occurrences
On August 24, 2023, the company released its semi-annual report. 2023H1 achieved operating income of 8.9 million yuan, +790% year-on-year; net loss during the period of 244 million yuan, -37% year-on-year; general and administrative expenses of 83.1 million yuan, -30% year-on-year; and cash reserves of 2.54 billion yuan.
Comment:
Yi Jia: The world's first fluorocycline antimicrobial drug, which is expected to solve the drug use dilemma of drug-resistant bacteria Yigia (ylacycline) is the world's first fluorocycline antimicrobial drug. It is used to treat infections caused by gram-negative bacteria, gram-positive bacteria, anaerobic bacteria, etc., including clinically common multiple drug-resistant bacteria. In March 2023, Yijia NAMP was approved for the treatment of complex intraperitoneal infections (CIAI) in adults, and has been recommended by various treatment guidelines/consensus at home and abroad due to its advantages such as broad antimicrobial spectrum, strong antibacterial activity, accurate clinical efficacy, and good safety. Currently, the high-end antimicrobial market is in a blue ocean: on the one hand, the detection rate of multi-resistant bacteria and the number of infected patients continue to rise; on the other hand, the iteration of powerful antimicrobial innovations falls short of clinical demand. Currently, there are limited drug options that can be used to treat multiple drug-resistant infections in gram-negative bacteria, and mainly rely on ticecycline, polymyxin, and ceftadium-avibatan. The sales amounts of tigecycline, polymyxin, and ceftadium-avibatan in 2022 were RMB 2 billion, RMB 2.4 billion, and RMB 700 million, respectively. Yijia's sales are expected to peak at RMB 15-20 billion.
Resistant to IgA nephropathy: The world's only drug for treating IgA nephropathy. Research results and data are impressive. As the world's only drug for treating IgA nephropathy, Nepecon is expected to be approved in China in the second half of 2023, and is expected to be fully commercialized domestically in early 2024. Currently, the domestic IgA nephropathy market is broad. On the one hand, China is the country with the highest number of cases of IgA nephropathy in the world, accounting for more than 50% of patients; on the other hand, approved treatments for IgA nephropathy are scarce, currently accessible drugs are mainly generic drugs, and innovative drugs are scarce. Also, the main clinical drugs are systemic steroids and immunosuppressants, which have adverse side effects and are not suitable for long-term use by patients. However, through process innovation, Nepecon realizes the precise targeted release of budesonide, thereby reducing the large number of side effects of traditional hormones after systemic release. Also, as a mucosal immunomodulator targeting the intestines, it can reduce the decline in renal function by 50% and delay progression to dialysis or kidney transplantation for more than 10 years. On June 21, 2023, the two-year follow-up data for the third phase of the study were revealed at the European Kidney Association and the European Dialysis and Transplantation Association Congress. The results of the study were excellent and impressive.
The year of strategic transformation was full of results, and the License-in model gradually showed results. On August 15, 2023, Genting Xinyao partner Venatorx Pharmaceuticals announced that the marketing application for a new drug called cefepime-taniborbactam for the treatment of complex urinary tract infections in adults was accepted and prioritized by the US FDA.
On July 26, 2023, Yijia was successfully listed in China. The first prescription was issued at Huashan Hospital affiliated to Fudan University, marking the company's transformation into an innovative biopharmaceutical company in the commercialization stage.
On June 21, 2023, Genting Xinyao partner Calliditas Therapeutics AB used to evaluate the treatment of IgA nephropathy by Genting Xinyao, was presented at the 60th European Kidney Association and European Dialysis and Transplantation Association Conference (ERA-EDTA) in 2023.
On May 17, 2023, the company completed the recruitment of Asian Etrasimod (itramod) multi-regional, multi-center phase 3 clinical patients for the treatment of moderate to severe active ulcerative colitis.
Genting Xinyao has obtained licensing rights for clinical drugs through licensing agreements with biopharmaceutical companies around the world, introduced patent licenses, developed and commercialized innovative treatments and independent research and development. The company's products are mainly in the fields of autoimmune diseases, heart and kidney diseases, and infections. In addition to Ega and Nepecon, cefepime-taniborbatan is scheduled to submit an NDA in China this year, and Etrasimod is in phase 3 clinical trials. The company's commercial introduction+self-development strategy process has been steadily implemented.
Investment advice: Maintaining a “buy” rating
We are optimistic about innovative pharmaceutical companies that have already entered the commercialization stage. After early pipeline adjustments, the company has clarified the in-depth layout of non-oncological chronic diseases. We are optimistic about the company's technological innovation advantages, first-mover advantage, and strategic layout of new technologies in the field of chronic disease nephrology and anti-infection. The commercialization of the company's core product, eracycline, is progressing steadily, and Nepecon will soon be approved for listing. It is expected that the commercial release of the two products will be achieved in 2024.
We expect the company's revenue from 2023 to 2025 to be 89 million yuan, 721 million yuan, and 1,518 million yuan, respectively, up 599%, 707%, and 111% year on year, respectively; estimated net profit of -1,084 million yuan, -696 million yuan, and -192 million yuan respectively, with year-on-year increases of -338%, 36%, and 72%, respectively.
Losses will gradually narrow as product sales bring in revenue. Maintain a “buy” rating.
Risk warning
Risk of failure in research and development of new drugs: The pharmaceutical industry has high investment in innovative research and development, long cycles, and high risk.
Although the company has formulated corresponding risk prevention measures to increase the product completion rate, R&D still has to bear the corresponding risk of failure;
Risk that approval falls short of expectations: The company's drug and device applications, clinical and registration processes may face the risk that approval progress falls short of expectations; the company's products entering medical insurance collection may face risks such as losing their labels;
Industry policy risks: With the gradual deepening of health insurance fee control and the full implementation of the national volume procurement policy, a series of policy trends may affect drug tender prices. Innovative drug types with high market competition may face the risk of price cuts exceeding expectations in health insurance negotiations, and biosimilar drugs may face the risk of price cuts exceeding expectations for centralized procurement;
Risk of fluctuation in sales: Competitors in the market and new drugs to be marketed in the future may have a certain impact on product sales, resulting in sales falling short of expectations.