Whether it is A shares or Hong Kong stocks, investors always habitually follow foreign investors and big banks. Even if the valuation is significantly higher than that of their peers, as long as the "high" target price comes out, they can always attract a group of "loyal followers". Those penny stocks full of characteristics and potential are often ignored, or even mistakenly killed.

Take the penny stock, biomedical upstart Liankang Biology (00690), for example, Zhitong Financial APP observed that under the multiple characteristics of "holding best-selling EGF drugs, focusing on diabetes, striving to achieve performance, and introducing emerging strategic partners", the stock price was stunned to lose the Hang Seng Index in the 2017 bull market, with a trading volume of less than 1.6 billion shares.

Source: Futu Securities

Explore the cause of this dilemma: some investors blame its performance but beautiful, not easy to be recognized by the market; others feel that its business channels are not strong enough to reflect its competitiveness; and even think that its R & D layout is not clear enough and the future driving force is insufficient. Either way, it seems to be declaring, "I have reason to ignore you."

But is that really so? With these questions, let us always find out the truth from the exclusive interview of Liang Guolong, chairman of Liankang Biology, so as not to miss a potential biomedical target.

Business upgrading seeks internationalization

Zhitong Financial APP: from the diversified business at the beginning of listing to now rooted in the pharmaceutical field, in your opinion, what are the considerations for the major change in the main business and what are its advantages?

Liang Guolong of Liankang Biology:In the process of starting a business for more than a decade, Liankang Group has always had a relatively clear layout:

First of all, we are one of the first biopharmaceutical companies to list in Hong Kong and take root in the mainland pharmaceutical market for a long time, and one of the first pharmaceutical companies to develop biopharmaceutical products and put them on the market. From the historical point more than a decade ago, it is very forward-looking. At present, with the real advent of the bio-pharmaceutical era and the era of innovation, with our existing advantages, our business renewal can fully adapt to the changes brought about by this industry and market.

Secondly, after 16 years of value accumulation and market testing, we have sufficient confidence in existing products and market positioning, and focus on the construction of our R & D pipeline and commercial platform, such as the establishment of Liankang Yongtai Biotechnology Co., Ltd., used for the establishment of marketing team, and then widely carry out all kinds of preclinical and clinical trials, so that "production, research and marketing" play a good synergistic effect.

Finally, thanks to years of development and summary, Liankang Group has formed a mode of "international management, capital and strategic layout and vision, coupled with a flexible operation of localization". In particular, 2017, which has just passed, is a critical year for Liankang Group, because the Group has not only completed the renewal of the board of directors and attracted a number of internationalists, but also introduced strong strategic partners and optimized the shareholder structure. Achieve a balanced docking of international resources and the mainland market. In addition, in the promotion of the new marketing team, on the basis of stabilizing the original sales scale, the existing products have firmly mastered all kinds of channels in their own hands, and successfully completed the five-year plan of "promoting growth".

Zhitong Financial APP: in fact, in the Hong Kong stock market, the change of main business is very "dangerous", which is not only easy to cause misunderstandings among investors, but also face the challenges of new industries. How do you consider the "double" challenges in the process of transformation?

Mr Leung Kwok-lung, Chairman of Liankang Biology:It is not so much business change as business upgrade and integration.

Our current R & D line and products in sale are in accordance with the previous planning and smooth progress, the overall strategy around the business is unchanged, but constantly improve efficiency, do in-depth, optimize the details. In the process of integration, because of product innovation, obvious competitive advantages, and national policy support, we are also trying to fulfill our commitments to investors and the market.

Through nearly three years of business integration and reshaping, our goal is clearer and our strategy is clearer.

Zhitong Financial APP: what is the significance of introducing Xiangjiang Group as a strategic shareholder of the company?

Mr Leung Kwok-lung, Chairman of Liankang Biology:The reason for our cooperation is mainly due to the advent of the era of China's great health industry and the matching and complementary advantages of each other's strategic positioning, and no matter at which level Xiangjiang Group cooperates with us, it will be a long-term strategic relationship, not just at the capital level.

