Company profile
Zhaoke Ophthalmology is an ophthalmology pharmaceutical company spun off from Lee's Pharmaceutical Company (950 HK). It has established a pipeline of 25 ophthalmic drug candidates, including 13 innovative drugs and 12 generic drugs, covering most major ophthalmic indications affecting the anterior and posterior segments of the eye, with the most rapidly growing products being the innovative drug cyclosporine An eye gel and generic drug bemetaprost. The company already has a perfect commercial production scale, including an annual production capacity of about 25 million multi-dose eye drops, 6 million single-dose eye drops, 400000 sterile gels and 4 million topical gels, and an independent area of about 900square meters for quality inspection function and fully integrated quality system.
Sino-Thai viewpoint
China's ophthalmic drug market has a broad prospect. Cyclosporine An eye gel and bemeprost, the company's two core products, are expected to submit new drug applications and be approved respectively in Q421: according to searing data, China's ophthalmic drug market is expected to grow from a compound annual growth rate of 18.6% in 2019 to US $7.2 billion in 2025, exceeding the growth of the global ophthalmic drug market in the same period. It is mainly due to the fact that China has a large number of patients with eye diseases such as xerophthalmia, wet senile macular degeneration, diabetic macular edema, glaucoma, myopia and allergic conjunctivitis. Cyclosporine An Eye Gel, the fastest-growing core product in the company's innovative drug pipeline, is expected to submit a new drug application to the SFDA in the fourth quarter of 2021. Compared with similar products in the current Chinese market, one Xingqi Zirun and two other III phase cyclosporine A candidate drugs, the company's cyclosporine An eye gel is an innovative hydrogel that stays on the eye surface longer, improves bioavailability and needs to be administered only once a day. The company's generic drug pipeline includes 12 drug candidates, including 7 for glaucoma, 2 for other eye diseases and 3 for ophthalmic surgery and diagnostic treatments. The fastest-growing bemeprost is a PGA monotherapy eye drop for open-angle glaucoma and ocular hypertension. It has the potential to become the first imitation drug used in the treatment of glaucoma in China and the only bemeprost eye drops that does not contain any preservatives. The company submitted a simplified new drug application to the State Drug Administration in August 2019 and is expected to be approved in the fourth quarter of 2021.
Financial and valuation analysis: since the company currently has no products approved for commercial sale, it has not generated any revenue. In 2019 and 2020, the losses were 120 million yuan and 730 million yuan respectively; R & D expenditure was 93.4 million yuan and 81.8 million yuan respectively; and cash and cash equivalents at the end of the year were 150 million yuan and 65.1 million yuan respectively. Based on 540 million shares after the global public offering, the company's market capitalization is HK $8.23-9 billion. As the company has not yet made a profit, the PE valuation method is not applicable. The price stabilizer is Goldman Sachs Group, who has recommended 20 projects since 2020, 15 up, 4 down and 1 flat. Cornerstone, the introduction of GIC, OrbiMed and other 8 investors, a total of 55 million U.S. dollars subscribed. We believe that the company's eye medicine industry golden track and imitation drug bemeprost may be approved in the fourth quarter of this year, commercialization is imminent, so give it 71 points, rated as "purchase".
Risk hints: (1) market competition risk, (2) the company is at a loss, the revenue is not stable, (3) the R & D progress is lower than expected, and the result is uncertain.