The company's recent situation
On December 20, 2023, the company announced that its innovative drug OT-703 (fluorine easy intravitreal implant 0.19 mg) for the treatment of diabetic macular degeneration (DME) was approved for marketing in Hong Kong, China. On January 16, 2024, the company announced that the Ophthalmology and Optometry Hospital affiliated to Wenzhou Medical University completed the country's first advance payment of Youshiying settled through the provincial health insurance system.
reviews
According to the company's announcement, OT-703 (fluorine easy intravitreal implant 0.19 mg, ILUVIEN) has been approved in the US and is a corticosteroid intraocular implant used to treat DME with slow release for up to 3 years. DME is one of the common complications of diabetes and the main cause of blindness in diabetics.
According to Frost & Sullivan statistics, there were about 7.5 million DME patients in China in 2023, which is expected to increase to 8.5 million at a compound rate of 2.5% in 2028. OT-703 was introduced and obtained by Alimera, and the company has exclusive development and commercialization rights in 11 countries in Greater China, South Korea and Southeast Asia. As of January 23, 2024, OT-703 research and development in mainland China is in phase III clinical and real-world research stages.
On December 13, 2023, Yu Shiying (OT-401) was officially included in national health insurance through national negotiations. On January 16, 2024, the company revealed that it had implemented the first dose after entering health insurance. According to the company's announcement, after Yu Shiying joined the medical insurance catalogue, the company quickly promoted its medical insurance implementation work across the country with perfect commercialization capabilities, bringing better and more affordable treatment methods to patients with uveitis and solving the problem that patients were discouraged by high treatment costs. The rapid implementation of the first dose reflects the improvement of the domestic innovative drug payment system and highlights the progress and development of China's medical industry.
Looking back at 2023, the company achieved many R&D and commercialization milestones. As of January 23, 2024, the company has 25 ophthalmic drug combinations, including 12 commercialized products and 5 clinical phase III pipelines. According to company disclosure 2, the company's main R&D milestones in 2023 include OT-1001 (cetirizine hydrochloride eye drops) being accepted and prioritized for review, OT-101 (low concentration atropine) entering the phase III clinical trial, OT-202 (tyrosine kinase inhibitor) completing phase II clinical enrollment, and OT-502 (dexamethasone implant) entering the pre-NDA stage.
Profit forecasting and valuation
We maintain our profit forecast for 2023/2024 and first introduced a net loss forecast of 100 million yuan to the mother for 2025. We maintain our outperforming industry rating. Considering recent fluctuations in the valuation of the pharmaceutical sector of Hong Kong stocks, we lowered the DCF target price from 12.0% to HK$8.80, which has 67.3% upside compared to the current stock price.
risks
New product launches fell short of expectations; drug candidates were less profitable than expected.