An innovative pharmaceutical company focusing on antiviral and immune diseases. The company already has a variety of mature commercial products, which can achieve stable profits. At the same time, Kailiwei, a cure for hepatitis C, is the first domestically produced pan-genotypic antiviral drug, and the product volume is imminent.
Long-acting interferon, a second-generation drug to cure hepatitis B, is already in clinical phase III. It is expected to be marketed in 2025, and the R&D relationship will enter the harvest period.
Hepatitis C cure: The next 7 years will be an important window for eliminating hepatitis C, and the expansion of Kailiwei's health insurance coverage will accelerate the release of products. Kailiwei was approved for domestic listing in 2020, breaking the monopoly of overseas pharmaceutical companies and achieving import substitution. The 2022 contract renewal will expand the scope of reimbursement to pan-genotypes, further opening up market space. In terms of promotion strategy, the company differentiates and expands the primary county market according to the distribution characteristics of hepatitis C patients in China. The “Action Plan to Eliminate the Public Health Hazards of Hepatitis C (2021-2030)” proposes the goal of eliminating hepatitis C by 2030. The stock of hepatitis C patients in China is about 10 million, and there are about 200,000 new cases every year. The hepatitis C treatment market will continue to accelerate in the next 7 years and continue to promote antiviral treatment for existing patients, so Kailliwei is expected to achieve rapid release.
Hepatitis B cure: The product matrix is rich, and the second-generation therapy long-term interferon combined with NAS data is ready to be read. The company's long-acting interferon-derived prebiotic/KW-001 is in phase III clinical phase. As of the first half of 2023, all subjects have been enrolled and used for 48 weeks, and have entered the 24-week follow-up phase. Clinical trial data are being read out soon. According to the “Expert Consensus on Clinical Cure (Functional Cure) of Chronic Hepatitis B”, long-acting interferon drugs combined with NAS is the most likely solution to improve the clinical cure rate at this stage. The competitive pattern for long-term interferon in the hepatitis B treatment market is good. Foreign companies have withdrawn from the Chinese market. Currently, there is only one Pegbin product on the market. At the same time, considering China's huge patient base, construction of hepatitis B treatment clinics has begun, and KW-001 has great potential for future growth. In addition, the company also stocks a variety of innovative drugs for the treatment of slow hepatitis B, such as KW-027, KW-034, and KW-040, to create a product matrix around functional cure for hepatitis B.
The ability to commercialize is outstanding, and mature varieties lay the foundation for performance. In addition to innovative drugs for the treatment of hepatitis C and hepatitis B, the company also has a variety of unique commercial products, including Jin Shuxi (human interferon α2b vaginal effervescent tablets), Kain Probiotics (human interferon α2b injections), Amboz (pirfenidone tablets), Kein Ganlu (compound glycyrrhizide capsules), and Glycyrrhizin (compound glycyrrhizide tablets/injections) to stabilize the company's basic revenue market.
Profit forecasting and valuation. We expect the company's revenue for 2023-2025 to be 1,481 billion, 1,845 million, and 24.43 billion, respectively, up 27.7%, 24.6%, and 32.4% year-on-year; net profit to mother will be 139 million, 192 million, and 251 million, respectively, up 67.2%, 38.0%, and 30.7% year-on-year, corresponding to 2023-2025 PE of 40x/29x/22x, respectively. Using a comparable company PE valuation method, the company's target market value was obtained at 7 billion dollars, and there is room for an increase of 26.9% compared to the latest closing price. Therefore, it was covered for the first time, and the company was given a “buy” rating.
Risk warning: risk of product commercialization falling short of expectations, risk of developing new drugs, risk of price reduction in collection.