At the same time, in addition to cooperation at the capital level, because Xiangjiang Group has its own healthy pension industry, the pharmaceutical services in the management of chronic diseases, the excavation and application of big data in chronic diseases, and R & D cooperation at the industrial level, as well as the introduction of international excellent R & D resources and other things in line with industrial trends and future medical needs are the focus of our cooperation in the future.

Zhitong Financial APP: in the short term, will the ownership structure of the company continue its current state or will it continue to introduce new strategic partners?

Mr Leung Kwok-lung, Chairman of Liankang Biology:In the current rapid growth period of Liankang Group, we need more suitable strategic partners to introduce and keep an open attitude to any form of strategic cooperation. It should be emphasized that strategic cooperation must be not only financial and capital cooperation, but also the combination of business and resources, in order to help the overall business operation of the group.

Dermatology, ophthalmology and diabetes drugs are issued at the same time.

Zhitong Financial APP: transformation, injection of fresh blood, these will undoubtedly open up a new way for the development of the company, but to return to the essence, the root of enterprise development is still products. At present, the company is mainly focused on dermatology, ophthalmology and diabetes. How do you rate the overall performance of these three businesses?

Mr Leung Kwok-lung, Chairman of Liankang Biology:Recombinant human epidermal production factor is the first biological preparation under Liankang Group. So far, it still has strong advantages, such as ®, which can be well used in dermatology, burns, oral surgery, gynaecology and obstetrics, anus and intestines, ear, nose and throat, plastic surgery, radiotherapy, endocrine such as skin ulcers caused by diabetes. Up to now, this product and Pinap ®are still the two largest profit contributing products of the group. After September 2017, we have also unlocked the product's restrictions on industrial injury insurance, and its strong future growth can be predicted only from the number of medical divisions.

Jinyinshu ®, an ophthalmology product, is one of the products that we will continue to cultivate. Coupled with the newly entered health insurance catalogue, this product has been stationed in seven provinces of health insurance, and its volume potential has been enhanced again.

Diabetes and other endocrine diseases are our main direction. From the initial performance of GLP-2-type misoglinide tablets that successfully entered the health insurance market, this product will undoubtedly be our cash cattle product before the research and development of biological agents. As for the water injection of isenapeptide and long-acting agents under development, it will also bring huge benefits in the future.

Zhitong Financial APP: as you said, the company's main products are epidermal growth factor-Jin Yin Peptide and Jin Yinshu. Up to now, which provinces have won the bid for the above two products?

Mr Leung Kwok-lung, Chairman of Liankang Biology:Jin Yin Peptide ®won the bid except Zhejiang, Fujian, and Qinghai, and also entered the overall planning of the army for procurement by the seven major military regions or troops; Jin Yinshu ®, with the exception of Henan, Zhejiang, and Anhui, also entered the overall planning of the whole army for procurement by the six major military regions or troops.

After winning the bid throughout the mainland, both products will give a significant boost to sales, and are initially expected to be higher than similar bid-winning products.

Zhitong Financial APP: similarly, how did Pinap win the bid? Do you expect year-on-year growth in 2018 to change?

Mr Leung Kwok-lung, Chairman of Liankang Biology:Pinapu has won the bid in all provinces except Guizhou, Qinghai and Xinjiang, and is expected to grow by about 25%.

Zhitong Finance and Economics APP: the diabetic product miglinide calcium tablets have been tendered in Fujian and participated in bidding in many places. How is the winning bid so far?

Mr Leung Kwok-lung, Chairman of Liankang Biology:After Fujian, miglinide calcium tablets won the bid in Shanghai, Jilin, Heilongjiang, Chongqing, Sichuan, Guangdong, Qinghai, Hunan and Sichuan. The reason why we can win the bid on a large scale, in addition to the price advantage, is mainly focused on our marketing network to sink Miglinide to the secondary or grass-roots hospitals in the above-mentioned provinces or future winning provinces, so as to "win on the basis".

The two-vote system has little impact on the company.

Zhitong Financial APP: under policies such as medical insurance control fees, it is a major trend to reduce drug prices. What do you think of the pressure on the production and operation of the company caused by medical insurance bidding?

Mr Leung Kwok-lung, Chairman of Liankang Biology:Indeed, price reduction through tendering is a major trend, and provincial bidding has become a standard practice in many provinces since 2015. Therefore, in response to this trend, our Group has set up a multi-functional task force, including our market access team and senior management. The task force uses internal special tracking tools to regularly review the provincial tender status to ensure the effective management of the bidding process for its three products.

