The problem of multiple drug-resistant infections is serious, and global clinical needs are urgent. As antibiotics are widely used, drug-resistant bacteria are becoming a major threat to human health. Research predicts that up to 10 million people worldwide will die each year from drug-resistant bacteria by 2050. However, the development of antibiotics has characteristics such as high difficulty, long cycle time, and low return. The number of new antibiotics approved worldwide is limited, the pace of marketing is slow, and clinical unmet demand is high. According to the Frost & Sullivan report, China's antimicrobial market will reach 125.4 billion yuan in 2030, including 10.8 billion yuan for the treatment of gram-positive drug-resistant bacteria and 42.2 billion yuan for the treatment of gram-negative drug-resistant bacteria.

Focusing on the field of anti-infection, the first commercial product entered the market. Established in 2007, Mengke Pharmaceutical is an innovative pharmaceutical company focused on treating infectious diseases. The company has two core technologies: 1) drug molecule design and discovery technology; 2) metabolism-based drug design and optimization technology. The company's core product Uxitai? (Contizolid tablets) has been successfully approved for marketing in China and has entered the commercial release stage, achieving sales revenue of 0.91 billion yuan (YOY +88.3%) in 23 years, and its sequential treatment with MRX-4 is making every effort to advance global clinical phase III.

1) Contizolamide tablets, a new antimicrobial option with better safety.

The company's core product, contizolamide, is an oxazolidinone antimicrobial drug, and is the third such drug approved in the world. Clinical data show that its efficacy is similar to linezolid, but its resistance and safety are better. Furthermore, several blood indicators showed that the side effects of contizolamide decreased by an order of magnitude compared to linezolamide, making it more suitable for patients requiring long-term medication.

2) MRX-4 sequential treatment with contiazole to broaden more application scenarios.

MRX-4 is a water-soluble contezolamide prodrug administered in the form of an injection. The company developed the MRX-4 sequential contiazole treatment combination to treat complex skin and soft tissue infections and diabetic foot, and has now entered the global phase III clinical phase. This innovative treatment package is expected to cover a wider range of patient groups, including hospitalized patients with acute infections and chronic diabetic foot patients. Considering that diabetic foot currently affects about 40 to 60 million people worldwide, and there are no specific antibiotics specified in treatment guidelines, the clinical success of MRX-4/contezolamide will give it unique clinical value.

Summary: The company's core product Uxitai? As a next-generation oxazolidinone drug for the treatment of gram-positive drug-resistant bacteria, it has unique safety. The product has no competition for similar new drugs in the short term, and clinical trials for unique indications, including treatment of diabetic foot infections, are being actively promoted overseas, supporting the product's global competitiveness.

Profit forecast, valuation and rating: We forecast that the company's revenue for 2024-2026 will be 1.56/2.51/397 million yuan, an increase of 71.6%/61.0%/58.4% year-on-year, and EPS of -0.61/- 0.54/-0.36 yuan, respectively.

Using the absolute valuation of the company's pipeline as the main valuation reference, the company was given an overall valuation of 3.41 billion yuan, converted to a target price of 520 yuan based on the latest share capital of 655 million shares. Considering that the company's product is a new generation of oxazolidinone antimicrobials, it has significant improvements in safety, is being actively promoted in phase III clinical trials worldwide, and has developed unique indications for diabetic foot. It was covered for the first time and gave it a “buy” rating.

Risk warning: Risk that R&D progress falls short of expectations; competition increases risk.