For the first time, Ojai Vision Biology-B (01477) rated the outperforming industry with a target price of HK $38.50, which is 36.0% higher than the company's current share price. The reasons are as follows: ophthalmic diseases are common in China, but the treatment rate is low, and the market supply and demand is out of balance. According to Frost&Sullivan statistics, the number of patients with various eye diseases in China in 2019 is much higher than that in the United States, but the size of China's ophthalmic medicine market in 2019 is 2.8 billion US dollars, which is only 5% of that in the United States in the same period. In terms of new drugs, since 2015, a total of 7 new ophthalmic drugs have been approved by NMPA (State Drug Administration) to be listed in China, but in the same period, 17 new ophthalmic drugs have been approved by FDA to be listed in the United States, which shows that there is still a large number of unmet demand in the ophthalmic market.
Ophthalmology medicine industry requires high specialization, technical ability and innovation requirements to build barriers to entry. The structure of the eye is complex and precise, and complexity leads to the possibility of a variety of diseases, and precision determines that it requires higher professional knowledge and technical ability of practitioners. As of June 2021, the players in China's ophthalmology market are mainly large multinational corporations and a small number of Chinese comprehensive pharmaceutical companies, lack of local professional ophthalmology drug platform. We believe that the team that focuses on the ophthalmology and medicine industry, has rich experience, strong innovation ability and rich product pipeline has a competitive advantage in the market.
The company focuses on the ophthalmic medicine market and has rich product lines. As of June 2021, the company has established 18 combinations of ophthalmic drugs through licensing, acquisition or independent research and development, covering major anterior and posterior eye diseases, and is one of the few companies in China to fully cover the ophthalmology field. The company has most of the Chinese rights and interests in the new ophthalmic drugs approved by FDA in recent years, as well as independently developed core drugs, which is expected to bring great changes to the existing treatment methods. We expect that in the future, the company will make concerted efforts in product development, introduction, registration, commercialization and manufacturing to build an overall solution platform for ophthalmology drugs in China.
The biggest difference between us and the market: 1) the life cycle of ophthalmic drugs is long, and it is expected to usher in a longer growth cycle after listing. 2) We believe that the platform enterprises with rich drug pipelines and advantages in development, registration, commercialization and manufacturing will enjoy the rapid growth dividend of the ophthalmology market.
Potential catalyst: the sales of OT-401 exceeded expectations and the progress of phase III clinical trials of OT-101 exceeded expectations.
Profit forecast and valuation
We expect the company's core products to generate revenue in 2021 and turn a profit by 2025, 2021.2022.
The company's revenue in 2023 was 65221 and 474 million yuan respectively. Based on the DCF valuation, we assume that the weighted average cost of capital is 9.49 per cent and the sustainable growth rate is 1.7 per cent, and the equity value of the company is HK $24.3 billion, or HK $38.50 per share.
Risk.
The new product launch is not as expected; the profit of the candidate drug is lower than expected; the competition pattern is higher than expected; the policy leads to the drug price reduction more than expected or the loss of market share.