The company is operating steadily, and the initial launch of HIV drugs is underway. Relying on the steady human protein business, the company had revenue of 289 million yuan and net profit of 39.77 million yuan in 2020. After the innovative anti-HIV drugs enovirin and enomide were marketed, the company increased investment in sales, management, and R&D expenses, which led to losses. In the first three quarters of 2023, the company's initial sales of new HIV drugs began, and the year-on-year loss narrowed sharply.

Eddy Pharmaceuticals: Comprehensive layout of anti-HIV target mechanisms. The company's R&D pipeline focuses on diseases such as AIDS, inflammation, and stroke. It currently has 19 research projects, including 8 new Class 1 drugs and 2 new Class 2 drugs.

The core product, enovirin, is a non-nucleoside reverse transcriptase inhibitor (NNRTI) with a novel structure. Compared with traditional non-nucleoside regimens, it can reduce the incidence of adverse reactions in blood lipid metabolism, central nervous system, liver, etc., and improve immune reconstruction; it has been approved for marketing and included in medical insurance.

The compound preparation Enomide is a triplet monoclonal compound HIV drug. It is a compound preparation composed of two nucleoside reverse transcriptase inhibitors (NRTIs) tenofovir fumarate (TDF) and lamivudine (3TC) added to enovirin. Enomitine was approved for marketing in December 2022 and included in the “National Health Insurance Catalogue (2023)”. Patients only need to take one tablet a day without taking other medications, significantly reducing the burden of medication use. In addition, new indications for enovirin and enomide for treated patients were included in the priority review in November 2023.

The company has also deployed the next-generation anti-HIV virus integrase inhibitor ACC017 and the long-term treatment of HIV ACC027.

The overseas HIV drug market is vast, and domestic sales are beginning to show signs. The overseas HIV drug market is huge. Among them, Gilead's biktarvy (Biktarvy) has become a major variety worth over $10 billion due to its good efficacy, high safety, and low drug resistance rate, accounting for nearly half of the market. In recent years, the number of people infected with HIV in China has continued to increase. The number of people being treated for HIV has exceeded 1 million, and the prevention and control situation is grim. In the past, domestic HIV drugs were mostly free or low-cost drugs. With the rapid release of Bickenprolol after domestic marketing, the domestic HIV drug market ushered in rapid growth.

Investment advice: Optimistic about the company's HIV innovative drug market potential. We expect the company's revenue for 2023-2025 to be 4.55 billion yuan, 5.84 million yuan, and 840 million yuan, respectively, up 86.4%, 28.2%, and 44.0% year-on-year; net profit to mother is -0.44, -0.13, and 97 billion yuan. According to the innovative drug product pipeline valuation method (cash flow discount method based on risk adjustment), the company was given an overall valuation of 7.782 billion yuan, and the corresponding target price was 18.5 yuan. Covered for the first time, giving it a “strong” rating.

Risk warning: Sales of new HIV drugs fall short of expectations, changes in the competitive landscape, and risks in traditional business operations.