\u3000\u3 Guocheng Mining Co.Ltd(000688) 180 Shanghai Junshi Biosciences Co.Ltd(688180) )
Event: Shanghai Junshi Biosciences Co.Ltd(688180) announced the annual results of 2021 on March 31, 2022. The revenue was 4.02 billion yuan, a year-on-year increase of 152.4%, the operating cost was 1.24 billion yuan, a year-on-year increase of 234.1%, the sales expense was 730 million yuan, a year-on-year increase of 6.8%, the management expense was 640 million yuan, a year-on-year increase of 46%, the R & D expense was 2.07 billion yuan, a year-on-year increase of 16.4%, and the net loss was 720 million yuan, which was significantly narrowed compared with 1.669 billion yuan in the same period of last year;
Comments: with the arrival of the inflection point of the company’s fundamentals, covid-19 pipeline provides greater flexibility;
The fundamentals of the company will improve in four aspects:
1) commercialization is on the right track: the sales of the company’s core product PD-1 monoclonal antibody trepril in 2021 was 412 million yuan, down from the previous year, mainly due to the turbulence of the internal commercialization team in 2021. In November 2021, Mr. Li Cong became the co CEO of the company and was fully responsible for commercialization. At present, the team adjustment and organization recovery have been completed;
2) major indications are about to bear fruit: treprizumab was approved for three indications: 1L nasopharyngeal carcinoma, 2L / 3L nasopharyngeal carcinoma and 2L urothelial carcinoma in 2021. At the same time, the listing application for 1lnsclc and 1L esophageal squamous cell carcinoma was submitted and accepted. We expect that both major indications will be approved in 2022. At the same time, trepril has completed the enrollment of four phase 3 key clinical patients, including 1lsclc, 1lhcc, liver cancer assistance and gastric cancer assistance. The company is in a leading position.
3) completion of technology transfer of port plant and lifting of capacity restriction: Shanghai Lingang Holdings Co.Ltd(600848) production base phase I passed GMP inspection in March 2022, and the capacity was expanded from 4500l to 34500l, which will improve the supply capacity and cost advantage of trepril;
4) the overseas cooperation is progressing smoothly, and 1L nasopharyngeal carcinoma will be approved in the United States: the cooperation with coherus was reached in February 2021, and the down payment of US $150 million has been received. In October 2021, the indication BLA for first-line and back-line treatment of nasopharyngeal carcinoma was accepted by FDA, and the target review date of PDUFA was April 2022.
Covid-19 is rich in products, providing the company with greater performance flexibility:
1) neutralizing antibody js016: it has obtained EUA in more than 15 countries and regions around the world, and has been used by more than 700000 patients. All milestone funds have been unlocked. The milestone and share in 2021 are RMB 2.366 billion.
2) oral drug vv116: developed in cooperation with Wangshan and wangshui, it has been approved for the treatment of moderate and severe covid-19 patients in Uzbekistan. A global phase III clinical trial of moderate and severe indications and global phase II / III clinical trial of mild and moderate indications are being carried out, and the administration of the first patient has been completed;
3) oral drug vv993: cooperate with Wangshan wangshui to develop 3CL protease oral covid-19 candidate drug, which does not need to be combined with ritonavir, and is currently in preclinical stage
Driven by original research and development, the number of products under research has been expanded to 51. The innovative R & D field of the company has expanded from monoclonal antibodies to small molecules, ADCs, double / multi antibodies, nucleic acid drugs and other types; The pipeline of products under research covers five treatment fields, including malignant tumors, autoimmune diseases, chronic metabolic diseases, nervous system diseases and infectious diseases. Among them, there are 3 products under development in the commercialization stage (treprizumab, etesverizumab and adalimumab), 23 products under development are in the clinical trial stage (among which angoreximab, vv116, bevacizumab and PARP inhibitors are in the phase III clinical trial stage), and more than 25 products under development are in the preclinical development stage.
Profit forecast: adjusted according to the business progress in 2021 to reduce the future revenue expectation of covid-19 neutralizing antibody. Without considering the revenue contribution of covid-19 oral drug vv116, we expect the company’s revenue from 2022 to 2024 to be RMB 2.092 billion (3.716 billion before adjustment), RMB 3.163 billion (3.47 billion before adjustment) and RMB 4.11 billion respectively, with a year-on-year increase of – 48%, 51.2% and 39.4% respectively. It should be noted that under the background of the rampant covid-19 mutant Omicron, vv116 is expected to be approved within this year, which will bring greater performance flexibility to the company. The company has rich innovative drug pipeline and strong product development ability. It has the potential to grow into a large global innovative drug enterprise and maintains the “buy” rating.
Risk warning events: the risk of R & D and listing falling short of expectations, the risk of sales falling short of expectations, and the risk of policy uncertainty
