Core views:
Deeply involved in the field of HIV treatment, innovation and transformation have entered a period of harvest. Eddy Pharmaceuticals is a pharmaceutical company focused on HIV treatment and human protein. The company was founded in 2009 and started with the human protein business; in 2014, it began to transform and develop innovative drugs and is deeply involved in the field of HIV treatment; the company's two new drugs for HIV treatment, enovirin and enomitide, were approved and marketed in China in June '21 and December '22, respectively, and the innovative investment has entered the harvest period.
The field of HIV treatment continues to iterate, and the domestic anti-AIDS market is growing rapidly. Cocktail therapy treats HIV infection by combining 3 antiviral drugs and can effectively control the condition. It is currently the standard treatment plan against HIV. Improving efficacy, safety, and overcoming drug resistance promotes the continuous development of anti-HIV drugs. Iteratively solving the problems of previous generation products with the same target drugs, the development of new mechanism drugs brings new hope to patients with multiple drug resistance. Currently, there are more than 30 types of antiretroviral drugs in six categories in the world. In recent years, with many new imported HIV drugs, especially compound single-tablet formulations, being marketed domestically and included in medical insurance, the single-tablet solution has great advantages in terms of efficacy, safety, and convenience, driving the rapid growth of the HIV treatment market in China.
The first domestically produced triple compound is expected to be rapidly released to speed up the deployment of the next generation of new drugs. The company's new HIV drug is in the early stages of commercialization and achieved sales revenue of 73.58 million yuan in '23, an increase of 119.7% over the previous year. As the first domestically produced compound single-tablet formulation, Enomitide is in line with advanced international dosage forms and is more in line with patients' treatment needs. In 2023, the company adjusted its management and added sales team. In addition, Enomi was successfully included in the health insurance catalogue through health insurance negotiations, and commercialization is expected to accelerate further. In addition, the company has deployed the second-generation INSTI innovative molecule ACC017 and the long-acting drug ACC027 in the research pipeline to meet the evolving treatment needs in the HIV field.
Profit forecasting and investment advice. We expect the company's 24-26 revenue to be $501, $8.52, and $1,154 million, respectively. We are optimistic about the rapid release of the company's new HIV drugs. Using the risk-adjusted DCF method, we obtained the company's reasonable value of 20.11 yuan/share. It was covered for the first time and gave it a “buy” rating.
Risk warning. New drug development falls short of expectations, risks of commercialization of new drugs falling short of expectations, risk of fluctuations in the crude human protein products business, etc.