Incident: On November 20, 2019, the company issued the “Notice of Investment Progress of Jiuzhitang Co., Ltd. on M&A Funds”. The company received a notice from the Zhuhai Hengqin Jiuzhitang Yonghe Yonghe Qihang Equity Investment Fund. Its holding subsidiary Lijiuzhitang Meike (Beijing) Cell Technology Co., Ltd. received the “Acceptance Notice” issued by the China Drug Administration (acceptance number: JXSL1900126), and the clinical trial application for “ischemia-resistant allogeneic bone marrow mesenchymal stem cells” reported by Metco has been accepted by the China Drug Administration.
The proposed stem cell product went smoothly in phase I/IIa clinical trial in the US. The data obtained has been publicly released. The clinical trial application received this time was reported by Metco, a company established by the company's merger and acquisition fund. The product name is “ischemic recipient allogeneic bone marrow mesenchymal stem cells”. The product was independently developed by the US company Stemedica Cell Technologies Inc., which was invested by the M&A fund. The product has previously carried out clinical trials and commercialization at various stages in many countries, including the United States, Switzerland, Kazakhstan, Mexico, etc., among others:
In Kazakhstan: American Stemedica partner company Kazakh LLP “ALTACO-XXI”
The reported treatment for acute myocardial infarction using human bone marrow mesenchymal stem cells produced by Stemedica has been approved. This marks the first time that Stemedica mesenchymal stem cell products are legally eligible for sale in Kazakhstan. This has also indirectly had a positive impact on Jiuzhitang's market expansion and performance improvement.
In the US, six clinical trials were conducted, including chronic heart failure, ischemic stroke, Alzheimer's disease, photoaging of the skin, acute myocardial infarction, and traumatic brain injury. Among them, phase I/IIa clinical trials using human bone marrow mesenchymal stem cells to treat ischemic stroke successfully reached all endpoints, and safety and efficacy were initially proven. Stemedica's research paper on phase I/IIa clinical trial using human bone marrow mesenchymal stem cells to treat ischemic stroke has been published in the international journal Stroke, which specializes in the field of stroke, and detailed safety and efficacy data obtained in the study have been officially published.
The research results of the invested stem cell project have entered China! The application has been accepted by the National Drug Administration. According to the company's announcement, Metco's clinical trial application is currently the first clinical trial application using imported stem cell products accepted by the Drug Evaluation Center of the National Drug Administration. According to the “Notice of Acceptance” issued by the National Drug Administration, the application for this clinical trial was approval of imported (including Hong Kong, Macao and Taiwan) therapeutic biomedical clinical trials. The conclusion was that it was examined and decided to accept it. After Metco's application for this clinical trial is accepted, it still needs to pass the review by the Drug Evaluation Center of the National Drug Administration. Currently, there will be no impact on the company's recent performance. We believe that US Stemedica's stem cell clinical trials have progressed smoothly in both the US and Kazakhstan over the past two years. This time, it entered China and was accepted by the National Drug Administration, strengthening expectations for commercialization of Jiuzhitang's stem cell business in China, which is worth continuing attention.
Investment advice: We lowered the company's profit forecast due to the influence of policy factors such as medical insurance restrictions and hospital fee controls in 2019, and because the invested Stemedica company invested heavily in stem cell research. It is estimated that in 2019-2021, the company will achieve net profit of 218/2.50/293 million yuan, corresponding to EPS 0.25/0.29/0.34 yuan. Consider the rapid expansion of the company's stem cell business, leading domestic stem cell technology, and at the same time laying out emerging businesses such as new diabetes drugs to maintain the “increase in holdings” rating. Risk warning: There is still great uncertainty about the approval of the product review/the time and results required for each stage are uncertainty/Technology research and development risk/medical insurance fee control/business development falls short of expectations