1H21 performance is in line with our expectations
The company announced 1H21 results: no operating income during the reporting period; a net loss of 326 million yuan, excluding the impact of the employee incentive scheme, an adjusted net loss of 300 million yuan, in line with expectations.
Trend of development
Puclosamide achieved its first COVID-19 EUA, and preparations for commercialization are progressing steadily. Since 2021, there have been many milestones in the exploration of the use of procuramide in the treatment of COVID-19. Following the positive clinical results of IIT in Brazil, in July 2021, the Paraguayan government awarded proclomide for the first EUA of hospitalized patients with COVID-19, which we expect to contribute to the accumulation of more real-world data on the use of procuramide in COVID-19 's treatment. The company is actively preparing for the global commercialization of Pucrylamine, the company is actively preparing for the production capacity needed for globalization, and signed cooperation agreements with Shanghai Fosun Pharmaceutical and Etana respectively on the commercialization of Pucrumine in India / Africa and Indonesia.
During the three global multicenter registration III projects of Pucrumine, we pay attention to the disclosure of key data. The company is promoting two new phase III registrations for non-inpatients and one for inpatients worldwide, and we believe that the disclosure of key data will confirm the protective effect of procuramide on COVID-19 patients. In addition, existing in vitro studies suggest that proclomide is potentially involved in regulating the expression of key proteins (ACE2 and TMPRSS2) invaded by novel coronavirus, activating Nrf2 pathway and regulating immune and inflammatory responses. In vitro studies and preclinical genome sequencing results suggest that proclomide is potentially effective against mutants such as Alpha, Delta and Gamma. We believe that the above results are helpful to understand the protective effect of proclomide on outpatient, hospitalized and mutant patients. Actively lay out the cutting-edge technology platform and enrich the diversified pipeline layout. The company has a multi-mechanism layout in the field of AR. In addition to prolamide, the external small molecule AR antagonist Freitann used in androgenic alopecia (AGA) phase II clinical has entered the data analysis. The company is expected to release preliminary data in early September 2021, and start the III phase clinical in 4Q21. The American II phase clinical has obtained the FDA license, and the domestic phase I/II clinical for acne treatment is in progress. The exploration of external AR PROTAC molecule GT20029 for AGA and acne has entered the clinical stage, and it is the first topical PROTAC in the world. ALK-1 antibody in macromolecular pipeline is being promoted in II phase study in combination with PD-1 in the treatment of hepatocellular carcinoma in China and the United States. We believe that the company's deep ploughing in the field of AR is conducive to the exploration of targets and disease mechanisms, and the diversified layout of the tumor field, with potential synergistic effects of combination.
Profit forecast and valuation
Keep profit forecasts for 2021 and 2022 unchanged. We use the DCF model to value the company and maintain the win-run industry rating, taking into account the progress made in overseas commercialization of Pucrylamine, as well as the liquidity gains brought about by the inclusion of the Hang Seng Composite Index (effective September 6) and the potential inclusion of the Hong Kong Stock Connect. We raised our target price by 4.7 per cent to HK $90.00, which is 25.0 per cent higher than the current share price.
Risk.
The clinical progress and data are not as expected, the commercialization of products is not as expected, the impact time of COVID-19 is uncertain, and the progress of overseas commercialization is not as expected.