The most dazzling innovative pharmaceutical company at the beginning of the year

Mahayana Meditation Sutra Book 3: Sentient reincarnation, born of the six paths, like the inconsistency of the wheel. Echoing from afar, Solomon explained in Ecclesiastes: What has been there will be again; What has been done, will be done later. Under the sun, there is nothing new.

There is nothing new on Wall Street, because speculative trading is as old as mountains, and capital markets are forever in rotation. When Navitas reached rock bottom after a year and a half of decline, the new stock Bailey Tianheng was rising into the cloud, repeating the "valuation overdraft of a lifetime of performance" in the early days of listing.

The most dazzling innovative pharmaceutical company in January 2023 did not expect to be a Sichuan company that was almost defeated by centralized procurement and was about to run out of cash.

Bi-antibody, tetra-antibody, ADC, bi-antibody ADC, these labels meet the market's beautiful imagination of innovative drugs, although the market value of 17.2 billion yuan is mainly supported by a clinical phase II pipeline.

Perhaps six months from now, most people have forgotten about the company, but the message from this event will settle down, and the market is so hungry for new molecule types that it prefers to pay a super valuation by mistake.

Navitas has been 10 times in one day, and has maintained the record price increase on the first day of listing on the Science and Technology Innovation Board.

Behind this is the market's hunger for domestic substitution in the upstream supply chain of pharmaceuticals, and Navitas has been described as one of the few companies in the world that can simultaneously produce inorganic and organic high-performance nanosphere materials at scale. Later, we learned that there are not a few unlisted companies involved in chromatographic packing materials/chromatography media, including Lanxiao Technology, WuXi Biologics, and Saifen Technology is also expected to land on the science and technology innovation board.

Navitas' market capitalization in 2021 once exceeded 50 billion yuan, and its net profit that year was only 188 million yuan. The grand outlook was finally defeated by common sense, and the results stalled into the second half of 2022, and high valuations collapsed faster.

The day before yesterday, Navitas released its 2022 annual performance forecast. Q4 revenue was 219 million to 249 million yuan, a year-on-year increase of 34% to 52%, and non-net profit was 0.43 to 60 million yuan, down 32% to 5% year-on-year, but the performance basically stabilized month-on-month.

At this point, the market value has fallen back to around 20 billion yuan, and a lesson for investors is that good companies also need valuation matching.

At the same time, Bailey Tianheng nearly doubled in 3 days of listing.

This is actually a 25-year-old traditional pharmaceutical company, starting with chemical generic drugs and proprietary Chinese medicines, and the listing criteria chosen are very conventional: the expected market value is not less than RMB 3 billion, and the operating income in the latest year is not less than RMB 300 million.

Because the core products dexmedetomidine hydrochloride injection and propofol medium/long-chain fat emulsion injection did not win the bid, resulting in the loss of market share, revenue declined year by year, and lost money for 4 consecutive years, in the first half of 2022, deducted non-net profit of -154 million yuan, R&D expenses of 173 million yuan, and monetary funds were only 92.66 million yuan.

The gearing ratio is 78.9%. The asset-liability ratio of enterprises is generally 40%~60% as a normal level, and 70% has reached the warning line.

Fortunately, the IPO saved a life, but the net IPO fundraising of 884 million yuan can only support research and development for two or three years, and the cloud of lack of money is still entangled. Now most pipelines are in the early clinical stage, and it is not yet time to really burn money.

Bailey Tianheng has 8 innovative biological drugs in the clinical trial stage, including 2 bispecific antibody drugs, 3 tetraspecific antibody drugs, 1 bispecific antibody ADC drug, and 2 monoclonal antibody ADC drugs. In addition, there is a neutralizing antibody macromolecule drug (ACE2 fusion protein) for the treatment of the new coronavirus, which has completed phase I clinical research and has a research and development budget of 28.47 million yuan, can this money be saved?

Seven pipelines are in the early stages of clinical practice, there is a risk of not achieving the expected results, and should not be valued according to the norm.

Four-specific antibodies GNC-038, GNC-039, GNC-035 have entered phase I clinical trials, which are the first three four-specific antibodies in the world to enter the clinical research stage, and other companies in the world are still in the early stage of preclinical exploration. Multispecific antibodies need to break through the technical bottlenecks of poor druggability and large toxic side effects, and each stage of CMC development faces many challenges.

BL-B01D1, a bispecific ADC drug that has entered phase I clinical trials, is the third bispecific ADC candidate in the world and the first in China to enter clinical research. The research and development of overseas dual antibody ADCs has failed one after another. At the 2022 ESMO conference, Zymeworks, a US-listed company, released the phase I clinical data of the HER2 bispecific ADC product ZW49 for the treatment of solid tumors, which did not meet expectations, and the stock price plummeted by 29%. The development of AstraZeneca's bispecific ADC product, MEDI4276, was discontinued due to toxicity issues. Dual-epitope ADC not only solves the problem of non-response of antigen low-expression drugs, but also has great toxicity.

Whether Bailey Tianheng can break through the research and development problems of multi-antibody and bi-antibody ADC deserves continuous attention.

PD-1/CTLA-4 dual antibody SI-B003 is in phase I clinical trials, and the official website of Bailey Tianheng calls itself Best-in-class, which is exaggerated, and its competitor is Akeso's listed cardunilimab (AK104). SI-B003 monotherapy for solid tumors was evaluated in 46 patients with an ORR of 19.56% (9/46) and a DCR of 56.52% (26/46). For relapsed or metastatic cervical cancer that has failed platinum-containing chemotherapy with cardunilimab monotherapy, the ORR of cardunilim monotherapy 2/3 line reached 33.0%, and the complete response (CR) rate reached 12%, regardless of the patient's PD-L1 status; The ORR of PD-L1+ patients (CPS≥1) was as high as 43.8%.

The only innovative biological drug EGFR/HER3 bispecific antibody SI-B001 that has entered clinical phase II, is the fastest progressing bispecific antibody based on HER3 targets in the world. HER3 binding capacity is low, there is no or almost no intracellular tyrosine kinase activity, since the discovery of this dimer mechanism of action of HER3 and HER2, there has been no successful marketing of drugs based on HER3 targets in the past 30 years, and there are also drug challenges.

SI-B001 had an objective response rate (ORR) of 5.56% and a disease control rate (DCR) of 42.59% in 54 evaluable patients with end-line advanced solid tumors.

A total of 11 patients with PD-1(L1) monoclonal antibody + platinum-containing chemotherapy for second- and second-line treatment of patients with recurrent metastatic head and neck squamous cell carcinoma with SI-B001 monotherapy had an objective response rate (ORR) of 27.27% and a disease control rate (DCR) of 72.73% in the second-line and second-line treatment of patients with recurrent metastatic head and neck squamous cell carcinoma with SI-B001 as a single agent (2 in stage I and 9 in phase II).

Relying only on the support of a clinical phase II dual antibody pipeline, it is difficult for the market value of Baili Tianheng to benchmark Hong Kong stock 18A companies to exceed 5 billion yuan, but it has staged a myth of inflation, and the deep problem behind it is innovation anxiety.

In the context of the homogenization of innovative drugs, the gorgeous labels of new molecular types have stories to tell, which means that there is room for technology to activate increments, but most of the pipelines are in the early clinical stage and the risks of drug ownership are ignored.