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深度*公司*海正药业(600267):与旺实生物达成战略合作协议并受托生产新冠口服药VV116

Deep* Company* Haizheng Pharmaceutical (600267): Reached a strategic cooperation agreement with Wangshi Biotech and was entrusted with the production of the COVID-19 oral drug VV116

中銀證券 ·  May 20, 2022 11:56  · Researches

Haizheng Pharmaceutical issued a notice on the evening of May 19 that it signed a "strategic cooperation agreement" with Wangshi. In accordance with the relevant agreement and GMP standards, the company established product-related production quality management documents, carried out analytical method verification, carried out product scale-up trials, clinical research sample production, process verification and commercial production, and promoted the transformation of Wangshi biotechnology achievements. The agreement is valid for 8 years. In addition, a "consignment production agreement" has been signed, and the company is entrusted with the production of VV116, which is valid for 5 years.

Support the main points of rating

VV116 has obvious first-mover advantages, and the industrial chain provides development opportunities. The data of phase II clinical trial of VV116 recently released by Junshi Biological Company is eye-catching, which shows that it can significantly improve the clinical symptoms of patients, shorten the negative time of novel coronavirus nucleic acid, significantly reduce the risk of progression to critical illness and death, and is effective for Delta and Omicron variants. At present, phase II/III clinical research has been in full swing, and it is also accelerating the process of applying for listing. VV116 preparation and its industry chain have a broad market space, which provides greater business development opportunities for domestic CDMO or API enterprises.

The financial index of Haizheng Pharmaceutical Industry has improved, and the fundamental inflection point has appeared. In 2019, Haizheng began to rectify the system, change management and launch equity incentive programs, actively dispose of invalid assets, clean up or reorganize redundant subsidiaries. The asset-liability ratio decreased year by year, the operating cash flow was good, and the deduction of non-net profit appeared an inflection point in 2020. In 2021, the acquisition of 49% stake in Hanhui Pharmaceutical from Hillhouse made it a wholly-owned subsidiary, and its profitability was greatly improved. Haisheng Pharmaceutical, Borey Biology, Haizheng Animal Insurance and other subsidiaries maintained relatively steady growth in preparation business and made rapid progress in research and development.

The integration of API preparations and the active strategic layout in emerging fields. The company actively creates a gradient combination of pipeline products with the integration of upstream and downstream of API preparations in the field of multi-series treatment to ensure the market supply of multiple collection products. The preparation business is flexible to control the sales rhythm, and sales are still higher than expected under the influence of collection and epidemic situation; API covers potential disease areas, has complete production capacity layout, is rich in research and development pipelines, and continues to increase R & D investment. In addition, the company carries out strategic layout in animal protection, special medicine, new traditional Chinese medicine, innovative medicine and other emerging fields, actively and continuously carry out comprehensive layout and key promotion, and introduce partners to become bigger and stronger together.

Valuation

It is expected that the net profit of the company from 2022 to 2024 will be 595 million yuan, 718 million yuan and 875 million yuan, and the EPS will be 0.50,0.60,0.73 yuan respectively.

Main risks faced by rating

VV116 approval uncertainty risk, business expansion is not as expected risk; policy change risk; exchange rate fluctuation risk.

The translation is provided by third-party software.


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