The current situation of the company
At the American Hepatology Association Annual meeting (AASLD) on November 15, 2021, Vir Biotechnology, a partner of Tengshengbo, announced the preliminary results of the clinical phase II trial of hepatitis B siRNA drug BRII-835 (VIR-2218) combined with PEGIFN- α, which showed a good effect.
Comment
Hepatitis B siRNA drugs show the potential of functional cure. In this phase II trial, HBsAg levels in patients with BRII-835 alone or in combination with PEG-IFN- α decreased by an average of 1.89,2.03,2.55 and 2.30 log10 IU/mL respectively compared with the baseline at the 24th week. The proportion of patients with HBsAg < 100 IU/mL was 92%, and the proportion of patients with HBsAg ≤ 10 IU/mL in each dose group was 13.3%, 20.0%, 38.5% and 55.6%, respectively. 3 patients achieved HBsAg clearance. We believe that this result proves the potential of BRII-835 in the functional cure of hepatitis B and will be the cornerstone product of combination in the future. With the company's overall layout on the HBV pipeline and scientifically differentiated combination therapy, we expect it to provide a functional cure. The company is currently promoting the Phase 2 clinical trial (NCT04749368) with BRII-179 and BRII-835, and the company is expected to announce the top-line results of the phase 2 trial at 2H22.
The new crown neutralizing antibody is expected to be approved in China by the end of the year. According to CCTV Finance News 11 on November 15, the company has submitted a rolling application for the listing of the new crown neutralizing antibody BRII-196/BRII-198 to the State Drug Administration on October 9, and the company expects it to be approved (conditional) before the end of December. This will be the first COVID-19 specific drug approved to go on the market in China, and we expect it to contribute to revenue in the short term. In addition, we believe that the company will complete the transformation of a biotech company from clinical phase to commercialization through the new crown neutralization antibody, demonstrating the company's ability to develop, register and commercialize in both China and the United States.
Pay attention to the differential layout of the company. The company's management team is experienced, in addition to authorized introduction of products, the company is also gradually verifying its independent R & D capabilities. At present, there are many domestic enterprises in the field of oncology and autoimmunity, and the company is based on anti-infection and central nervous system, we think it is expected to achieve differential competition.
Valuation and suggestion
We keep the company's 2021 EPS of-0.90 Universe 1.36 yuan unchanged in 2022.
Due to the excellent efficacy of BRII-835 in phase II, we raised its success rate to 40%. We use the discounted cash flow (DCF) valuation method, assuming that the weighted average cost of capital (WACC) is 9.0%, with a sustainable growth rate of 1.5%, and we raise our target price by 29% to HK $40.00, which is 13.0% upside from the company's current share price.
Risk.
New product launch, clinical trial data and sales or profits are lower than expected; increased competition; pharmaceutical industry reform; the company's continued losses may affect product research and development and promotion.