Under the management of the group, the group's product strategy focuses on the development of competitive and innovative therapies, successfully achieving "price for volume", entering the health insurance catalogue of many provinces, and reducing the operating pressure of bidding on the group.

Zhitong Finance APP: under the two-vote system, the company also began to actively optimize the distribution team and take the road of academic promotion. So far, how do you plan your company's commercialization platform?

Mr Leung Kwok-lung, Chairman of Liankang Biology:First of all, our Group plans to greatly expand the size of its internal sales team and regional distributors; second, it will seek to establish partnerships with contract sales agencies or large pharmaceutical companies to expand its sales and marketing scope in the mainland.

Zhitong Financial APP: in addition, the company has handed over the sales work of Jin Yinshu to China Resources Zizhu. What is the positive impact of this move on the company?

Mr Leung Kwok-lung, Chairman of Liankang Biology:After reaching a partnership with China Resources Zizhu, Liankang changed the sales model of Jinyinshu ®, after which sales and distribution expenses were deducted from revenue as an offset, while the company's sales and distribution costs fell by about 19.3% in the first half of 2017 compared with the same period last year.

Our cooperation with China Resources Zizhu not only increases and diversifies the company's revenue sources by expanding Jin Yinshu's ®footprint, but also expands the company's sales and improves its operating performance.

Uni-PTH is the top priority in R & D plate.

Zhitong Financial APP: in addition to existing products, investors are probably most related to the company's research and development. At present, what is the overall situation of the company's products under research?

Mr Leung Kwok-lung, Chairman of Liankang Biology:In the short term, both R & D speed and investment will be further accelerated to promote new products on the market as quickly as possible; the medium-and long-term R & D line is characterized by not only rich but also highly innovative, and we will also make use of our own R & D platform. contact with more R & D subjects and teams in order to cooperate in R & D and transform new drug results.

Zhitong Financial APP: the company has studied Uni-E4 and Uni-PTH for a long time, and now it has entered the third clinical stage. How is the listing time planned? What is the application market potential of these two products?

Mr Leung Kwok-lung, Chairman of Liankang Biology:Uni-E4 submitted a new drug application in 2017 and is expected to launch in 2019; Uni-PTH 's new drug application was completed as early as April 2015 and is expected to be available in 2018 according to the R & D schedule.

The products of these two products are very competitive in both therapeutic field and price, especially the innovative advantages of PTH. Although it seems to prolong the research and development time in the short term, it makes the product more competitive because of the opposite technological content, and other competitive products are also in the clinical stage, so there is no real competitive product.

It is worth mentioning that the PTH powder injection has been submitted for production, followed by on-site inspection by the regulatory authorities.

When Zhitong Financial APP:Uni-EPO-Fc conducted the Lb experiment, it was revealed that "the hospital team thought there was a problem with the clinical data". After that, the company changed the hospital. Can you elaborate on this matter?

Mr Leung Kwok-lung, Chairman of Liankang Biology:EPO is a kind of new drug, because it is a new drug, it is normal to adjust it in the first phase of the trial. After all, drugs are the result of thousands of trials and tests. Moreover, the replacement of hospitals is not our reason. First of all, we did a phase of trial in Shanghai Changhai Hospital, and on this basis, we continued the clinical trial in a hospital in Wuhan in April 2015 due to the adjustment of drug metering. Later, when the hospital accepted the national policy verification of 722, due to the hospital's own problems, all projects in the hospital were suspended, and we had to change to a new hospital.

Up to now, we have upgraded the process of EPO and are ready to sign a contract with the new hospital. We expect to carry out single-dose and multi-dose studies on anemia patients in the second half of 2018 and 2019, and then successfully carry out clinical phase III trials.

Zhitong Financial APP: these new products are being developed. Which product do you think is most likely to raise the company's valuation and become the fulcrum of the stock price?

Mr Leung Kwok-lung, Chairman of Liankang Biology:The social and economic benefits of PTH are inestimable. under the action of market potential and medical insurance costs, the product can definitely become the fulcrum of stock price.