Whether it can be landed depends on the regulatory authorities
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Wen | Caijing reporter Xin Na Wang Teng
Editor| Wang Xiao
"One dose of human papillomavirus (HPV) vaccine is effective in preventing cervical cancer and is comparable to two or three doses of vaccine protection."
This is the world health organization (WHO) Strategic Advisory Group on Immunization (SAGE) reviewed evidence for one dose of HPV vaccination from April 4 to April 7, 2022 and reached its conclusions.
Affected by this news, as of the close of trading on April 14, the domestic vaccine-related enterprise Wantai Bio (603392. SH) fell 9.46%, Zhifei Bio (300122. SZ) fell more than 14 percent, Watson Bio (300142. SZ) fell 3.08%.
Currently, there are five HPV vaccines worldwide, involving four suppliers. GlaxoSmithKline (GSK) and Merck cover the global market, while Wantai Bio and Watson Bio only sell domestically. In addition, Zhifei Bio is the exclusive agent of Merck's HPV vaccine sales in China.
The HPV vaccine is considered effective in preventing cervical cancer, but its global popularity has been hampered by capacity supply and high prices, discouraging low- and middle-income people. If SAGE's recommendations are implemented, it is possible that this part of the population can also use the HPV vaccine.
The one-shot proposal is indeed not too favorable news for vaccine companies, and it is bound to greatly affect the revenue of vaccine delivery companies. This is also where the capital market reacts sensitively.
However, SAGE's recommendations have not yet reached a final result, and it will take time to land. Wang Haijiao, managing partner of Gao Tejia Investment, believes that whether the proposal will have a substantial impact on the Chinese market depends on whether the Chinese regulatory authorities fully accept the proposal. "There have also been some specific Regulatory Measures in China that are not entirely consistent with the WHO recommendations."
How far from landing
The WHO's official website details the immunization procedures recommended for HPV vaccination.
Women aged 9 to 14 years are the highest priority, with one or two doses, women aged 15 to 20 years giving one or two doses, and women over 21 years of age receiving two doses at an interval of six months.
The suggestion was made by SAGE discussions. WHO Assistant Director-General Nothemba commented, "This single-dose recommendation has the potential to make us more quickly achieve our goal of eliminating cervical cancer, which is to vaccinate 90% of girls by the age of 15 by 2030. ”
However, the recommendation is not final. The WHO website article said that before the position paper on HPV vaccines is revised, a stakeholder consultation meeting will be held on these important policy changes.
Affected by this news, on April 14, the stock prices of LISTED COMPANIES RELATED TO HPV vaccines fell sharply. In this regard, the secretary of the board of directors of Zhifei Bio replied that the company's operation is as usual and has paid attention to relevant news.
In its reply to Caijing Health, Merck said that the current immunization program for quadrivalent and nine-valent HPV vaccines listed in China is three doses, and the protocol is based on clinical research data in China approved indications. We recommend that healthcare professionals and consumers follow regulatory-approved HPV vaccine instructions.
It mentioned that Merck is conducting a number of clinical studies of the two-dose HPV immunization program in women and men of different ages in China, and is conducting a large number of real-world population-based studies. "The effectiveness and safety of two doses, single doses, or other immunization procedures not approved by regulatory agencies for Chinese populations remains to be further confirmed."
Wantai Bio mentioned in the announcement that under the current national drug regulatory policy, if the secondary change of inoculation is carried out, a series of clinical, data support and registration change procedures need to be performed, which takes a certain amount of time, and there is no significant impact on the company's operating performance in the short term.
Prior to this, there was an international discussion about the number of HPV vaccinations. In June 2021, the Frederick National Cancer Research Laboratory of the National Institutes of Health organized a seminar on the standardization of HPV serological tests. One such topic is the serological evaluation of an immune HPV vaccine.
Dr. Anne Schuind from the international nonprofit - Path compared the effectiveness and immunogenicity of one dose of HPV versus unvaccinated or multiple doses. The rate of HPV16 and 18 infection among vaccinated patients is extremely low and significantly lower than among unvaccinated subjects. The effectiveness of HPV16 and 18 was comparable in young women who received one, two, and three doses at 11 years after vaccination. Single doses have lower antibody titers than multi-dose inoculation, but are still higher than the levels of antibodies induced by natural infection.
To what extent will the WHO's recommendations be adopted by regulators, and how far will it be from landing? According to an expert from a Working Group of the World Health Organization, this is the first time to give advice on HPV vaccinations, and whether it can be landed in various countries mainly depends on the attitude of local regulatory authorities.
Wang Haijiao believes that how to vaccinate the HPV vaccine needs to meet the actual situation in China and supplement the trial data for Chinese populations.
What are the implications for businesses
To discuss the impact of the news on the Chinese market, we can focus on three listed companies - Zhifei Biological, Wantai Biological and Watson Biological.
