Recommended logic: 1) The first domestically produced triple compound novel HIV drug is expected to be rapidly released: Enomil tablets have excellent efficacy and safety. It is the first domestically produced triple monoclonal HIV drug, and is expected to be included in rapid medical insurance dosage through 2023 medical insurance negotiations. 2) Keep up with international trends in the research and pipeline, and many new drugs with early potential continue to advance. The company's core research projects include 8 new Class 1 drugs and 2 new Class 2 drugs. The anti-HIV integrase inhibitor ACC017 has entered the first phase of clinical trials. 3) A team of newly appointed executives is in place and has extensive experience in commercializing new drugs. The company's new CEO Zhang Jie and senior vice president Gu Gaohong have decades of experience in commercializing new drugs in large well-known pharmaceutical companies. Chief Medical Officer Qin Hong also has many years of experience in clinical development and medical affairs for well-known domestic and foreign pharmaceutical companies.

The market space is gradually expanding, and domestically produced innovative anti-HIV drugs are scarce. The number of new cases and deaths of HIV infections in China in 2022 was 52,709 and 19210, respectively. Nationwide, 1,23,000 surviving HIV-infected people and AIDS patients were reported. The death rate of HIV patients receiving antiretroviral therapy has dropped to less than 4 per 100 people per year, increasing the life expectancy of patients. Imported drugs account for a major share of the domestic anti-HIV drug market, and domestically produced innovative anti-HIV drugs are scarce.

The first domestically produced triple-tablet compound Class 1 new anti-AIDS drug has excellent efficacy and safety, and is expected to be included in rapid medical insurance coverage. Anovirin tablets are third-generation non-nucleoside reverse transcriptase inhibitors (NNRTIs) for anti-HIV treatment developed by the company. They were approved for sale in China on June 25, 2021. They were recommended by the “China AIDS Diagnosis and Treatment Guidelines (2021 Edition)” and successfully included in the national health insurance catalogue. Enomide tablets are the first domestically produced triple-tablet compound class 1 new anti-AIDS drug. According to phase III clinical trial data of Enomil tablets, compared with Aikoun protid tablets, Enomil tablets can maintain virus suppression for a long time and are quite effective for HIV-infected people who are suppressed by the virus. The incidence of adverse events with enomitide was lower than that of the equine group (74.0% vs. 86.9%, P<0.001). In particular, the incidence of grade 3-5 adverse events was 3.9%, far lower than 18.1% (P<0.001) in the control group.

The research pipeline is progressing rapidly, and ACC017, an anti-HIV integrase inhibitor, has entered the first phase of clinical trials. The company is developing 19 projects, the core of which include 8 new Class 1 drugs and 2 new Class 2 drugs. Among them, the first Class 1 innovative anti-AIDS drug, Anovirin tablets, has been approved for marketing and commercialized. The second anti-AIDS Class 1 innovative drug (the first domestically produced triple monoclonal compound), Enomi tablets, was approved for marketing in December 2022, and successfully negotiated for inclusion in the national health insurance catalogue at the end of 2023. ACC017, an anti-HIV integrase inhibitor, has entered Phase I clinical trials.

Profit forecast: The company is the vanguard of new anti-HIV drugs. The first domestically produced triple-tablet compound Class 1 new anti-AIDS drug has excellent efficacy and safety, and is expected to be rapidly released when included in medical insurance. We expect net profit to be -80 million yuan, -40 million yuan, and 80 million yuan respectively in 2023-2025.

Risk warning: risk of sales falling short of expectations, risk of failure in the development of new drugs, industry policy risks, etc.