With the only COVID-19 special medicine in China.Junshi creatureWill it be the next Heng Rui?
Recently, due to the repeated epidemic situation in Xinjiang, Dalian and other places, the capital market has once again turned its attention to COVID-19 vaccine and specific medicine.
As 688180.SH 's new crown monoclonal antibody JS016 is the only specific drug being developed in China, it is also a scarce investment target in the A-share market. Therefore, Junshi Bio rose by the daily limit on July 29th, and its share price closed at 126.6 yuan, with a total market capitalization of 110.303 billion yuan.
From a news perspective, an important factor causing the limit is that Professor Zhang Wenhong said in an interview with the media, "COVID-19 specific medicine has been clinical, but the output is limited."
Corresponding to this news is the specific medicine of Junshi Bio. What is more worth mentioning is that Hong Kong stock Junshi Bio is also popular in the capital market, and its share price has risen by more than 88% so far this year.
But there is one thing that makes people wonder why this eight-year-old pharmaceutical company, which has not made a profit, has received so many flowers and applause from the capital market.
01 not making a profit is a good thing?
Junshi Bio, founded in Shanghai in December 2012, has three R & D centers in Suzhou, San Francisco and Maryland around the world. the products cover tumor immunotherapy, metabolic diseases, inflammatory or autoimmune diseases and nervous system diseases.
In terms of ownership structure, the company's controlling shareholder and actual controller are Xiong Fengxiang and Xiong Jun, who are father and son; Xiong Fengxiang, Xiong Jun and their joint actors hold a total of 217.23 million shares in the company, accounting for 27.7% of the total share capital of the company.
Although the company was established soon, it has made great achievements in capital operation and product research and development.
Junshi Bio only used eight years, and then successively landed on the "New third Board + H shares + Science and Technology Innovation Board" listing. At the same time, it also has blockbuster products such as JS001 (triplizumab), UBP1211 (adamumab biological analogue), JS002 and so on.
However, because the company has been spending more money on research and development, it is still at a loss stage.The net profits in 2017, 2018 and 2019 were-317 million yuan,-723 million yuan and-747 million yuan respectively, and there was a trend of expansion in the past three years.
Under the impact of COVID-19 's epidemic this year, the loss is even more serious.
June 21, Junshi Bio issued a performance forecast, expected first-half net profit of-681 million yuan to-563 million yuan, a year-on-year change of-133.97% to-93.46%.
But on the other hand, the commercial realization ability of Junshi biology is also increasing.
From 2017 to 2019, the realized operating income was 54.4998 million yuan, 2.9276 million yuan and 774.1313 million yuan respectively, with an average annual compound growth rate of 276.89%.
Among them, the reason for the surge in performance in 2019 is that the sales of the core product tripril monoclonal antibody (trade name: Tuoyi) increased sharply after listing, with sales as high as 774 million yuan.
Tripril monoclonal antibody was approved in December 2018 and is the first monoclonal antibody product in China to be approved for the treatment of locally progressive or metastatic melanoma after previous standard treatment failure.
From a business point of view, if pharmaceutical companies want to achieve commercial realization, the core lies in whether the R & D pipeline is rich, and whether the marketing is appropriate.
Instead of rushing to make a profit, instead of focusing on research and development, it seems to be a good thing for the young Junshi pharmaceutical industry.
02 research and development of the hard truth
As a typical "R & D-driven" enterprise, Junshi Bio attaches great importance to R & D investment and R & D team building.
According to the financial report, the R & D expenditure from 2016 to 2019 is 122 million yuan, 275 million yuan, 538 million yuan and 946 million yuan respectively. Even under the impact of COVID-19 's epidemic, 217 million yuan was invested in the first quarter of this year.
By the end of 2019, the company had a total of 1421 employees, including 415 technical R & D personnel and 360 sales staff, accounting for 29.2% and 25.28% respectively.
Although Junshi is the "youngest" biotech company, its R & D strength is not to be underestimated.
Since its inception, the company has been committed to the research and development of first-in-class (first of its kind) or best-in-class (best of its kind) macromolecular drugs, and has developed a complete technical system covering the whole life cycle of protein drugs from early research and development to industrialization.
Up to now, the company has a total of 21 products under research, of which 13 are original new drugs independently developed by the company and 8 are jointly developed with partners.
Among the 21 varieties under research, 19 are innovative drugs and 2 are biosimilar drugs, which are involved in the fields of tumor, anti-infection, chronic diseases, immune inflammation and nervous system diseases, including monoclonal antibodies, fusion proteins, small molecules, ADC and so on. It can be said that the product R & D pipeline is very rich.
At present, melanoma is the only indication approved by triplizumab, but the company has also submitted a listing application for second-line treatment of urothelial cancer and third-line treatment of nasopharyngeal carcinoma. At the same time, clinical trials of a number of indications are also being actively carried out.
By the end of March 2020, the company is conducting or will conduct more than 20 clinical trials on triplet, including lung, stomach, liver and esophageal cancer indications.
In addition to PD-1, the bioanalogue UBP1211 (adamumab) was also accepted for NMPA in November 2019, and JS002 (recombinant humanized anti-PCSK9 monoclonal antibody for injection) for the treatment of cardiovascular disease has now entered the clinical II phase.
It is worth mentioning that the anti-infective biological drug JS016, that is, the new crown neutralizing antibody, has also attracted much attention.
