Brief comment on performance
On September 26, the company released its mid-year report of 2022, with an operating income of 67000 yuan and a net profit of-350 million yuan in the first half of 2022.
Business analysis
The expenditure on R & D has increased rapidly, and the clinical progress has been promoted in an orderly manner. In the first half of 2022, the company's R & D cost was 354 million yuan, an increase of 73% over the same period last year. The rapid increase in R & D costs mainly comes from: 1) Clinical trial expenditure (179 million yuan, an increase of 281% over the same period last year), mainly due to the III phase clinical expenses of the core product recombinant HPV nine-valent vaccine REC603 and the increased investment in clinical trials of recombinant two-component COVID-19 vaccine (CHO cell) ReCOV. 2) preclinical expenditure (64 million yuan, an increase of 45% over the same period last year), mainly due to the company's vaccine research in the preclinical stage.
The REC603 III phase clinical is progressing smoothly, and the new adjuvant HPV vaccine is expected to submit IND application by the end of the year. According to the company's mid-2022 report, REC603 is currently in phase III clinic and completed immune bridging in young age groups, comparison of immunogenicity with Gardasil 9 and first dose vaccination in August 2022. Subjects in the REC603 primary efficacy trial are being followed up according to the clinical regimen and are expected to submit BLA applications in 2025; the new adjuvant HPV vaccine REC604a is expected to submit IND applications by the end of 2022.
The progress of ReCOV is positive, and the pre-clinical varieties bloom at many points. The company's ReCOV can induce high titer broad-spectrum neutralizing antibody and Th1 biased T cell immune response, has excellent cross-neutralizing effect on Omircron and other mutants, and is expected to submit EUA applications in Chinese and overseas markets simultaneously in the second half of 2022. The mRNA vaccine R520A (the world's first freeze-dried mRNA vaccine) for Omircron mutants has been approved for clinical trials in the Philippines and New Zealand. The new adjuvant recombinant herpes zoster vaccine REC610 is nearing completion of preclinical research and an application for IND will be submitted in the second half of the year.
Profit adjustment and investment suggestions
Regardless of the possible performance contribution of the company's COVID-19 vaccine, we maintain the profit forecast and expect the R & D investment to continue to increase, taking into account the continuous progress of the company's future product pipelines and clinical trials. 22-24 net profit is expected to be-7.28,5.31 and-370 million yuan. Maintain a "buy" rating.
Risk hint
The risk of HPV vaccine immunization procedure change; the risk of product research and development progress falling short of expectations or failure; the risk of intensified competition in the industry market; the risk of sales falling short of expectations; the risk of commercial expansion falling short of expectations; the risk of intellectual property rights; the risk of product price fluctuations.