Key investment points

Zejing Pharmaceutical: A platform-based innovative pharmaceutical company, which is deeply involved in the fields of oncology and self-immunity, was established in 2009. Its products cover the fields of tumors, bleeding and hematologic diseases, and immune inflammatory diseases.

The company has commercialized 2 innovative drugs. The sales volume of the main product, donafenib, is close to 0.4 billion yuan in 2023; many new drugs are expected to be launched in the future. In terms of macromolecular drug layout, Zejing Pharmaceutical has 4 multi-specific antibodies under development, and some products may become the next generation of immunotherapy drugs.

There is great market potential in the fields of diseases such as self-immunity, coagulation, and tumors

The company's products cover the fields of immunization, coagulation, and oncology. China's self-immunization drug market reached 2.9 billion US dollars in 2022, is expected to reach 19.9 billion US dollars in 2030, and the CAGR will reach 27.22% in 2022 to 2030. Both small and large molecule drugs are expanding. Coagulation drugs are related to surgery. The local surgical hemostasis market in China is expected to grow from 7.3 billion yuan in 2018 to 16.03 billion yuan in 2030, with a compound annual growth rate of 6.8%. Liver cancer and lung cancer are among the top ten most common cancer types in China. New drugs in the field of oncology frequently revise existing clinical protocols, and there is great potential for iterative new drugs.

The core pipeline is being commercialized step by step. The company's first commercialized liver cancer product, donafinib, earned close to 0.4 billion yuan in 2023; the recombinant human thrombin was approved for sale in January 2024 and successfully entered the 2024 medical insurance catalogue; the JAK inhibitor gikaxitinib is expected to be approved one after another for the three indications of bone marrow fibrosis, alopecia areata, and atopic dermatitis. The company has deployed a number of macromolecular biopharmaceuticals. ZG006 is a CD3/DLL3/DLL3 triple antibody. The same target drug AMG757 has been marketed overseas and approved for post-line treatment of small cell lung cancer; PD-1xTigit dual antibody shows a high ORR in posterior cervical cancer, and we believe that the company's macromolecule drugs have licensing potential.

Innovative drugs have both centralized commercialization and overseas licensing expectations. We expect the company's 2024-2026 revenue to be 0.488/0.896/1.729 billion yuan, respectively, up 26.38%/83.49%/92.95% year over year, and net profit to mother of -0.187/-0.068/0.174 billion yuan respectively, gradually reducing losses.

Since the company's innovative drugs have entered the commercialization cycle, the products under development are rich and have the potential for external licensing, they have been covered for the first time and given a “buy” rating.

Risk warning: commercial sales fall short of expectations; clinical progress or time to market fall short of expectations; worsening competitive landscape