CDMO/CMO is affected in the short term and is expected to increase significantly in the second half of 2020: the company's operating income in the first half of 2020 was 13.03 million yuan (the same below), down 47.0% from the same period last year. This is mainly due to the impact of volume procurement on the sales of Smuri 1, the agent product, and the need for CDMO/CMO business to cooperate with the customer development planning process. The investment in R & D was 99.325 million yuan, an increase of 31.0% over the same period last year, mainly due to the launch of phase III clinical trials of the ADC project.
The clinical progress of ADC is better than expected, and the unique production process enhances the competitiveness of the commercial market:
TAB008 is a bioanalogue of bevacizumab and is expected to be on the market in 2021. Although two biosimilar drugs have been approved to market, the market potential of bevacizumab and its biosimilar drugs is huge, and the product is still expected to achieve good sales after it is put on the market. TAA013, an anti-HER-2 ADC drug, is the first T-DM1 ADC drug to enter the III phase in China, with obvious initial advantages. It is expected to complete the III phase in 2022 and go on the market in 2023. According to the statistics of Frost & Sullivan, the market size of HER-2ADC drugs is expected to reach 1.487 billion yuan in 2024 and further grow to 2.697 billion yuan in 2030. TAA013 is expected to get a piece of the pie after listing. In addition, the company uses perfusion-batch mixing technology (PB-Hybrid) for production, which can save the traditional amplification steps and shorten the production cycle, thus increasing the annual output. On the whole, the company has made sufficient preparations and competitive advantages in terms of technology, production and production capacity, laying a solid foundation for the successful commercialization of the products on the market.
The sales team is experienced and diversified cash flow provides guarantee for product research and development: since 2011, the company has been acting Japanese Dapeng original research and development drug Smuro capsule (Smuro 1). With nearly 10 years of commercialization experience of tumor products, it currently covers more than 450 hospitals, of which 1amp 3 is a third-class first-class hospital. In addition, in the future, the company will open up and cooperate and jointly open up sales channels for its own products. As the third MAH cooperation pilot unit in China, the company takes advantage of its own open platform to enhance CDMO/CMO business cooperation, optimize its own R & D and production, and obtain service revenue. The company has also granted TAB014 the right to commercialize Greater China to generate revenue for the company at different stages.
The relevant strategy provides the company with diversified cash flow and supports the company's continuous R & D investment.
Our point of view: the company will usher in the harvest period in the next 1-3 years. Relying on the company's competitive advantages in technology, production and production capacity, and superimposing its own successful commercialization experience of tumor drugs, the products are expected to open the market quickly and drive the growth of performance.
Risk hints: the progress of research and development is lower than expected, market competition intensifies, policy risks, and the impact of the epidemic exceeds expectations.