The prospect of clinical blindness is promising.
Events:
1. The company released its performance KuaiBao. In 2019, the company achieved operating income of 621 million yuan, an increase of 5.13% over the same period last year. The net profit of shareholders belonging to listed companies was 69.4887 million yuan, down 26.18% from the same period last year.
2. The III phase clinical trial of recombinant mutant human tumor necrosis factor-related apoptosis-inducing ligand (hereinafter referred to as "CPT"), a national Ⅰ new drug independently developed by the shareholding subsidiary Beijing Sadong, has been blinded.
Event comments:
The company's performance has declined due to the influence of industry policies. According to the company's performance KuaiBao, the company's operating income in 2019 was 621 million yuan, an increase of 5.13 percent over the same period last year, and the net profit belonging to shareholders of listed companies was 69.4887 million yuan, down 26.18 percent from the same period last year. In June 2019, the National Health and Family Planning Commission included rat nerve growth factor for injection in the first batch of national key monitoring and rational drug use catalogue, and the National Medical Insurance catalogue (2019 edition) published in August 2019 (officially implemented from January 1, 2020) will be transferred out. Due to the adjustment of the industry health insurance policy and the influence of the market environment, the sales volume of the company's main product Jin Lujie (rat nerve growth factor) declined compared with the same period last year, resulting in a slowdown in the growth of operating income of the company 2019Q3 and 2019Q4, which increased by 5.69% and-15.74% respectively compared with the same period last year. The adjustment of the health insurance catalogue will be implemented from January 1, 2020, and it will still have a further impact on the company's performance in 2020. At the same time, the company's operations were affected by the epidemic in the first quarter of this year, and we expect Jinlujie's sales to continue to decline in 2020.
Myeloma is a malignant tumor with abnormal proliferation of plasma cells. it is an incurable hematological malignant tumor, which can affect the production of white blood cells, red blood cells and stem cells in bone marrow. According to Yadu data, multiple myeloma is the second largest hematological malignant tumor after non-Hodgkin's lymphoma in the United States, accounting for about 1% of all malignant tumors, 13% of hematological malignant tumors and 2% of deaths from malignant tumors. The average age of onset is 62 for males and 61 for females. Only 2% of the patients are under 40 years old. The incidence of multiple myeloma is different in different regions of the world. The incidence of multiple myeloma in China is about 10 million to 2 million, which has exceeded that of acute leukemia and ranks second in the incidence of hematological malignant tumors. According to the statistics of Pharmaceutical Economics, in 2017, the total global sales of major drugs approved by FDA for the treatment of multiple myeloma reached US $14.59 billion, and drugs for the treatment of multiple myeloma have become a new hot spot for pharmaceutical companies.
The mechanism of CPT is unique, and the results of phase Ⅲ clinical trials show that the curative effect is better than that of the control group, and the prospect is promising. In 2015, the company participated in the research and development of multiple myeloma drugs by taking a stake in Beijing Shadong Biology. At present, multiple myeloma is still an incurable hematological malignant disease, almost all patients will develop resistance to currently available anti-myeloma drugs, leading to disease recurrence. With the increase of the number of relapses, the prognosis of this patient group is getting worse and worse, the treatment is more and more difficult, the disease is more difficult to obtain remission, and the duration of remission is getting shorter and shorter.
Therefore, there is still an urgent need for more effective treatment for recurrent or refractory multiple myeloma. The commonly used new therapeutic drugs for multiple myeloma in the Chinese market are thalidomide, lenalidomide, bortezomib and so on. These drugs are commonly used in combination with traditional hormone drugs and cytotoxic drugs. Beijing Shadong biological CPT has a unique mechanism of action. The preliminary analysis of the results of the phase Ⅲ clinical trial showed that the CPT-MM301 project had reached the preset primary end point and key secondary end point, and the main end point (progression-free survival time) and key secondary end point (overall survival time, disease progression time, etc.) of CPT combined with thalidomide and dexamethasone treatment group (trial group). All of them were superior to placebo combined with thalidomide and dexamethasone treatment group (control group), and the differences of the above end points between the two groups were statistically significant. The effectiveness and safety of the test group are in line with the expectations of the test. The follow-up of the project will enter the stage of clinical data analysis and application for new drug registration. Once CPT is listed, it will open up a new treatment field for multiple myeloma and provide patients with new drug choices and means of drug use.
Increase the shareholding proportion of Beijing Shadong step by step according to the progress of research and development, registration and sales of CPT. The company currently holds 39.605% of the shares in Beijing Shadong, of which 1.134% is managed on behalf of the shares that need to be encouraged to Beijing Shadong employees. According to the "Equity acquisition Framework Agreement" signed with Beijing Sha Dongyuan shareholders in November 2014, Haite Bio acquired the shares held by Beijing Sha Dong original shareholders step by step in accordance with CPT's research and development, production approval and sales process. According to the acquisition agreement, after the results of the phase Ⅲ clinical trial of CPT were revealed and the production approval was obtained in the later stage, the company further acquired the stake in Beijing Shadong and increased its shareholding.
Investment advice:
Although the phase Ⅲ clinical trial of Beijing Shadong CPT, a participating subsidiary, has been revealed, due to the uncertainty of whether it can be successfully registered and approved, we have not taken into account the performance contribution of CPT after its listing. According to the impact of the adjustment of the health insurance policy on the company in the fourth quarter of 2019, and the impact of the epidemic on the company's operations in the first quarter of this year, we lowered our performance forecast. It is estimated that the company's net profit from 2019 to 2021 will be 69494060max RMB 58.79 million, EPS 0.67 / 0.39ppm 0.57RMB, and the current share price corresponding to PPPX E is respectively times that of 53-92-63. Considering the company's entry into the fields of in vitro diagnosis, CRO and oncology, the results of CPT Ⅲ clinical trials are better than those of the control group, and can enjoy a certain valuation premium, and we maintain its "overweight" investment rating.
Risk Tips:
Affected by the health insurance policy, Jin Lujie's sales declined more than expected; the performance of in vitro diagnosis and CRO business was lower than expected; and the progress of CPT project registration application was slow or not approved.