Hepatitis C: With the support of national policies, the diagnosis and treatment rate is expected to increase rapidly. Kailiwei's medical insurance indications are expanded, and the number of doses is accelerated
Judging from the number of hepatitis C patients in China, according to Polaris data, it is estimated that there were 9.487 million cases of HCV infection in China in 2020; according to the China Health Statistics Yearbook, the number of new cases of hepatitis C in China is about 200,000 per year. In terms of national policy, in 2016, WHO proposed the goal of eliminating the public health hazards of hepatitis C by 2030; China's Health Commission also issued the “Work Plan for Actions to Eliminate the Public Health Hazards of Hepatitis C (2021-2030)” on September 15, 2021. Currently, the diagnosis rate of people infected with HCV in China is still low. According to Polaris estimates, in 2020, the diagnosis rate for people infected with hepatitis C in China was only 33%, and the treatment rate was only 11%. Looking forward to the future, with the support of national policies, it is expected to increase the hepatitis C diagnosis and treatment rate and promote the expansion of the hepatitis C drug market. Kailiwei (clopavir hydrochloride capsules) was approved for marketing as a Class 1 innovative drug in February 2020, and entered the medical insurance catalogue through health insurance negotiations in the same year; the reimbursement indications were extended to pangenotypes through medical insurance negotiations in '22, making it the first domestically produced hepatitis C pan-genotype full oral treatment plan in China. Kailiwei experienced accelerated volume after the expansion of health insurance indications, and sales revenue for the full year of 2023 increased by more than 200% year-on-year.
Hepatitis B: A series of innovative hepatitis B therapies have been laid out. Among them, probiotic hepatitis B indications are imminent and are expected to create a second growth curve
Judging from the number of hepatitis B patients in China, according to Polaris data, there are about 86 million cases of chronic HBV infection; according to the China Health Statistics Yearbook, the number of new cases remains at 90-1 million per year. Rational combination of nAs and polyethylene glycol interferon is the most likely treatment strategy to achieve clinical cure at this stage. Judging from the competitive pattern of long-term interferons used in hepatitis B treatment in China, long-term recombinant human interferons that have been approved for marketing in the treatment of hepatitis B include MSD's Peronene, Roche's Pyroxine, and TurboBio's Pegbin. Among them, Pelosin has been discontinued, and Peroxin will not continue commercial promotion in mainland China since December 31, 2022. At the same time, Kain has developed a series of innovative therapies for hepatitis B indications, including KW-001/KW-027/ KW-034/ KW-040. Among them, the KW-001 (Probiotic Hepatitis B Indication) phase III clinical trial has been fully followed up and released. We expect to complete the NDA declaration within 24 years and be approved in 25 years. Therefore, looking forward to the future, we believe that the competitive pattern for long-term interferon treatment of hepatitis B will be better, and Kain and Tebao are expected to stand on the same page.
Other commercial products: expected to achieve steady growth and contribute stable cash flow to the company
In addition to Kailiwei, the company also has a number of commercialized varieties, including Jin Shuxi (human interfering with α2b vaginal effervescent tablets), Kane Probiotics (human interfering with α2b injections), Kane Ganlu (compound glycyrrhizide capsules), Gan Yu (compound glycyrrhizide tablets, compound glycyrrhizide injections), and Amboz (pirfenidone tablets). Among them, Jin Shuxi is the exclusive domestic α2b interferon effervescent tablet dosage form, which has the highest share of the α2b market in China; considering that it is a non-medical insurance and non-collected product, and that the price drop in Jiangxi Union Collection was moderate by 21.8%, winning the bid for Jiangxi Union Collection this time is expected to increase profits for the company. Ambrose (pirfenidone tablets) is one of the anti-fibrotic drugs recommended in the guidelines. Currently, the manufacturers of pirfenidone approved in China are Kain and Beijing Cantinib, and only the pirfenidone tablets from Saiwei Pharmaceuticals and Eke Pharmaceuticals are under review. It is expected that the competitive pattern is good in the short term, and Ambrose is expected to achieve rapid dosage. The company has a rich product layout, and other commercialized products such as Jin Shuxi and Anbosi are expected to achieve steady growth and contribute stable cash flow to the company.
Performance forecasting and investment recommendations
The company focuses on the field of viral diseases. Its main products cover the three categories of antiviral, anti-inflammatory and pulmonary fibrosis, mainly antiviral. Considering the large hepatitis C patient base and low diagnosis and treatment rate in China, there is still a certain gap from the country's 2030 target; at the same time, the company's core product, Kaili, expanded its reimbursement indications to pan-genotypes after 22 years of medical insurance negotiations. It is the first domestically produced full oral treatment plan for hepatitis C pan-genotype in China, and it is expected that accelerated dosage will be achieved in the future. In terms of developing new products, the KW-001 (probiotic hepatitis B indication) phase III clinical trial has completed all trial follow-up and group release. It is expected that the NDA declaration will be completed within 24 years and approved in 25 years. Other commercial products, such as Jin Shuxi and Ambrose, have a good competitive pattern and are expected to contribute to stable cash flow. We predict that the company's revenue for 2024-2026 will be 16.91/22.13/2,818 billion yuan, respectively, corresponding EPS of 0.83/1.15/1.52 yuan, corresponding to the closing price of 30.46 yuan/share on May 10, 2024, and corresponding PE will be 37/26/20 times, respectively, covered for the first time and given an “gain” rating.
Risk warning
The development and promotion of the product line under development fell short of expectations; the marketing of new products fell short of expectations; the price reduction of collection exceeded expectations