Event 1: the company announced that it received the "acceptance notice" of the application for listing of Haize Maibu and Haize Maibu tablets issued by the State Drug Administration.
Event 2: the company announced that Haisheng Pharmaceutical (insulin) to the listing announcement deadline (December 26, 18) did not recruit qualified intended investors, capital expansion and old stock transfer project to suspend listing.
Event 3: the company announced that the company and its subsidiary Haizheng Hangzhou Company intend to set up Zhejiang Haizheng Biopharmaceutical Co., Ltd. with their own monoclonal antibody-related assets (valued at 1.1763487 billion yuan and 795.439 million yuan respectively). The company and Haizheng Hangzhou Company hold 59.66% and 40.34% of the newly established company respectively. The overall valuation of Haizheng organism (monoclonal antibody) is 1.9 billion yuan.
Comments on the incident:
Haize Maibu: the company first reported the production of me-too small molecular innovative drug Haize Maibu is the company's first reported production of me-too small molecular innovative drug, the target is the small intestinal brush border transporter NPC1LI, and the same target has been listed as ezetimib. Ezetimib was approved by FDA in October 2002 and listed in China by CFDA in April 2006. Because the mechanism of action of ezetimib is different from that of statins, ezetimib is mainly used in combination with statins in clinic. it is used in the treatment of primary hypercholesterolemia (alone or in combination with statins), homozygous familial hypercholesterolemia (in combination with statins) and homozygous sitosterolemia. We expect that the indication of Haize Maibu after listing is similar to that of ezetimib.
Small molecule innovative drugs enter the harvest period
Haizemibu declared phase II / III in September 2013, obtained clinical approval in June 2014, and conducted a phase II clinical trial in September 2015. The clinical results of phase II showed that there was no statistical difference in the trend of LDL-C decline between Haizemibu and ezetimi. there was no statistical difference in the incidence of adverse events and adverse reactions between each group and placebo and ezetimib group, which confirmed that Haizemibu was safe and effective. Phase III clinical trials were launched in September 2015. At present, Haize Maibu has conducted three phase III clinical trials, of which two key phase Ⅲ clinical trials supporting single drug listing applications (registration numbers: CTR20150787 and CTR20150788) have been completed in September 2018. The results show that both trials meet the preset standards, and the efficacy is similar to that reported in the literature, with mild adverse reactions and good safety. The results of phase III clinical trial (CTR20150787) of single drug showed that:
Haize Maibu can effectively reduce LDL-C, and there is no statistical difference between adverse reactions and placebo. Short-term and long-term medication is safe. The results of phase III clinical trial (CTR20150788) in the middle group showed that on the basis of 10mg Atto vastatin as the background treatment, the lipid-lowering effect of adding hezemib was better than doubling the dose of statin, and the frequency of adverse events and adverse reactions was lower. We believe that as the curative effect of Haize Maibu is not inferior to that of ezetimib, and the safety is good for long-term use, as a chronic disease drug that needs to be taken for a long time, patients will pay more attention to safety, which is conducive to sales and promotion in the later stage, and it is expected that it will be approved and listed in high probability. The company's small molecular innovative drugs have entered the harvest period. In addition, phase III clinical trials (CTR20150351) supporting the development of a combination of hezemib and Atto vastatin are ongoing and will further evaluate the efficacy and safety of hezemib combined with Atto vastatin in the treatment of hypercholesterolemia.
The innovative drug policy is environmentally friendly, and the sales peak of Haize Maibu is expected to reach 1 billion yuan as a domestic innovative drug. Haize Maibo is faced with a relatively friendly policy environment after listing: 1) it is expected to be quickly incorporated into health insurance through national drug negotiations to speed up the release rate; 2) negotiated varieties do not account for the proportion of drugs; after collection and promotion, the price of generic drugs has dropped significantly, and the creation of new drugs is more in line with the interests of doctors.
According to the guidelines for the Prevention and treatment of Dyslipidemia in Chinese Adults (revised in 2016), the current prevalence of hypercholesterolemia in China is 4.9%, and the estimated number of patients is 68 million. Among them, about 50% of the patients could not meet the LDL-C standard after using statins alone, and the rate of substandard treatment of statins in extremely high-risk patients was as high as 60%. According to 50%, the number of patients with substandard LDL-C after taking statins was 34 million.
At present, the average annual cost of ezemib is about 2600 yuan. It is assumed that after listing, the price of ezemib is 70%. Considering that the domestic patent of ezemib expires in 2014, Haize Maibu will face the impact of generic drugs in the future. According to the conservative calculation of 1% permeability, the sales peak of Haize Maibu will reach 1 billion yuan (34 million * 1% "2 600 yuan * 70%" 62 million), considering that Haize Maibu alone can also be used to treat patients with high cholesterol and blood lipids who are intolerant of statin. sales peak is expected to reach 1 billion yuan.
Event 2 comments:
The asset value of insulin still exists, and the subsequent introduction and investment is worth looking forward to.
Insulin assets flow auction is mainly due to the internal decision-making process of investors, the funds can not be put in place within the prescribed time limit, it is not that the intended investors have not been solicited, it does not mean that the value of insulin assets has not been recognized by the market. In the research varieties, insulin glargine and insulin asparagus have both reached the clinical III phase, which is in the leading position among similar products in China, and is expected to be approved to be listed in Q2-Q3 and early 2020, respectively. Degu Insulin is also about to start the clinical phase I study, and the insulin business is nearing harvest. The company will still promote the introduction of Haisheng Pharmaceutical into the war investment work in the future. with the continuous progress of the clinical trial of the variety under study & the declaration of production, the valuation of insulin assets remains (the valuation before this investment is not less than 1.9 billion yuan).
