A biotechnology platform driven by innovative research and development. Established in 2003, Baiotai was founded as a leading biopharmaceutical platform company in China. A total of 4 biosimilar drugs and 6 innovative drugs have entered the clinical stage. The adalimumab analogous drug, grelil, has been approved for marketing and will soon become the company's first commercialized variety. As an R&D-driven biotech company, R&D expenses have continued to increase in recent years, and is still unprofitable.
Gleryl: The first domestically produced adalimidumab antibiotic similar drug, contributing revenue in 2020. Gloria completed the phase III clinical trial for ankylosing spondylitis. The main efficacy indicator was the percentage of subjects who responded to ASAS20 treatment in week 12. Clinical data showed that Gleryl was equivalent to humilor. Competition for domestically produced adalimudan antibiotics and similar drugs is fierce. Haizheng Pharmaceutical's varieties have been approved following Gelali's, and other varieties such as Cinda Biotech and Fuhong Hanlin have also submitted marketing applications. Under the industry trend where prices of original research drugs continue to drop and biosimilar drugs are approved one after another, we predict that the market share of adalimumab biosimilar drugs in the domestic market will gradually expand. We estimate that Gleryl's sales are expected to reach RMB 2.29 billion by 2030.
International multi-center clinical trials for bevacizumab BAT1706 and tocilizumab BAT1806 have entered phase III. Competition for the development of bevacizumab antibiotics and similar drugs is also fierce, and varieties of Qilu Pharmaceutical have already been approved for listing. BAT1706 has conducted phase III clinical studies in 106 clinical trial centers in many countries around the world. Subjects have been enrolled so far. There is no clinical data available. We expect BAT1706 to be approved for marketing in 2021. We estimate that its global sales for the two major indications of lung cancer and colorectal cancer are expected to reach RMB 3.42 billion. BAT1806, a drug similar to tocilizumab, also carried out an international multi-center phase III clinical trial. Domestic R&D progress is in the first tier. It is expected that it will be approved for marketing in 2022, and we estimate that BAT1806's sales will reach 1.58 billion yuan.
Batafiban BAT2094 has submitted a listing application, and the subsequent product pipeline is worth looking forward to. BAT2094 is an artificially synthesized thrombocyte glycoprotein IIB/IIIa receptor antagonist. It is a Class 1.1 chemical and is mainly used for anti-thrombotic treatment during PCI perioperative period. The company has submitted a listing application for BAT2094 and is expected to be approved for listing in 2020. In addition, many of the company's potential varieties from independent research and development platforms are in phase I and II clinical trials, such as the novel TNF-α inhibitor golimumab antibiotic similar drug BAT2506, the antibody conjugated drug BAT8003 targeting Trop2, the anti-PD-1 monoclonal antibody BAT1306, the next-generation anti-CD20 monoclonal antibody BAT4306F, and the anti-VEGF monoclonal antibody BAT5906 for treating WamD. The rich product echelon of the independent R&D platform ensures sustainable innovation capabilities, as well as complete R&D capabilities for innovative drugs and biosimilar drugs.
Catalysts within the next 1 year. Gleryl went on sale; BAT1706 completed phase III clinical trials and submitted marketing applications; BAT2094 marketing application was accepted by CDE; golimumab BAT2506 initiated phase III clinical trials, etc.
Use of funds raised. This time, the company plans to publicly issue 60 million A-share common shares, and plans to raise 2 billion yuan of capital, of which 1,580 million yuan is planned to be invested in future research and development of products under development, 100 million yuan to build a marketing network, and 320 million yuan as reserve capital for the company's operation and development.
Investment advice. The company is a leading biopharmaceutical platform in China. The product pipeline is rich, and the development progress of key varieties is in the first tier. We believe that as the product pipeline continues to advance and gradually commercialize, the company's revenue will explode. Considering that the company is currently unprofitable, we believe that the company's intrinsic value lies in its product pipeline. Based on DCF valuation and step-by-step valuation by variety, we think the company's reasonable value range is 34.79-39.21 yuan, covered for the first time, and given a “superior market” rating.
Risk warning.
Drug development risks. The company's main products are in clinical or preclinical research. Clinical research still has a certain degree of uncertainty. The company invests too much energy and resources into drugs, indications or other potential projects that may eventually prove to have no potential for subsequent development, which may adversely affect the company's business.
Drug marketing risks. If the progress of clinical trials or the Drug Review Center's review progress falls short of expectations and causes delays in the marketing of the company's products, the company's profitability and valuation will be adversely affected.
Technology iteration risk. The fields of life science and pharmaceutical research are changing rapidly. If breakthrough progress is made in diverse antibody banks, the screening and preparation of whole-human antibodies or functional domains, the field of drug coupling, or other fields related to the company's core technology, or the birth of more competitive drugs within the company's pharmacotherapy field, it will have a major impact on the company's existing core technology and products under development.
The risk of not being able to commercialize pharmaceuticals. 1) The company faces fierce market competition, and even after the product is approved for listing, it may not be able to meet sales expectations. 2) The company's marketing team is being formed. If the recruitment and development of the team does not meet expectations, it will affect the company's ability to carry out commercial promotion in the future. 3) Sales of the company's products may fall short of expectations in the future due to high pricing, and there is uncertainty about whether they can enter the medical insurance catalogue and when.
The risk of not being profitable or unable to distribute profits for a certain period of time in the future. If any of the company's drugs under development fail clinical trials or obtain regulatory approval, or are approved without market approval or commercialization, the company may remain unprofitable. It is expected that after the initial public offering, the company will not be able to pay cash dividends in the short term, which will adversely affect shareholders' investment income to a certain extent.
