① Northland's 2023 annual results report shows a year-on-year decline in operating income, and the net loss margin is narrower than in 2022. ② The reasons for the year-on-year narrowing of net loss include the failure to meet the third achievement condition of the company's equity incentive plan and reversing the impact of the relevant expenses already calculated.
Finance Association, Feb. 26 (Reporter He Fan) Today, Northland (430047.BJ) released its 2023 annual results report. While the company's revenue declined year-on-year, the net profit loss margin narrowed. A Financial Services Association reporter noticed that the reasons why the company's net profit loss narrowed year-on-year included the failure to meet the third achievement condition of the company's equity incentive plan, which had already recovered the impact of the relevant expenses already calculated.
The performance report shows that during the reporting period, Northland achieved operating income of 596.751 million yuan, a year-on-year decrease of 7.70%; net loss of 48,134,800 yuan, which is narrower than in 2022.
Regarding the main reasons affecting business performance during the reporting period, Northland said that the company's new biopharmaceutical project is in the R&D stage, the new biopharmaceutical industrialization project is still in the infrastructure stage, and commercial sales have not yet been formed. Furthermore, due to the implementation of the equity incentive plan by the company, the third condition was not met during the reporting period, and the expenses related to the third phase were estimated based on equity incentive accounting estimates. As a result, net profit attributable to shareholders of listed companies during the reporting period decreased compared to the same period last year.
Northland is an innovative biopharmaceutical company, mainly engaged in R&D, production and sales of gene therapy drugs, recombinant protein drugs, and ophthalmic drugs. According to Northland's semi-annual report, the company's main business revenue mainly comes from the production and sale of eye drops products.
According to the equity incentive plan announced by Northland in 2021, it is proposed to grant a total of 7.82 million equity shares to incentive recipients, accounting for about 3.08% of the company's total share capital of 254 million shares when the incentive plan was announced. The exercise price for stock options granted under the incentive plan is 8.60 yuan/share, and the grant price for restricted stocks is 4.30 yuan/share. Incentives include the company's chairman Xu Songshan, directors Nie Liya, Han Chengquan, Gao Jie, and 39 core employees.
The exercise assessment year is the three fiscal years 2021-2023. The company-level performance requirement is the first exercise period/the first release of sales restrictions, and the completion of the NL005 phase IIa clinical trial enrollment in 2021. For the second exercise period/the second period for lifting sales restrictions, it is necessary to complete the 2022 nL005 project to initiate phase IIb clinical trials and begin enrolment or complete the NL003 phase III clinical trial and submit a marketing application (as long as one of the indications is satisfied). For the third exercise period/the third period for lifting sales restrictions, it is necessary to complete the 2023 NL003 project to obtain marketing approval or the bioengineering new drug industrialization production workshop to obtain a drug production license.
Meanwhile, NL003 and NL005 are two Class 1 bioinnovative drugs that the company had already entered clinical trials at the time. Project NL003 is a recombinant human hepatocyte growth factor bare plasmid injection for severe lower extremity ischemic diseases. The NL005 project is an injectable recombinant human thymine beta4 used to treat ischemia-reperfusion injury due to acute myocardial infarction.
A Financial Services Association reporter noticed that Northland had already successfully exercised the first and second installment of equity incentives before. Among them, in the performance index of the company corresponding to the enforcement conditions of the first exercise period, the NL005 project completed phase IIa clinical trial in 2021 and met the enforcement conditions; in the company performance index corresponding to the conditions of the second exercise period, the NL005 project completed the phase IIb clinical trial and began enrollment in 2022 to meet the enforcement conditions.
However, judging from the company-level performance requirements in the third phase of the terms of reference, Northland did not meet them.
Judging from the announcements in June and November 2023, the Northland NL003 project only enrolled participants in phase III clinical trials for ulcer and resting pain, and there is a huge gap between approval for marketing.
However, according to Northland's official website, the biopharmaceutical industrialization base, which officially started construction in June 2022, has completed the construction and inspection of the main structure of the building, installation of exterior facades and roof waterproofing projects, and the overall construction of the project has not been completed.