There is a broad space for growth in China's ophthalmic drug market. China's ophthalmic drug market is in a period of rapid development, with a market size of about 19.3 billion RMB in 2020, and it is estimated that the 2020-30e CAGR will reach 22%.
Compared with the American market, the penetration rate is still low, and there is more room for domestic substitution. Under the trend of rapid expansion of private eye hospitals, Ayre Ophthalmology, China's largest ophthalmology chain, as a strategic investor, will help the company to quickly roll out its products and establish a brand image of ophthalmic drugs.
The innovative drug pipeline has a complete layout in the field of ophthalmology, and the four drugs are in the late stage.
Cyclosporine An eye gel-market potential optimal cyclosporine A. At present, the only approved cyclosporine An in China is Xingqi Zirun, and the cyclosporine An of Zhaoke family uses hydrogel preparation. Compared with competitive products, cyclosporine An is given twice a day to achieve the same effect, which can greatly improve patient compliance. The company expects to submit the NDA by the end of this year and is expected to be approved by the end of 2022.
NVK-002 low concentration atropine-beneficiary of the national strategy for the prevention and control of myopia. At present, there are about 79.7 million myopic patients among Chinese teenagers in school. with the improvement of the national monitoring of myopia prevention and control, the diagnosis rate will reach more than 90% in the future. At present, no atropine has been approved in the world to control the deepening of myopia. The company expects to submit an application for clinical III at the end of this year, ranking third in clinical progress in China. And NVK-002 has two concentrations of 0.01% and 0.02%, targeting a wider range of ages from 3 to 17 years old.
PAN-90806- is expected to change the pattern of ophthalmopathy treatment with VEGF inhibitors. At present, VEGF inhibitors are intravitreal injection, while PAN-90806 is eye drops. In the phase I/II clinical trial conducted by PanOptica on PAN-90806, the combined use of Lucentis and PAN-90806 reduced the number of Lucentis injections by 79.4%. The results of the trial are amazing, and if approved to go on the market, it may change the pattern of the whole field of VEGF inhibitor ophthalmopathy treatment.
TAB014- has been clinically verified in the treatment of major ophthalmic diseases. When applied in the real world to wet senile macular lesions of major ophthalmological diseases, the success rate is high and the diagnosis rate will increase in the future. At present, the clinical progress of phase III is expected to be approved for listing in 2025.
First buy rating with a target price of HK $25.2. We use r-NPV to evaluate the innovative drug and generic drug pipeline of Mega Ophthalmology respectively, and use SOTP to get the overall valuation of the pipeline:
The value of the innovative drug pipeline is 10.63 billion yuan, of which the three innovative drugs with the highest value are:
1) Cyclosporine A, 2) NVK-002; and 3) PAN-90806. The generic drug pipeline is valued at 550 million yuan. The overall valuation of the pipeline is 11.18 billion yuan, corresponding to HK $25.20 per share.
Investment risk: the core innovative drugs such as cyclosporine An and NVK-002 have the risk that the R & D progress is not as expected and fail; the R & D progress follows the partners, or there is the risk of delay.