Three comments on the event:
With the steady progress of McAb asset integration and the introduction of war investment & employee motivation, we think: 1) the asset evaluation value is not high, and it is expected to leave room for follow-up employee motivation, with reference to the valuation of similar domestic enterprises. McAb assets should be valued at about 8 billion yuan. 2) the company's previous planning of McAb asset integration is divided into two stages: 1. The integration of Fuyang McAb assets; 2. Taizhou and Fuyang McAb assets and sales team integration. Fuyang McAb assets have been integrated in June 18. The establishment of Zhejiang Haizheng Biology marks the completion of the internal integration of McAb assets. It is expected that the follow-up employee incentives & the introduction of war investment and other measures will gradually fall to the ground. Valuation and investment advice-the former king, the inflection point of history!
We believe that the company's business and management is expected to usher in a historic inflection point. In terms of management:
After the completion of the change of chairman, the company will pay more attention to straightening out the governance structure, management and incentives than before. We judge: the governance structure will be optimized, the internal management system will be gradually straightened out, and the company management will usher in an inflection point. At the operational level, the company will reduce unnecessary construction projects and improve R & D efficiency in the future, highlight the two main industries of biomedicine and Hanhui, release profits, and the introduction of insulin-McAb assets will also continue to be promoted. the follow-up employee incentive program is expected to be carried out at the level of listed companies and subsidiaries. We believe that the company will usher in a win-win situation for shareholders, employees and management.
All business sectors are also showing a positive trend: 1) after the entry of Hillhouse Capital to optimize management, Hanhui Pharmaceutical profits are growing rapidly, with an estimated growth of 40% in 18 years, and the mature CSO model will be adopted in the follow-up to ensure sustained growth through the introduction of varieties (patented products); 2) the value of the biopharmaceutical sector is seriously undervalued. After the expansion of production, Ambenol began to grow rapidly, adamumab has been reported for production, and the research and development of the third generation insulin has been steadily advanced; 3) the chemical innovative drug Haize Maibu has been declared for production; 4) the generic drug BE has a large quantity, no stock and large production capacity, benefiting from the national collection and mining policy, it is expected to make full use of fixed assets and cover depreciation expenses. 5) in the future, the company will sell non-core sectors, reduce unnecessary construction projects and improve R & D efficiency, highlight the main business, financial expenses are expected to gradually decline, and profits will be gradually released.
Haizheng Pharmaceutical Company has a reasonable valuation of 20 billion yuan in 19 years (Hanhui 7 billion + biological drug 10 billion + chemical drug-1 billion + raw material drug 3 billion + commercial 500 million). Where:
1) Hanhui Pharmaceutical 7 billion: the net profit in 1919 is estimated to be 685 million yuan, an increase of 40%, 30%. Haizheng Pharmaceutical holds 51% equity, and the net profit of equity is 349pm, which is calculated at 15 times PE in 19 years, corresponding to a valuation of 7 billion yuan.
We judge that Hanhui Pharmaceutical is not affected by national collection in the short term and slow-small in the medium and long term.
Product structure: Pfizer Inc products account for 60% of 8 varieties, Haizheng products account for 40% of 15-20 varieties; mainly injections and compound preparations, and the corresponding industry scale is more than 1 billion, so the time affected by collection will be slow and the range will be small. After the patented varieties, even if there are generic drugs, from a clinical point of view, some kinds of generic drugs are not effective, such as Tezhixing (piperacillin sodium for injection and tazobactam sodium for injection). If it is not out of stock, the income of this variety should be 1.5 billion yuan, with a partial supply of 300 million yuan in 17 years and 1 billion in the early years.
2) Biopharmaceuticals 10 billion: with reference to the valuation of similar enterprises such as Fuhong Hanlin and INNOVENT BIO, the partial valuation of monoclonal antibody is about 8 billion yuan; the insulin plate is valued at 2 billion yuan, with a total valuation of 10 billion yuan.
3) Chemical drugs conservative valuation of 5 billion (product line valuation + asset valuation based on fixed assets), deducting liabilities of 6 billion (caused by fixed assets investment),-1 billion valuation: existing varieties still have great potential for growth of 200 million net profit in 18 years. More than 50 generic drug varieties are reported to cover large varieties. Beneficiary countries collect, innovative drugs are in research and development 15, Haize Maibu newspaper production marks the beginning of many years of R & D investment results, in the research product echelon (generic drugs, innovative drugs) is good, plus fixed assets investment of 5 billion, a total conservative valuation of 5 billion yuan; chemical drug liabilities are estimated at 6 billion, after deduction,-1 billion valuation. Subtraction is being done: selling approval documents and selling fixed assets.
4) API 3 billion: net profit of 2000-30 million yuan in 2017, gradually enter the recovery channel after the lifting of the ban on FDA, EU certification is expected to be re-passed, FDA and EU ban before the normal net profit of more than 300 million yuan, calculated according to 10 times PE, the valuation of 3 billion yuan; is doing subtraction: selling fixed assets.
5) Pharmaceutical business 500 million yuan: the net profit in 2018 is 31 million yuan, which is expected to maintain steady growth and a reasonable valuation of 500 million yuan.
18 years is the year of performance adjustment, 19 years is expected to begin to release performance, the company is expected to achieve annual net profit of-50 million yuan, 308 million yuan and 538 million yuan respectively in 18-19-20. The company is facing a double historical inflection point of management and operation. at present, the market capitalization of 7.5 billion is seriously undervalued, maintaining a reasonable valuation of 20 billion yuan and a "buy" rating for 19 years.
Risk tips: national collection of rapid and comprehensive promotion of the risk; management is not straightened out; depreciation of fixed assets-excessive financial costs affect performance; drugs failed to be approved on the market.