Today, after experiencing changes such as drug review reforms, mergers and acquisitions within the industry, asset divestments, and corporate closures, the domestic innovative pharmaceutical industry is rapidly entering a new era of major change. The natural law of survival of the fittest will continue to be the main theme in the development of the innovative pharmaceutical industry.

Although many innovative pharmaceutical companies are facing multiple challenges such as tight capital chains and insufficient product competitiveness, and it is still unknown whether they can overcome market fluctuations, there are still some stable and stable leading companies that have maintained steady cash reserves and are forming a healthy capital cycle model, while showing outstanding leading advantages in key disease areas.

Recently, Zhaoke Ophthalmology, the first tier ophthalmology innovative pharmaceutical company in China, released its financial report for the first half of 2024. The core pipeline made significant progress in R&D and registration. At the same time, it recorded revenue of RMB 49.77 million, an increase of 3.4 times over the previous year. Losses narrowed sharply by 56.3% to RMB 75.8 million yuan, and had plenty of cash on hand, to RMB 1.27 billion.

As the company's commercial product sales and external licensing revenue continue to increase, the company's revenue side gradually improves. In addition, the core phase III clinical trial is about to be completed, short-term R&D investment has also reached an inflection point.

At the same time, the company's core drugs in the advanced clinical stages have successively entered the critical stage of registration review. They are about to enter the harvest period, and the future can be expected.

Relying on early accumulation, Zhaoke Ophthalmology's business model, from innovative research and development, to deep commercialization, to overseas upgrading, is gradually being realized, which also indicates the simultaneous emergence of its intrinsic value.

All clinical trials are progressing simultaneously, and approval of many major products is only a step away

As an innovative pharmaceutical company, to determine its value, Zhaoke Ophthalmology should first focus on two aspects: one is the innovation and competitiveness of the product, and the other is the commercialization process of the product.

Most of the products in the Zhaoke Ophthalmology pipeline have similar pioneering or best-in-class potential, and among them, the myopia drug NVK002, the dry eye drug cyclosporine A eye gel, TAB014, and several generic ophthalmic products are already in the process of applying for new drugs or are about to be submitted for marketing.

The author anticipates that in the next two years, Zhaoke Ophthalmology may usher in a period of intense performance explosion. As these ophthalmic drugs enter the market one after another, the company will not only see a significant increase in commercial revenue, but also consolidate its leading position in the ophthalmic drug market due to the innovative and clinical efficacy of its products.

See the product for details:

1) NVK002: A drug marketing application has been submitted, and it is a potential second low-concentration atropine drug in China

NVK002 is a low-concentration atropine drug that targets the progression of myopia in children and adolescents. It has conducted CHAMP clinical trials in various regions, including North America, Europe, and China. It is one of the large-scale, lengthy, and comprehensive Atropine drug research projects currently on the market.

Judging from the latest clinical developments in China, in August 2023, NVK002 has now completed a one-year mini CHAMP drug follow-up, and in August 2024, completed a two-year China CHAMP phase III clinical trial drug follow-up and entered the observation period.

At present, Zhaoke Ophthalmology has submitted a listing application for NVK002 to the regulatory authorities, and is currently preparing the correction information with a view to receiving formal acceptance and successfully advancing the domestic listing process. NVK002 is expected to become the second low-concentration atropine drug in China, which is expected to bring new treatment options to hundreds of millions of myopic children in China.

2) Cyclosporine A (CsA) eye gel: A new phase III clinical trial will soon be launched to simultaneously promote registration progress

As an improved dosage form of an innovative drug for the treatment of dry eye syndrome, ciclosporin A eye gel has shown significant advantages in terms of efficacy and ease of use. Cyclosporine A eye gel only needs to be used once a night, and can effectively improve patients' symptoms within just two weeks. Compared with traditional cyclosporine drugs, it is a great improvement, greatly improving patients' medication compliance and shortening the treatment cycle.

Zhaoke completed the key phase III clinical trial (COSMO study) of cyclosporine A eye gel for the treatment of dry eye in 2021, and achieved positive results. It is currently the largest dry eye clinical trial in China.

In September of last year, the CDE issued the “Technical Guidelines for Clinical Trials of Drugs for Dry Eye Treatment”. As required by the new guidelines, companies are required to submit additional clinical data to meet more stringent review criteria.