There are two bivalent vaccines in the domestic market, one quadrivalent and one nine-valent, a total of four cervical cancer vaccines to choose from. Zhifei Bio represents Merck with quadrivalent and nine-valent HPV vaccines in China, and was approved to enter the Chinese market in 2017 and 2018 respectively. Wantai Bio is a bivalent HPV vaccine that was approved for marketing in 2020. In addition, there is the bivalent vaccine of Watson Bio, which was approved in March 2022.
According to the 2020 financial report of Zhifei Biotech, since the agent products were listed and sold in the Chinese mainland market, as of the end of the reporting period, the company has issued more than 25 million doses of HPV vaccines. Among them, in 2020, more than 7.2 million doses of quadrivalent vaccines were issued, and the nine-valent vaccine was more than 5 million doses.
Batch issuance in 2022 is still increasing. According to a research report by Huaxi Securities in March, according to the data disclosed by the Central Procuratorate, as of March 15, 2022, 12 batches of quadrivalent HPV vaccines were issued, presumably about 2-2.5 million; 20 batches of nine-valent HPV vaccines were issued, presumably about 4-4.5 million. It is expected that in the first quarter of 2022, the four-price and nine-price batch will issue about 6-7.99 million units, an increase of 100%-130% over last year.
In addition, the domestic COVID-19 vaccination concentration for routine vaccination weakened, the pace of vaccine batch issuance returned to normal, so it is predicted that Merck's supply of HPV vaccine in China will increase significantly compared with last year.
In Merck's above reply, it was also mentioned that with the increase of global production capacity, Merck's supply of HPV vaccines to China has also increased year by year. In the first quarter of 2022, merck's batch issuance of quadrivalent HPV vaccine increased by nearly 70% year-on-year, and the number of batch issuance of nine-valent HPV vaccine increased by nearly 280% year-on-year.
According to the analysis of the above research report of Huaxi Securities, as the exclusive agent of Merck's quadrivalent and nine-valent HPV vaccines, Zhifei Biotech accounts for more than 80% of the company's revenue from the HPV vaccine business. Therefore, the increase in Merck's supply of HPV vaccines to China will significantly increase the company's revenue and profit levels.
The "valence" in bivalent, quadrivalent, and nine-valent vaccines indicates the type of virus that the vaccine can prevent. Bivalent vaccines cover the prevention of HPV16 and 18 virus infections, and 70% of cervical cancer and cervical cancer precancerous lesions in the world are related to HPV16 and HPV18 viruses; quadrivalent vaccines cover the prevention of HPV viruses 6, 11, 16 and 18, and the nine-valent vaccine covers five more subtypes on this basis.
That is to say, the higher the number of prices, the more viruses are prevented. In China, "84% of cervical cancers are caused by HPV16 and HPV18." Wei Lihui, chief physician of the Department of Obstetrics and Gynecology of Peking University People's Hospital, once analyzed that the bivalent vaccine can basically meet the needs of the Chinese people. The nine-valent vaccine can increase the prevention rate of cervical cancer to 90%.
According to a person in the biomedical industry, more people in first- and second-tier cities and coastal cities choose to import vaccines. Bivalent and quadrivalent vaccines are not out of stock, and nine-valent vaccines are still difficult to find. Many people have the idea of once and for all, since they want to fight, they will fight the most complete coverage.
From the price point of view, Wantai Bio's HPV vaccine has advantages over similar imported bivalent vaccines. Another advantage is that women aged 9-14 only need two injections when they are vaccinated, which can reduce the cost of vaccination compared with imported vaccines.
However, Wantai Creatures now encountered a fierce enemy. In March 2022, a bivalent vaccine owned by Watson Biotech was approved for marketing by the State Food and Drug Administration, and a production base with a production capacity of 30 million doses was built, and the vaccine only needed two injections for women aged 9 to 14 years old, and the price would be competitive.
Wantai Biotech mentioned in its 2021 annual report that its cumulative sales of bivalent HPV vaccine exceeded 10 million in the whole year. Its biological vaccine products achieved operating income of 3.278 billion yuan and gross profit margin of 92.78%, an increase of 360.75% over the same period last year. In its full-year results statement, it was mentioned that the significant increase in operating income was mainly due to the increase in revenue from bivalent HPV vaccines, reagents and active raw materials.
If the HPV vaccine is reduced to only one injection, which is equivalent to one-third of the original, it is bound to greatly affect the revenue of the above companies. The proposal is still some way from landing, but the HPV track has begun to get hot.
According to the "Cervical Cancer Vaccine Market Research Report", combined with the winning price of the product in the domestic market and the rough estimate of the batch issuance volume, the market demand for HPV in China in 2020 will be about 11.8 billion yuan, of which the nine-valent vaccine and market demand will be about 6.3 billion yuan, accounting for 53%; the quadrivalent vaccine will be about 4.6 billion yuan, accounting for about 39%.
However, with the increase of HPV vaccine products, and more and more cities to include bivalent HPV vaccines into the free vaccination plan, according to the situation of centralized procurement of other categories, the future government procurement price is bound to squeeze the price, and the profit margin is limited.
An HPV vaccine war is about to begin.
(Xin Ying also contributed to this article)