Genting Xinyao is a mainland post-clinical pharmaceutical company founded in 2017, focusing on the development and commercialization of innovative treatments such as oncology, immunity, heart and kidney and anti-infection. At present, the company has 8 promising clinical drug candidates, and has been favored by many top capital, such as GIC GIC, Blackrock Fund, Hillhouse Capital and so on.

Genting Xinyao plans to issue about 63.547 million shares at an offering price of HK $50 to HK $55 each from September 25 to 30, and is expected to list on October 9.

License-in business model, the rapid introduction of drugs at the same timeHidden potential risks

General biomedical companies in drug research and development are either independent research and development or acquisition, Genting Xinyao uses a new model-License in (license introduction).

License-in mode is mainly based on the introduction of authorized business model, the company directly introduces foreign advanced products, can achieve the simultaneous listing of domestic and foreign advanced drugs. Under the License in model, the importing party is required to have a unique vision to select the blockbuster products and to commercialize them quickly. But its disadvantage is also very obvious, patent rights and other intellectual property rights rely too much on third-party licensing and sub-licensing.

Star shareholder Yunji Inc, the largest healthcare investment platform in Asia, holds 62.4%.

It is worth noting that the company is favored by the world's top institutional investors, including Cambridge Capital, Temasek, Hillhouse Capital, Junli Henderson, Blackrock and so on. Cambridge Capital (CBC), one of the largest health care specialist investment platforms in Asia, has a 62.4% stake.

Eight promising clinical drug candidates

At present, the company has eight drug candidates (including two core drug candidates) in its product line, and its related patents are mainly licensed from third parties, covering oncology, immunology, heart and kidney diseases and infectious diseases.

1） The main battlefield of Trodelvy will be in the no man's zone of triple negative breast cancer.

Trodelvy is the first TROP-2 targeted antibody drug conjugate (ADC), which is mainly overexpressed in common epithelial cancer. The drug from Genting was developed by Immunomedics and is currently mainly used to treat breast cancer and urothelial cancer. In the field of breast cancer, Trodelvy mainly treats hormone receptor positive breast cancer and triple negative breast cancer (i.e. red box).

Hormone receptor positive breast cancer (HR+/HER2-): there are 330000 new cases in 2019, which is the fifth largest cancer species in China and the first largest cancer species in women. Hormone receptor positive breast cancer (HR+/HER2-), the annual increase in domestic patients is about 330000 * 60% = about 200000, and there is a huge stock market. At present, the treatment of HR+/HER2- breast cancer is rich, such as CDK4/6 inhibitors, anti-HER-2 therapy, anti-vascular endothelial growth factor and so on. The 5-year survival rate of HR+/HER2- breast cancer has also increased to 89%. So on the whole, the advantage of Trodelvy is not great.

Triple negative breast cancer (HR-/HER2-): there are about 40, 000 new patients every year. The tumor is highly invasive, easy to drug resistance, and the treatment is very limited. At present, it is mainly chemotherapy treatment, but the disease is easy to produce drug resistance, and the treatment effect is not good. Therefore, Trodelvy will have a greater opportunity in the market of triple negative breast cancer.

Urothelial cancer: bladder cancer is the most common urothelial cancer, which is a small indication in China, with about 50,000 to 60,000 new cases each year. At present, the treatment of bladder cancer is mainly chemotherapy, radiotherapy and PD-1 immunotherapy. At present, the companies that treat urothelial cancer with PD-1 are BeiGene, Ltd. and Junshi Bio, so Trodelvy can only make efforts in terms of price in order to get the market.

Summary: Trodelvy has little market opportunity in the field of hormone receptor positive breast cancer and urothelial cancer, and more opportunities will be in triple negative breast cancer in the future.

2) Xerava

Xerava is an antibiotic that has a strong inhibitory effect on multiple drug resistance (MDR) and gram-negative pathogens such as Enterobacteriaceae and Acinetobacter baumannii.

Compared with western countries, the market for new antibiotics in China is very strong, with a compound growth rate of 3.6 per cent from 2015 to 2019. China's market for anti-infective drugs is one of the largest treatment areas in China, and its commercial income is similar to that of oncology and cardiovascular disease.

Genting's Xerava is licensed by Tetraphase Pharmaceuticals, and the original authorized company's products are approved in the United States and the European Union for the treatment of complex intra-abdominal infections, showing a high clinical cure rate for patients infected by gram-positive and gram-negative pathogens, including drug-resistant strains. At present, Xerava products are conducting phase 3 registration trials of cIAI in China to support registration applications in China.

Summary: as far as the competitive situation is concerned, antibiotics is a very competitive industry at present, and doctors do not recommend that bacterial infections use high-intensity antibiotics in the first place. So although Xerava products are very good,But doctors will not recommend the use of mild infections。

The company is still in the pre-profit stage.

The company has no products to sell, so there is no relevant source of income for the time being. The company's losses were mainly due to funding for R & D projects and general and administrative expenses related to operations.

ValuationIn the short term30% room for growth

According to Anxin International's valuation, with the further launch of clinical pipeline products, many of the company's products peaked in 2026-2028 and are expected to reach a valuation of HK $20 billion.But there is room for about 30 per cent growth in the short term.

Summary

Genting Xinyao uses the License-in business model, which not only requires the introducer to have a unique vision to select blockbuster products, but also the ability to commercialize quickly. It is also worth mentioning that the company is favored by the world's top institutional investors such as Hillhouse Capital, in which CBC, Asia's largest healthcare investment platform, has a 62.4% stake.

The company has now developed eight promising clinical drug candidates. Among them, the main battlefield of the core product Trodelvy will be in the uninhabited area of triple negative breast cancer. At present, chemotherapy is the main treatment scheme for triple negative breast cancer in China, but the effect is not good. Trodelvy will be expected to become a new scheme for the treatment of triple negative breast cancer in China.

Risk hint

Xerava, one of the company's core products, is antibiotics, but at present, hospitals do not recommend that doctors blindly prescribe antibiotic-related drugs for patients.

License-in business model lacks independent intellectual property rights of core products and is easily restricted by licensees.