Incident: (1) Liposin was successfully included in the national health insurance catalogue through negotiations. (2) Boan Biotech successfully carried out two new financings, with a pre-investment valuation of 4.85 billion yuan, a premium of about 228.5% over the valuation of 1,476 million yuan at the time of acquisition. (3) COVID-19 neutralizing antibodies completed phase I clinical trial enrollment. (4) Risperidone microspheres for injection were approved for marketing by NMPA.
Rifostin was successfully included in national medical insurance, and the product has an adequate distribution base: the company's production capacity of riposin has reached more than 8 million tablets, the sales team has reached more than 300 people, all kinds of marketing work have been fully prepared, and riposin has a basis for release. The inclusion in health insurance this time has also given ridoxine an entry channel, opening up a wider market for its release. The inclusion of price reductions in health insurance has provided a basis for sales of liposin to a broad grass-roots market. In the future, with the help of AstraZeneca and other partners, it is expected that they will jointly promote the expansion of liposin in the grass-roots market. In addition, bevacizumab also has indications for colorectal cancer and non-small cell lung cancer. It also has a cooperative foundation for AstraZeneca to promote broad markets using AstraZeneca. It is expected that AstraZeneca's broad coverage of thousands of people in the oncology drug field and high-quality product combinations will be used to jointly achieve broad coverage and deep penetration of green leaf products.
After the acquisition, Boan was integrated and revitalized, and the valuation tripled during the year: the acquisition of Boan Biotech expanded the company's R&D capabilities from chemicals to biopharmaceuticals. Boan Biotech has developed more than 10 innovative antibodies and 8 biosimilar drugs. Coupled with the company's commercialization base in related fields and the reduction of product clinical development and commercialization risks through strong alliances, the launch of biopharmaceuticals is expected to bring significant performance growth to the company over a long period of time.
Differentiated design and development of COVID-19 neutralizing antibodies progressed smoothly: the company's COVID-19 neutralizing antibody recently completed the enrollment of phase I clinical subjects, and will also directly conduct clinical research on patients in the US. The product uses a special Fc sequence design, which can better avoid ADE effects and worsen patients' CRS, thereby improving safety. If this product is successfully marketed, it is expected to get a share of the pie in the vast COVID-19 treatment drug market.
Risperidone microspheres were successfully approved for neurological use: risperidone microspheres (LY03004, resintal) are mainly used for the treatment of schizophrenia. They are long-acting injections that (1) can improve patients' medication compliance; (2) can reduce the risk of patients missing or overdosed doses; (3) blood drug concentrations are more stable. The market share of long-acting injections in China's risperidone drug market is only 1.83%, and there is still plenty of room for improvement. Prior to the listing of Resintol, there was only one domestic supplier of risperidone microspheres, and the competitive pattern was good. At present, the company's neurological drugs division has formed a sales team of 110 people. Reixintol is expected to grow rapidly after listing, bringing an increase in the company's performance.
Furthermore, rexintol is already in the listing application stage in the US, and phase I clinical trials have been completed in Europe.
Profit Forecast and Valuation: Given that ripoxine has not yet announced the latest medical insurance payment prices, we maintain our forecasted revenue of 70.48, 81.49 and 9.568 billion yuan for 2020 and 2022, up 10.9%, 15.6% and 17.4% year-on-year; we maintain our forecast of shareholders' net profit of 14.73, 17.65 and 1,988 billion yuan over the same period last year, up 0.3%, 19.8% and 12.6% year-on-year. The target price was maintained at HK$5.0, corresponding to price-earnings ratios of 9.39, 7.83 and 6.96 times in 2020-2022, respectively, and 0.98 for 20PEG, maintaining the “prudent increase” rating.
Risk warning: The impact of the global pandemic has exceeded expectations, development and sales of new products have fallen short of expectations, and market competition has intensified.