There is a serious mismatch between supply and demand for clinical prevention of multidrug-resistant bacteria. The burden of multiple bacterial resistance is serious. The detection rate of drug-resistant bacteria in hospitals in China remains high. The detection rate of common drug-resistant bacteria is 17.7-54.3%, and the average death rate due to drug-resistant bacterial infections is around 40%. In 2019, the number of deaths due to drug-resistant bacterial infections worldwide was 1.27 million. According to quantitative estimates, there are more than 13 million people at high risk of multiple drug-resistant bacterial infections in China. Under the neutral assumption, there are more than 4 million people infected with the five common drug-resistant bacteria. In contrast, there are currently no vaccines against drug-resistant bacteria on the market in the world. Novel antibiotics targeting gram-positive/negative drug-resistant bacteria have problems such as early marketing and insufficient research and development activity. There is a serious mismatch between supply and demand for clinical treatment of multiple drug-resistant bacteria.
From the perspective of DRGs, effective antimicrobial resistance control measures have great economic benefits. Based on the DRGs group, comparing multiple economic indicators of whether hospitalized patients are infected with multiple drug-resistant bacteria, patients will stay hospitalized for a very long time after being infected with multiple drug-resistant bacteria, significantly increasing hospitalization costs and increasing the financial burden. Therefore, effective prevention and control measures against multiple drug-resistant bacteria have become a common requirement for patients and payers.
The development of preventive vaccines and novel antibiotics is beginning to flourish. Olin Biotech's Staphylococcus aureus vaccine is currently the only vaccine against drug-resistant bacteria currently being clinically developed in China, and has already entered phase III clinical stage. China's novel antibiotics for multi-resistant bacteria are deployed through self-development+introduction, and there are two products for gram-positive/negative bacteria in phase III clinical or NDA stage, respectively.
The development of preventive vaccines and novel antibiotics against multidrug-resistant bacteria is dawning.
Olin Biotech - The pace of routine vaccine release is clear, and the Staphylococcus aureus vaccine may fill the gap in the world. Olin Biotech has now marketed three vaccines: adsorbed tetanus vaccine, Hib conjugate vaccine, and AC conjugate vaccine. The declared production of the Ac-Hib triplet vaccine has been accepted, and Staphylococcus aureus vaccine phase III clinical enrollment is underway. Pre-clinical stocks include quadrivalent influenza virus lysis vaccine, group A streptococcus vaccine, oral recombinant Helicobacter pylori vaccine (Escherichia coli), and Acinetobacter baumannii vaccine.
The expansion of adsorptive tetanus vaccine channels has opened up space for release, and the growth of the ac-Hib triple vaccine relay has completed the growth of a single vaccine. The tetanus vaccine is an active immunization method to prevent tetanus infection. The vaccination scenarios for disease control channels can be 1) dog wound clinics and 2) emergency trauma treatment. The current tetanus vaccine penetration rate for people who are passively immunized from dog injury+trauma is estimated to be less than 5%. Subsequent channel expansion will open up space for tetanus vaccines.
The declared production of Ac-Hib triplets has been accepted. After approval, they will become exclusive to the market, and the growth of single seedlings will be completed.
The four-faceted innovation of the Staphylococcus aureus vaccine guarantees the success rate of research and development, and the expansion of applications by multiple departments has unleashed huge potential space. The Staphylococcus aureus vaccine innovates in four aspects to protect the success rate of research and development in terms of antigens, adjuvants, indications, and vaccination procedures. According to current estimates for patients undergoing closed orthopedic surgery, the number of people vaccinated each year is expected to reach 350,000 per year. Subsequent expansion to departments in urgent clinical need and patients with inpatient surgery may further unlock huge potential space.
Profit forecast and valuation: We predict that Olin Biotech's net profit for 2023-2025 will be 0.68/1.24/183 million yuan respectively, +156%/+83%/+48%, and PE is 131x/72x/49x respectively, covered for the first time, giving it a “highly recommended” investment rating.
Risk warning: the risk of R&D falling short of expectations, the risk of commercialization falling short of expectations, the risk of changes in payment policies, the risk of increased competition, the risk that assumptions are not established, and there is no risk that the Staphylococcus aureus vaccine will affect short-term performance.