Company profile:
Maibo Pharmaceutical is a leading biomedical company in China, focusing on the development and production of new drugs and biosimilar drugs to treat cancer and autoimmune diseases. The company's drug candidate pipeline currently includes 9 monoclonal antibody drugs, 3 of which are core products in phase III clinical trials: CMAB007 (omalizumab), CMAB008 (infliximab), and CMAB009 (cetuximab). Two other drug candidates, CMAB809 (trastuzumab) and CMAB819 (navutumab), have been approved for clinical trials. The company's core R&D team members have more than 16 years of experience in this field and have presided over 3 major national research projects such as the “863” program. The production facility in Taizhou is currently equipped with a 3*1,500-liter bioreactor system. According to Frost & Sullivan's data, it is one of the largest antibody drug production facilities in China by capacity meter. Furthermore, Sansheng Pharmaceutical has signed a cornerstone investment agreement with the company to purchase 25 million US dollars of shares to be sold.
The views of China and Thailand:
The Chinese biopharmaceutical market continues to grow, and the omalizumab market potential is huge: the Chinese biopharmaceutical market is expected to increase to 478.5 billion yuan by 2022, with a compound annual growth rate of 17.0%. Due to higher prices and limited ability of Chinese patients to pay, China's monoclonal antibody market accounted for only 5.4% of the total biologics market in 2017. As more monoclonal antibodies are included in the national health insurance catalogue and the supply of biosimilar drugs increases and new monoclonal antibodies are launched in China (such as anti-PD1 monoclonal antibody and anti-PD-L1 monoclonal antibody), China's monoclonal antibody market is expected to grow to RMB 69.6 billion by 2022, with a compound annual growth rate of 42.6%, far exceeding the growth of biologics over the same period. According to statistics on historical price differences between MNC and domestic approved brands of biologics, domestic pharmaceutical companies are expected to set the price of their drugs at 70% of MNC drug prices in order to gain a pricing advantage. Domestic omalizumab producers are expected to gain market share mainly through their price advantage.
In terms of operating performance: Maibo Pharmaceutical has no commercialized products yet, and has not yet developed stable revenue, cash flow and profitability. The company lost 150 million yuan in 2018, with R&D expenses accounting for the main proportion. In 2018, R&D expenses increased 311.35% year-on-year to 89 million yuan. The company acquired land in Taizhou in January 2019 and will build two large-scale monoclonal antibody API production lines in the future, with production capacity of 2*18,000 liters and 3*7,500 liters respectively. CMAB007 is expected to have one to three production lines, with a production capacity of 6,057-7,403 liters in 2022, which is the largest production capacity of the three core products. The company is fully prepared in terms of production capacity, which will help reduce the production cost of products and provide backing support for the future commercial production of the company's core pharmaceuticals.
In terms of valuation: Based on the global share capital of 4.124 billion after the public sale, the company's market value was HK$6186-8.042 billion, which is lower than that of its Hong Kong stock peers. Since the company is not yet profitable, the PE valuation method does not apply. The net market ratio after sale was 4.41 to 4.64. Based on the company's position in the industry, performance and valuation level, we gave it 68 points, and the rating was “neutral”.
Risk warning: (1) Market competition risk (2) The company is in a loss and revenue is not stable (3) R&D results are uncertain