Incidents:

On the evening of July 29, the company issued an announcement stating that the results of phase I clinical research on the company's innovative traditional Chinese medicine product, Jincao (ZY5301), were recently published in the authoritative international medical journal “Journal of the American Medical Association (JAMA)”, and the clinical research results of Chinese traditional Chinese medicine in this field of treatment were published for the first time in this journal.

ZY5301 China's Class 1.2 New Traditional Chinese Medicine Drug

Jincao tablets are a class 1.2 new traditional Chinese medicine currently being developed in China (the original traditional Chinese medicine class 5 new drug). Its main component is total cyclic ether dioside, which is obtained by extracting the whole herb of musculoskeletal herbs. The substance basis and effects of Jincao tablets are more clear. The main application scenario is chronic pelvic pain as a sequelae of pelvic inflammatory disease. Judging from the characteristics of the product, Jincao tablets are Class 1.2 new traditional Chinese medicine and meet the company's “new global” standards

Phase III clinical phase III of Jincao tablets completed blindness detection, and clinical performance was good

On March 22, the company issued an announcement stating that the phase III clinical trial (CTR20222693) of Jincao tablets in female patients with chronic pelvic pain as a sequelae of pelvic inflammatory disease had reached the main research end. A data review meeting was held at the Beijing Hospital of Traditional Chinese Medicine affiliated to Capital Medical University and the disclosure of blindness was completed. Statistical analysis results showed that the pain loss rate of Jincao tablets reached the main study end point during the 12-week treatment period. Their safety and tolerability were good, and the incidence of adverse events was low. As the results of the Phase II clinical study of Jincao were published in the “Journal of the American Medical Association (JAMA)”, clinical phase II reached the end of the study, marking the recognition by international journals of the clinical research process and efficacy of Jincao tablets. At the same time, the company's new drug product pipeline is also expected to be further enriched in the future, helping the company's performance growth.

Core products are being released steadily, and R&D innovation is expected to provide a new driving force for growth

In terms of existing products, the company's core product, the hemocoagulase preparation “Suling”, successfully passed medical insurance negotiations and the company took steps to improve drug accessibility, further releasing the clinical value of “Suling”, expanding the market share of “Suling”, and increasing sales volume by 19.83% year over year. Furthermore, the company's product “Close Coverage” and the original business channel achieved complementary advantages and broadened the sales network, and successfully completed the performance promise of no less than 0.12 billion yuan in 2023. The strong and steady release volume of Suling and Calcium supported the company's performance. In terms of research and development progress, in addition to the successful progress of the Jincao tablet project, the company's main research projects currently include KC1036, a Class 1.1 innovative drug, and horseshoe blood clotting enzyme for dogs

KC1036 completed its first patient enrollment in February, and a phase III monitoring study for advanced esophageal squamous cell carcinoma is currently being carried out. The company's first injectable product to help ants and coagulant is the company's first product that is expected to enter the human pet medicine circuit. With the gradual opening up of the pet surgery market in China, if future products are launched, it is expected to add new performance growth points to the company. Overall, the company's current product volume is stable, and various R&D pipelines are progressing in an orderly manner. It is expected to support the company's continued rapid development in the future.

Investment advice:

We expect the company's EPS to be 1.02 yuan, 1.26 yuan and 1.48 yuan respectively after dilution in 2024-2026. The corresponding dynamic price-earnings ratio is 29.18 times, 23.73 times, and 20.12 times, respectively. Kangchen Pharmaceutical is a leading enterprise in the hemocoagulase preparation industry segment in China, benefiting from the recovery and growth in the number of surgeries in medical institutions. Through continuous R&D innovation and product introduction, various R&D projects are progressing smoothly. The phase III clinical trial of innovative traditional Chinese medicine Jincao tablets has reached the end of research. KC1036 is about to enter the clinical phase III clinical phase III clinical trial of advanced esophageal squamous cell cancer At the stage, Juventus' sarcoma indications for juvenile patients were approved for clinical use. In the future, the company is expected to usher in diversified implementation of innovative achievements and maintain the purchase rating

Risk warning: Drug development falls short of expectations, policy risks, market competition exacerbates risks