Heyuan Biology (688238)
Gene therapy cdmo industry: a golden track of rapid growth
Gene therapy as a new generation of precision medical therapy, especially after the listing of three gene therapy drugs luxturna, kymriah and yescarta in 2017, the industry scale expanded rapidly. Driven by policies and capital, the gene therapy industry has gradually become a golden track for future development. According to frost Sullivan, the global gene therapy market is expected to grow from US $2.08 billion in 2020 to US $30.54 billion in 2025, with a compound growth rate of 71.2%. Gene therapy production has high process barriers, which is difficult for pharmaceutical enterprises to complete independently. Cdmo enterprises can provide diversified process selection and optimization services, significantly reduce the cost of new drug R & D enterprises and shorten the drug commercialization cycle. The penetration rate of gene therapy cdmo outsourcing is expected to continue to increase. Driven by the rapid expansion of gene therapy market and the improvement of outsourcing penetration, the gene therapy cdmo industry has broad growth space. According to frost Sullivan data, the global gene therapy cdmo market is expected to grow from US $1.72 billion in 2020 to US $7.86 billion in 2025, with a compound growth rate of 35.5%.
Full platform integrated cgtcdmo is a scarce leader. It is expected that the performance will continue to grow at a high speed in the next three years
Since 2015, the company has continued to build a technical platform. At present, it has become an integrated cgtcdmo service platform covering cell therapy, gene therapy and oncolytic virus in China. In 2021, the company achieved an operating revenue of 255 million yuan, with a year-on-year increase of 78.57%. In terms of business structure, gene therapy cdmo business accounted for 75.61%, gene therapy cro business accounted for 21.66% and other businesses accounted for 2.73%. Looking forward to the next 3-5 years, with the continuous promotion of more than 50 pipelines served by the company, gene therapy cdmo business and gene therapy cro business are expected to continue to achieve rapid growth.
After the IPO capacity is put into operation, it will significantly improve the company’s capacity supply and meet the performance development needs in the next 3-5 years
At present, the company has nearly 1000 square meters of pilot platform for gene therapy products and nearly 7000 square meters of GMP production platform for gene therapy products, including 1 plasmid production line, 3 virus vector production lines, 2 car-t cell production lines, 3 warehouse building production lines and 1 filling line. The scale of GMP energy production has reached the level of similar foreign enterprises. According to the IPO raised investment projects, the company will start the construction of a 77000 square meter precision medical industry base in Lingang New Area of Shanghai free trade pilot zone, design 33 GMP production lines and a maximum reactor scale of 2000L. After the IPO production capacity is put into operation, it will significantly improve the company’s production capacity supply and meet the performance development needs in the next 3-5 years.
Performance forecast and investment suggestions
The company is an integrated cgtcdmo service platform covering cell therapy, gene therapy and oncolytic virus in China. Considering the company’s rich cgtcdmo experience and continuous improvement of production capacity, we judge that the company’s performance will achieve rapid growth in the next 3-5 years. It is predicted that the operating revenue from 2022 to 2024 will be 372 / 557 / 823 million yuan, EPS will be 0.16/0.25/0.37 yuan respectively, corresponding to the closing price of 18.94 yuan / share on April 19, 2022, and PE will be 116.34/74.95/50.83 times respectively. Considering that the company is the subject of cgtcdmo with scarce a shares, it will be covered and rated as “buy” for the first time.
Risk tips
Industry development is lower than expected, production capacity can not meet the company’s needs, the risk of intensified competition, the loss of core technical personnel, and the impact of New Coronavirus epidemic.
