On May 16, Johnson & Johnson announced that it would acquire Proteologix with an all-cash payment of US$850 million, while possibly making additional milestone payments in the future. Kanglong Hong Kong Investment directly held all of Proteologix's shares and transferred it to the buyer in consideration of approximately US$102.1 million, of which approximately US$15.321 million was the consideration for the milestone event.
Proteologix focuses on developing dual antibodies to treat immune-mediated diseases: the main pipeline combinations currently include PX128 and PX130, which include: PX128, a dual antibody targeting IL-13 + TSLP, which targets moderate to severe atopic dermatitis and moderate to severe asthma, and is about to enter phase I clinical trials; PX130, a dual antibody targeting IL-13+IL-22, for moderate to severe atopic dermatitis, is currently in pre-clinical development.
The company received about US$102.1 million in compensation from the sale of shares, which were calculated in two installments: the company directly held 10.21% of Proteologix's shares through Kanglong Hong Kong Investments; the buyer was required to pay a down payment of approximately US$86.821 million to the company through a payment agent within 60 days after the merger and acquisition took effect; and within 60 days after the buyer or its affiliates completed the R&D project milestone agreed in the agreement, paid the company approximately US$15.321 million in consideration of the milestone event through a payment agent.
Supplementing the company's cash flow is expected to increase net profit in 2024: This sale of shares will help the company increase its cash inflow and promote the development of the company's R&D service capabilities; previously, PROTEOLOGIX was not included in the scope of the company's consolidated statements, and it is expected that this transaction will have a significant positive impact on the company's net profit for 2024.
Customer inquiries picked up in 24Q1, and the signing trend was good: 2024Q1. The company felt that global customer inquiries and visits were picking up compared to 23Q1. The 24Q1 new orders showed a good trend. The total amount of new orders signed increased 20% + year over year, with the laboratory service sector increasing 10% + year over year.
Maintain a “Highly Recommended” investment rating. The company adheres to the full-process integrated service platform strategy. The front-end project diversion effect is gradually showing, new business segments are gradually improving, emerging technology capabilities are rapidly expanding, and the company aims to achieve 10% + revenue growth in 2024. Considering the company's sale of shares in overseas participating companies to increase investment income, the company is expected to achieve revenue of 127/144/16.7 billion yuan and net profit to mother of 20/20/24 billion yuan in 2024-2026, corresponding to PE of 20/20/17 times, respectively, maintaining a “highly recommended” rating.
Risk warning: risks such as geopolitics, exchange rate fluctuations, new business development falling short of expectations, and insufficient capacity utilization.