since the discovery of Helicobacter pylori in 1982. According to the prospectus, in the head-to-head Phase III trial with the BQT regimen, the eradication rate of the Lefu Tongnizuo triple therapy was 92.0%, higher than BQT's 87.9%; in the multidrug-resistant population, the advantage was even more pronounced - 89.9% vs. 81.2%; in terms of safety, the incidence of adverse events in the Lefu Tongnizuo group was 37.3%, significantly lower than BQT's 53.2%, and no drug-related serious adverse events were reported. More importantly, the commercialization progress of this drug is also crucial. It submitted an NDA in August 2025, expected to be approved by the end of this year, and has BD agreements in place to support its commercialization. Denn Medicine has received the authoritative endorsement of the AMR Action Fund. This fund was established by 12 global pharmaceutical giants including AstraZeneca, Bayer, Lilly, GSK, Johnson & Johnson, and Pfizer. Denn Medicine is the only non-European and American company that the AMR has invested in, and it is the first IPO project in Asia. In addition, based on the issue price of HK$75.7, Denn Medicine's initial market value was only HK$3.918 billion, with a premium of approximately 69% over the last pre-IPO post-investment valuation of HK$2.013 billion. This valuation is relatively low among the 18A biotechnology companies listed at the same time, providing a high margin of safety. Therefore, driven by multiple favorable factors, Denn Medicine's stock price experienced a significant surge against the market trend. Its dark pool trading saw an increase of over 90%, with the largest intraday increase on the first day of listing exceeding 189%, closing with an increase of 178.73%, and its market value surpassed HK$11 billion. After taking the market by storm for the first two trading days post-IPO, Denn Medicine saw a rapid increase in its stock price, with a cumulative increase of 211.23% from the issue price. However, on the third trading day, the stock price of Denn Medicine showed a long upper shadow candlestick, and it subsequently entered a "five-day decline" trend under the dominance of bearish sentiment, with the stock price falling to HK$192.40, corresponding to a market value of HK$100.63. This market value was already below the market value threshold of approximately HK$106 for the Hong Kong Stock Connect. As a small-cap stock with an initial market value of only about HK$3.9 billion, Denn Medicine faced the challenge of stabilizing its daily average market value above HK$10 billion within a review period of over a month. Previously, small-cap pharmaceutical stocks such as Hanci Aitai and BENQ HOLDING failed to pass the review for the Stock Connect. However, driven by the strong performance of the stock on its first trading day, Denn Medicine had already crossed the threshold for inclusion in the Stock Connect before the deadline. It naturally would not give up this golden window, which is the only opportunity of the year for new stocks to be included in the Stock Connect, with the highest certainty, speed, and lowest cost for locking in the incremental capital inflow from the south in the second half of the year. Therefore, after the five consecutive declines, Denn Medicine's stock price saw a noticeable rebound. From June 3 to June 24, the company's stock price rose by approximately 29% within the period. Looking at the volume in this period, the company showed a clear "volumeless rise," with daily trading volumes maintained at low levels, and the lowest daily trading volume even less than 50,000 shares, reflecting a high concentration of chips in the market. By the close of June 23, Denn Medicine's stock price had reached HK$273, corresponding to a market value of HK$142.8 billion, far exceeding the threshold for inclusion. With only 7 days left before the end of the review period of the Stock Connect, barring any drastic fluctuations, Denn Medicine's inclusion in the Stock Connect was almost certain. In this scenario, some investors in the market began to choose to exit at a high price. Looking at the market, on June 24, Denn Medicine's stock price rose to touch the upper BOLL line of HK$285.02 in the morning session, but soon began to steadily decline, falling below the daily average line before the morning close, and continued to fall below the daily average line throughout the day, with an accelerated downtrend appearing in the final trading session, ultimately closing with a 3.44% drop. After confirming the overbought signal on the technical front and a breakthrough in the stock price, bearish sentiment increased in the market, leading to six consecutive declines in the company's stock price within the review period of the Stock Connect, lowering its average market value to HK$121.4 billion. However, even so, Denn Medicine still managed to secure its inclusion. However, the sentiment of investors both in and out of the market changed significantly after the inclusion. Due to the scarcity of the core product and the endorsement of key investors, Denn Medicine became the focus of the IPO sector in the Hong Kong stock market, and under the bonus of mechanism B, it led to a very low success rate in allotments, forcing a large amount of capital that did not get allotments to buy in the secondary market, creating a typical scenario of a chip squeeze causing a surge in prices. These conflicting holders became a key factor exacerbating the difference in investor sentiment in the market. Looking at the flow of funds, large transactions had already started to flow out in an orderly manner from June 17, and on the next trading day, when Denn Medicine's inclusion in the Stock Connect was confirmed, the net outflow of large transactions reached 2,483,400 Hong Kong dollars. This may indicate that after the waning of sentiment, Denn Medicine's valuation trend may be rationalizing based on fundamentals. With the approval milestone of the core product Lefu Tongnizuo still at the end of this year, in the "favorable window period," Denn Medicine's ability to maintain its high valuation or to attract investor attention will be a focal point near term.