Faced with this change, the company quickly responded and designed and applied for a new phase III clinical trial plan for ciclosporin A eye gel in response to the “Guiding Principles”, which has now obtained IND approval. At the same time, the company is conducting further data mining and post-mortem analysis of this previously completed COSMO study.

In terms of drug registration, Zhaoke Ophthalmology is speeding up the marketing process. It has already communicated with the CDE and will submit a pre-NDA application. It plans to re-submit the NDA soon to bring an earlier treatment plan to dry eye patients.

From the perspective of commercial value, ciclosporin A eye gel is protected by global patents. The company not only focuses on the domestic market, but also actively lays out the international market to maximize the global commercialization potential of ciclosporin A eye gel. Zhaoke Ophthalmology is communicating with the FDA about the IND application for ciclosporin A eye gel in the US, and is also exploring the possibility of development in other Asian markets.

3) BRIMOCHOL PF and CARBACHOL PF: potential BIC presbyopia drugs, entered clinical trials in the second half of the year

BRIMOCHOL PF (carbacoline/bromonidine fixed dose combination) and CARBACHOL PF (carbaccholine) are innovative drugs for near-term vision loss due to presbyopia. Through cooperation with Visus, Zhaoke Ophthalmology obtained market development and commercialization rights for this drug in Greater China, South Korea, Greater China, several ASEAN countries, Australia, New Zealand and several Middle Eastern countries.

At the beginning of the year, the IND for BRIMOCHOL PF and CARBACHOL PF submitted domestically by the company was approved, and clinical trials are currently being carried out. Among them, the lead researcher of the Phase II trial is Professor Qu Jia, general director of the Ophthalmology Hospital Group of Wenzhou Medical University. He is an outstanding expert in the field of optometry in China, and enjoys a high reputation and influence at home and abroad.

Previously, the US partner VISUS obtained positive data on BRIO-I, a key US phase III trial of Brimochol PF and CARBACHOL PF, which not only provided initial verification of the efficacy and safety of the drug, but also brought experience and data references to its clinical trial results in the Chinese market.

In the context of an increasingly serious aging trend, considering the huge needs of presbyopia patients and the limitations of existing treatment options, the clinical progress and potential commercialization of BRIMOCHOL PF and CARBACHOL PF will undoubtedly bring new treatment methods to patients. At the same time, it will also add an important element to the competitiveness of Zhaoke Ophthalmology in the field of ophthalmology drugs.

4) TAB014: Phase III clinical trial is nearing its end, and the new drug registration review is about to be promoted

TAB014 is a monoclonal antibody injection for the treatment of wet age-related macular degeneration (wAMd). It is the company's breakthrough innovative drug in the treatment of post-ocular diseases. It is also the first bevacizumab-based antibody used in China to treat WamD in the clinical phase.

According to reports, as of August, 90% of participants in the TAB014 phase III clinical trial had completed medication, and clinical trials are expected to be completed soon. In the second half of the year, the company will obtain top-line data, and then proceed with the relevant process of applying for new drug marketing.

5) Generic drugs: they are expected to be approved one after another in the next two years

Previously, Zhaoke Ophthalmology submitted ANDA applications for 5 types of glaucoma drugs (bimeprost, travoprost, travoprost, latanoprost, and latanoprost?). Currently, they have all passed the first round of technical review and are in the data dissemination phase. It is expected that it will be approved for listing one after another starting in the second half of this year, further enriching the commercial product portfolio and adding more cash flow to the company.

In addition, the company's drug epinastine hydrochloride eye drops for allergic conjunctivitis has also submitted an ANDA application and passed clinical verification by the State Drug Administration. It is expected to be approved for marketing from the second half of this year to the beginning of next year. With the introduction of these drugs one after another, Zhaoke Ophthalmology will be able to provide more comprehensive treatment plans for patients with ophthalmic diseases to meet the treatment needs of patients with different eye diseases.

Significant progress has been made in pharmaceutical coverage, and the commercialization process has accelerated

Of course, as ophthalmic drugs gradually enter the commercialization stage, how to effectively promote the realization of product value and turn it into profit is a challenge that every innovative pharmaceutical company must face.

Judging from the commercialization results of the first half of the year, the company is selling two drugs: the glaucoma drug bemethasol timolol eye drops (Jingbeiying), and the calf blood protein-removing extract eye gel Rubote. Sales of the two ophthalmic drugs gradually increased, generating revenue of 13.57 million yuan (Jingbeiying's revenue in the same period last year was 2.25 million yuan). At the same time, the medical device product Baude Vision Eye Mask series received revenue of 2.08 million yuan, continuing to contribute to performance.

