Event: recently, the company signed a series of cooperation agreements with Alimera Sciences. (1) the company will pay US $10 million and a potential sales milestone payment of up to US $89 million to Alimera to obtain the exclusive commercialization rights of its ILUVIEN in 11 countries in Greater China, South Korea and Southeast Asia; (2) the company will acquire a 16.6% stake in Alimera for US $10 million, making it its largest shareholder; and (3) the company will issue 1 million subscription options of Okangwei Biology to Alimera at an exercise price of HK $23.88 per share.
The successful introduction of ILUVIEN provides new treatment options for patients with DME: ILUVIEN is a vitreous implant of corticosteroid flunarone, which can release a total of 0.19mg continuously within 36 months after implantation. It is mainly used in the treatment of diabetic macular edema (DME). DME is not only an important complication of diabetes, but also one of the four major blindness diseases in China. With the aggravation of the aging population and the change of people's living habits, the incidence of diabetes continues to increase, and the incidence of DME is also increasing. According to the statistics of Frost & Sullivan, the number of DME patients in China is about 6.9 million in 2020, and it is expected to further increase to 7.9 million in 2025. At present, retinopathy is mainly treated with VEGF inhibitors, but there are still many patients who do not respond to VEGF inhibitors. ILUVIEN provides a new treatment option for these patients. At the same time, the effect of a single injection of ILUVIEN can last for up to 3 years, which is more convenient to use than the monthly injection of VEGF inhibitors, and the treatment compliance of patients is better. ILUVIEN was officially listed in the United States in 2015. after the introduction of this product, the company will conduct an III bridge test in China, and strive to speed up the listing through real-world research. In addition, at present, no related implant products have been approved to be listed in China, and the competition pattern of ILUVIEN is good. Considering the large number of DME patients and the growing demand for treatment, ILUVIEN will bring relatively considerable benefits to the company after listing in China.
With the continuous expansion of the pipeline, the value of the ophthalmology platform is expected to gradually appear: the company focuses on the development and commercialization of ophthalmic drugs, coupled with the introduction of ILUVIEN, the company's product pipeline has included 18 drugs, basically covering the major ophthalmic diseases with high prevalence in China. The introduction of ILUVIEN has further improved the company's product layout in the field of fundus diseases, bringing the number of drugs in the field of fundus diseases to four, including OT-401 (application for sale was accepted by NMPA in April) and three drugs for the treatment of maculopathy (abaciprazumab bioanalogues (phase III), razumab bioanalogues and ILUVIEN). Specifically, these three drugs cover the first and second line treatment of maculopathy. After the products are put on the market one after another, the cooperation between different products will be strengthened, and the value of the company's ophthalmology drug platform will gradually appear.
Profit forecast and valuation: after the introduction of ILUVIEN, it is still some time before the domestic listing. We maintain the previous revenue forecast that the operating income in 2021-2023 is expected to be 0.65,1.91 and 508 million yuan, respectively, an increase of 397.10%, 192.97% and 166.07% over the same period last year. The 2021-2023 net profit is-3.28,2.75 and-67 million yuan respectively. Maintain the company's target price of HK $30.03 and maintain the "prudent overweight" rating.
Risk tips: the market progress and sales of the products under research are not as expected, the third party depends on the risk, and the financial pressure caused by excessive cost investment.