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金斯瑞生物科技(1548.HK):中报预告符合预期 看好CGT全面发展

Genscript Biotech Corporation (1548.HK): the forecast of China Daily meets expectations and is optimistic about the all-round development of CGT.

中信建投證券 ·  Aug 9, 2022 15:56  · Researches

Event

The company issues a preview of the 2022 mid-term report.

On the evening of August 7, the company released its mid-2022 forecast that the adjusted net profit of the ① acellular therapy business maintained a steady growth of about $29 million to $31.8 million, a year-on-year growth rate of 10.3% to 20.9%. ② cell therapy business: Legend Biotech Corp is expected to make an adjusted loss of about $145 million to $168 million, mainly from research and development expenses of about $135 million to $158 million. The ③ Group recorded an adjusted loss of approximately $115 million to $137 million during the expected period, compared with an adjusted loss of approximately $135.8 million for the same period in 2021. We believe that the rapid development of the CGT industry, the company's various parts of the business are highly competitive, is currently in the stage of capacity expansion, capacity expansion, the performance forecast is in line with expectations.

Brief comment

Life science services: launch a number of hot products, continue to increase the capacity of CGT business. In February, Kingsley Asia Pacific production and research base in Singapore officially put into production, adding 30000 square feet of highly automated protein production and gene synthesis service equipment, which is expected to greatly increase the scale of its protein and gene synthesis automation platform. In April, Kingsley Life plans to invest 1 billion yuan in the construction of the scientific reagent production building; in terms of products, the company continues to launch innovative products, such as T cell sorting magnetic beads, T cell sorting instrument, mRNA vaccine research and standardized production solutions, GMP products, etc., to consolidate its leading position in the field of gene and cell therapy.

Profit margin, due to upstream costs and the company's new capacity investment, we believe that the gross profit margin of the life science services sector decreased slightly in the first half of the year, and with the increase in capacity utilization and the weakening of the impact of the epidemic in the second half of the year, the full-year gross profit margin is expected to be level with 2021.

Vigorous biology: CGT CDMO leader, capacity expansion helps business development orders-on-hand to promote high revenue growth: in 2021, the company's CDMO orders reached US $197 million, an increase of 108% over the same period last year, and CGT business orders are expected to grow faster; fast-growing orders are expected to support the rapid growth of booming biological income; at the same time, in the context of strong industry demand, with the company's competitive advantage, orders are expected to continue the high growth trend in 2022.

A South Korean subsidiary has also been set up this year, which is expected to win more South Korean orders.

Accelerated production capacity growth to meet the development of antibody and CGT industry. The company successfully completed round A financing of 150 million US dollars and accelerated production capacity construction. In terms of antibody drugs, it is expected that antibody laboratories will be put into use in 2022 and 2023, and 12000 liters of GMP plant will be put into use in Zhenjiang in 2024; as for CGT, 6400 million plasmid GMP plants will be added in 2021, and 6400 tons will be added in China in 2022 and 2023 respectively. At the same time, American factories will be released one after another, and 31000 million plasmid and virus GMP plants will be added in 2024. The company is active in capacity expansion, which is conducive to the development of the company's business.

Booming biology CGT CDMO has rich experience and obvious development advantages: in terms of plasmids, booming biology is the largest plasmid CDMO supplier in China, with 9 successful IND applications in China, the United States and South Korea, and more than 70 IND applications using plasmid CMC projects in progress. In terms of viral vectors, the company has successfully provided lentivirus and AAV vectors for a number of cell therapy and Gene therapy, with a total of 3 successful experiences of IND applications in China and the United States, and more than 20 IND applications using viral vector CMC projects are in progress; in terms of mRNA plasmids, it has established cooperation with almost all domestic mRNA vaccine companies, and now the mRNA vaccine project cooperated with Korean and American companies has also been clinically approved in Korea and Japan. In the aspect of DNA vaccine, the CMC study of plasmid was provided. Given the rapid growth of the company's business, we expect Boom to continue to narrow its losses and break even at 2022H2.

Legend Biotech Corp: cilta-cel commercialization set sail, smoothly promote solid tumor research and development hand in hand Johnson & Johnson, jointly promote commercialization: at the end of February 2022, cilta-cel was approved in the United States; at the end of May, the product was approved to market in the European Union. 2022Q2, Johnson & Johnson officially launched cilta-cel sales, priced at $465000 in the United States, achieved sales of $24 million, and is expected to achieve rapid volume expansion in Q3 and Q4.

In 2021, BMS's Abecma sales amount is 164 million US dollars, considering that the efficacy and safety of cilta-cel are better than Abecma. At the same time, Legend and Johnson & Johnson are fully prepared, cilta-cel terminal sales are expected to exceed Abecma.

A number of products layout solid tumor CAR-T:1) LB1908, targeting Claudin18.2 CAR-T in the treatment of gastric cancer, domestic researchers are currently conducting clinical trials, preliminary efficacy data show that LB1908 has anti-tumor activity, approved by the United States FDA in June to carry out phase I clinical trials; 2) LB2102, targeted DLL in the treatment of small cell lung cancer; 3) LB2101, targeted GPC3 in the treatment of hepatocellular carcinoma and non-small cell lung cancer.

Active layout of early pipelines: on April 1, the company formally appointed Fang Guowei as the global head of research and early development. Dr. Fang has worked for Zymeworks, AbbVie, Genentech and other companies, mainly engaged in oncology research and discovery, joining Legend Biotech Corp will help the company to promote a number of pipeline products for hematological and solid tumors.

Baishijie: a leader in biosynthesis, seeking high-quality development

BSJ has a deep accumulation in biosynthesis, and the R & D team has many intellectual property rights and a variety of microbial strain platforms. the company will strengthen the combination of R & D and application to optimize the product portfolio and explore new opportunities in synthetic biology. We believe that with the continued popularity of synthetic biology, BSJ will coordinate resources and vigorously develop difficult and high value-added products, and revenue is expected to achieve high-quality growth. BSJ is currently engaged in an active business transformation to seek high-quality development.

Investment advice:

We believe that Genscript Biotech Corporation has a good management mechanism, talent incentive mechanism and incubation mechanism, and has successfully incubated many leading global businesses. In addition, with the rapid development of the CGT industry, the company has benefited from a number of businesses and accelerated the release of production capacity, and the performance is expected to achieve rapid growth in the next few years. Considering the great differences in valuation methods among Genscript Biotech Corporation's four major business sectors, we use the segment valuation method. The life sciences CRO business (gene synthesis, catalog products, oligonucleotides, proteins and peptides) benefits from the rapid growth of downstream demand, and some of the company's products are characterized by high barriers and fast growth, valuing the PE at 40 times. Booming is a leader in gene cell therapy CDMO with well-prepared technology and production capacity and is expected to benefit from rapid demand growth in the next few years, valuing Standard comparable at 25 times PS. The industrial enzyme was given 5 times PS to the standard comparable company. Legend Biotech Corp uses DCF valuation. The company's total revenue from 2022 to 2024 is expected to be US $767 million, US $1.058 billion and US $1.576 billion, respectively, with corresponding growth rates of 49.8%, 38.0% and 49.0%, respectively. At the same time, the company is expected to turn losses into profits in 2024. According to the business development in 2023, the reasonable market capitalization of the company is about HK $133.9 billion, and the corresponding target price is HK $63.85, maintaining the "buy" rating.

The translation is provided by third-party software.


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