This is a project jointly developed by Junshi Biology with the Institute of Microbiology of the Chinese Academy of Sciences and Eli Lilly and Co in February this year. It is currently in the clinical Ⅰ phase, but it is the first company in the world to push the new crown neutralizing antibody into clinical trials, with rapid progress.
At present, overseas enterprises involved in the new crown neutralization antibody include Zaiyuan, Amgen Inc, AstraZeneca PLC and Aberdeen. And Junshi biological research and development strength can walk in front of multinational pharmaceutical giants, it shows that the company's growth rate is very fast.
From a medical point of view, neutralizing antibodies are the only therapeutic and therapeutic drugs that can be landed in the shortest possible time. It is characterized by strong targeting, high specificity, not only short research and development time, R & D success rate is also higher than the vaccine, the market space is very large.
Although neutralizing antibodies have not yet been developed, they have pushed up Junshi's share price and market capitalization. It can be predicted that once it is successfully listed, it will undoubtedly increase the heavy bargaining chips for the company to turn losses into profits.
03 fierce competition
Back to product sales, Junshi Bio still faces a lot of challenges.
At present, the main battlefield of Junshi biology lies in the competition of PD-1 monoclonal antibodies. Although the company has the first-mover advantage, but after all, the cake of McAb is too big, and there are too many competitors.
As of March 2020, a total of 10 PD-1/PD-L1 products have been approved worldwide, including 7 PD-1 and 3 PD-L1 products.
Awkwardly, melanoma is the only indication approved by triplizumab, and the market space is not very large.
Judging from the current market situation, the number of new cases of melanoma in China in 2019 is 7563, and the incidence rate is relatively low. Among these new melanoma patients, there are only 2400 patients with local progression or metastatic melanoma after previous standard treatment failure, and the corresponding market size is small.
From the comparison of sales situation, the sales of triplizumab in domestic PD-1 products in 2019 is the lowest. On the contrary, Hengrui MedicineWith a sales team of ten thousand people, the sales volume is very objective.
According to Societe Generale SecuritiesThe research report shows that lung cancer, liver cancer, stomach cancer, colorectal cancer and breast cancer are among the top five cancers with high incidence. In 2018, the incidence of these five types of cancer accounted for more than 50% of the total incidence of cancer in China. Among them, the compound annual growth rate of lung cancer, colorectal cancer and esophageal cancer is higher than other cancers.
At present, Junshi Bio has submitted a listing application for second-line treatment of urothelial cancer and third-line treatment of nasopharyngeal carcinoma. If approved within 2020, it may have the opportunity to negotiate health insurance through three small indications, thus forming a differentiated competition.
But at the same time, the company still needs to speed up the clinical trials of lung cancer, liver cancer, esophageal cancer, breast cancer and other indications in order to expand the market space.
In addition to McAbs, Junshi Bio also has UBP1211 (Adamumab bioanalogue), which is about to be sold. However, there are also many competitors.
At present, five Adamu bioanalogues have been approved in the US market, and two have been approved in the Chinese market, which are called Proteal.Gree and Haizheng Pharmaceutical Co., Ltd.Peace and well-being.
And Junshi biology and INNOVENT BIO, Fuhong Hanlin and other Adamu monoclonal antibody biological similar drugs have been submitted to the NMPA NDA, on the market soon. Some professionals predict that the market size of Adamu McAb in China will reach 4.7 billion yuan by 2023.
How to stand out from the fierce competition is a difficult problem that Junshi creatures need to face.
04 the value of Junshi
As one of the "youngest" innovative pharmaceutical companies, if compared with BeiGene, Ltd., Golly Pharmaceutical, INNOVENT BIO, Hengrui Pharmaceutical and other counterparts, what is the strength of Junshi Biological?
In terms of growth capacity, Junshi's total revenue CAGR from 2017 to 2019 was 277.12%, higher than the average level of 121.18%, second only to INNOVENT BIO (651.71%). At the same time, compared with BeiGene, Ltd., Golly Pharmaceuticals, INNOVENT BIO and other biotech companies, Junshi Biological's loss range is smaller.
Secondly, the profitability of Junshi biology is also strong.
According to the financial report, Junshi's gross profit margin in 2019 was 88.3%, higher than that of INNOVENT BIO (88.08%), Hengrui Pharmaceutical (87.49%), BeiGene, Ltd. (83.38%) and Golly Pharmaceutical (71.66%).
In addition, in terms of R & D strength, the total R & D expenditure of Junshi Biology in the past three years is 1.759 billion yuan, which is higher than that of Beida Pharmaceutical., microcore organisms, Kang Hong Pharmaceutical Co., Ltd.And other powerful pharmaceutical companies. Moreover, in terms of the growth rate of R & D spending, it is almost the highest in the industry.
In the future, with the increase in the number of phase III R & D projects and the sales income of McAbs, Junshi, which focuses on R & D genes, will continue to increase its R & D investment.
Finally, take the Hong Kong stock market as an example. At present, the total market capitalization of Goliath Pharmaceuticals, Junshi Biology, INNOVENT BIO and BeiGene, Ltd. is 3.507 billion, 44.35 billion, 65.95 billion and 150 billion respectively. Even according to Science and Technology Innovation Board's market capitalization of 110 billion, the company still has some room to rise.
Overall, the fundamentals of Junshi, which has the first-mover advantage of PD-1 monoclonal antibody, are relatively good. In addition, the two major indications that are expected to be approved in the future are also more capable of growth.
On the whole, if the route does not deviate, the biological value of Junshi lies in the future.