Zhaoke's first marketed drug, bemesol timolol eye drops (Jingbeiying), faced many challenges in the early stages of marketing as a second-line drug with “two fibres” (unnegotiated and uncollected). However, the company continues to expand hospital coverage, with a particular focus on domestic leading ophthalmology hospitals. It can be seen that sales made significant progress in the first half of this year.

This lays a solid foundation for upcoming drugs, especially glaucoma eye drops such as bemeprost, which will be approved in the second half of the year.

In response, Zhaoke Ophthalmology has adopted an online and offline omni-channel strategy to ensure that its products reach more consumers. Online, the company actively lays out online channels such as Tmall flagship stores, Jingdong Pharmacy, and Ali Pharmacy to provide consumers with more convenient and efficient drug purchase options.

In order to further enhance brand awareness and market influence, Zhaoke Ophthalmology also makes full use of social media platforms to increase opportunities for direct communication with consumers and ophthalmologists, and continuously deepen brand promotion and interactive marketing.

In particular, it is worth mentioning that the company's official account “Zhaoke Expo”, which targets the Chinese ophthalmologist community, has more than 15,400 fans. This number is close to half of the Chinese ophthalmologist community, which not only proves the influence of Zhaoke Ophthalmology in the industry, but also provides strong support for the company's commercialization activities.

Starting from Southeast Asia, drawing up a global overseas map

Today, going overseas has become the only way for major innovative pharmaceutical companies to develop and grow. As a product pipeline with huge potential, Zhaoke Ophthalmology also grasps this trend, actively lays out the international market, and maximizes the value of pipeline assets. Over the past two years, the company has gradually established strategic partnerships in South Korea, Malaysia and Thailand to expand its global footprint.

Let's take a look back at the steps of Zhaoke Ophthalmology going overseas along the timeline:

In March of last year, the company signed a distribution and supply agreement with KDP, a leading Korean pharmaceutical company, for NVK002, marking the first step in exploring other parts of Asia.

Immediately after that, in January of this year, the company further deepened cooperation with KDP and reached another distribution and supply agreement for BRIMOCHOL PF, and the breadth of overseas cooperation continued to increase.

In March of this year, the company signed a distribution and supply agreement with Fama Pharmaceuticals, a leading comprehensive pharmaceutical company in Malaysia, regarding bemesil and timolol, and successfully entered the Malaysian market.

In the same month, the company also reached a distribution agreement with TRB Thailand for ophthalmic devices in Thailand, further strengthening the layout of the Southeast Asian market.

Obviously, Zhaoke Ophthalmology chose Southeast Asia as the first stop in its overseas strategy. As new drugs such as glaucoma drugs are launched one after another in the future, the company will continue to push products to the international market with the experience it has accumulated in overseas markets.

According to reports, the company said it will continue to explore markets in the US, Australia and other countries in the future, with the aim of maximizing the commercial potential of its ophthalmic drugs and further enhancing the company's market competitiveness.

epilogue

As excessive enthusiasm in the field of innovative drug investment gradually recedes, investors will now return more to fundamentals to make judgments, such as focusing on key indicators such as the potential value of the product pipeline, the company's ability to operate, and the actual performance of commercialization.

In this market environment, Zhaoke Ophthalmology's steady and steady development strategy has enabled it to accumulate R&D registration experience and channel resources. At the same time, with steady cash reserves, the company has sufficient ambition to promote future R&D and commercialization activities to achieve the company's sustainable and healthy development.

On the one hand, the company's various glaucoma drugs will soon be launched in the next six months. Coupled with the active layout in overseas markets, it is expected to bring in cash inflows one after another. On the other hand, as registration of core drugs such as low-concentration atropine NVK002, cyclosporine A eye gel, and TAB014 monoclonal antibody injections accelerates, the company is expected to usher in an outbreak period in the next 2-3 years.

However, from a valuation perspective, the current market value of Zhaoke Ophthalmology is only about 0.7 billion yuan, or even less than its cash on hand, and the company's valuation is clearly underestimated.

Therefore, we have reason to believe that with the steady advancement of the strategy, the commercial value of the company's products will gradually be released, and that it may usher in an overall increase in performance and valuation.