Huajin Securities: Gave Mabwell a buy rating

Zhao Ningda of Huajin Securities Co., Ltd. recently conducted research on Mabwell and released a research report "Commercialization and Capacity Construction Progressing Steadily, Nectin-4 ADC Multi-pipeline Positive Progress", this report gives a buy rating to Mabwell, and the current stock price is 33.15 yuan.

Mabwell(688062)

Investment Essentials

The listing of Mailishu contributed to the new increment. The company released its 2023 annual report. (1) In 2023, the company will achieve revenue of 128 million yuan (+361.03%, same as above), mainly including technical service revenue of 85.5953 million yuan and Mailishu sales revenue of 42.0896 million yuan. In 2023, the company will lose 1.053 billion yuan, with a year-on-year increase of 98.1981 million yuan, and a non-loss of 1.060 billion yuan, with a year-on-year increase of 93.1013 million yuan. In 2023, the company's sales expenses, administrative expenses, and R&D expenses were 143 million yuan (+81.99%), 225 million yuan (+19.23%), and 836 million yuan (+10.17%), respectively. (2) In Q4 alone, the company achieved revenue of 28.3242 million yuan (+287.79%), a loss of 380 million yuan, a year-on-year increase of 117 million yuan, and a non-loss of 382 million yuan, a year-on-year increase of 116 million yuan.

The commercialization of biosimilars is progressing steadily, and emerging markets continue to expand. In terms of biosimilars, the company has approved 3 products for marketing, and BD focuses on incremental development in emerging markets, with good commercialization expectations. (1) Melishu (denosumab, osteoporosis): approved for marketing at the end of March 2023. In 2023, 84,474 pieces will be shipped, with a confirmed income of 42.0896 million yuan, and in 2023, 28 provinces will complete the bidding and networking, 29 provinces will complete the medical insurance docking, and 605 hospitals will be admitted and 2,061 pharmacies will be covered, laying the foundation for the next volume increase. Overseas has submitted a listing application in Pakistan. (2) Maiweijian (denosumab, oncology): approved for marketing on March 29, 2024 for the treatment of giant cell tumor of bone, and the marketing application for other indications is advancing. At present, the company has set up an exclusive oncology team to be fully responsible for the promotion and sales of Maiweijian. Overseas has submitted a listing application in Pakistan. (3) Junmaikang (adalimumab): By the end of 2023, 166921 shipments have been completed, 26 provinces have completed the bidding and networking, and all provinces have completed the docking of medical insurance, with a total of 173 hospitals and 1,316 pharmacies. The Company has signed a supplementary agreement with Junshi Biosciences in April 2024, and Junmaikang MAH will be directly transferred from Junshi Biosciences to the Company. Overseas companies have submitted listing applications in Indonesia, Egypt and Pakistan.

The pipeline under development is advancing efficiently, and Nectin-4ADC has shown positive efficacy in multiple indications. 9MW2821 (Nectin-4ADC) has been deployed in multiple indications such as urothelial carcinoma (UC), cervical cancer (CC), esophageal cancer (EC), etc., and currently enrolls more than 280 patients. For UC of 2L and above, the first patient has been enrolled in the phase III clinical trial of monotherapy, and the ORR and DCR of phase II single-agent have been 62.2% and 91.9%, respectively, as of December 5, 2023, and the first patient has been enrolled in the phase I/II clinical trial of 1LUC in combination with PD-1. As of September 25, 2023, a total of 40 patients were enrolled, with a detection rate of 89.67% and 67.82% for Nectin-43+, 40.54% and 89.19% for 37 patients in the whole population, and 50.00% and 92.31% for 26 patients with Nectin-43+, respectively, Among the 21 patients who failed platinum-doublet chemotherapy and immune checkpoint inhibitors, the ORR and DCR were 38.10% and 85.71%, respectively. As of February 20, 2024, the ORR and DCR of 30 patients in phase II of phase II swelling are 30% and 73.3%, respectively, and the company will start phase III communication as soon as possible. In terms of other pipelines under development, 8MW0511 (HSA-G-CSF) NDA has been accepted, 9MW2921 (Trop-2ADC) and 7MW3711 (B7-H3ADC) Phase I/II clinical trials are being actively promoted, and 9MW1911 (ST2), 9MW3011 (TMPRSS6) and 9MW3811 (IL-11) are under research and development progress leading in China and in the forefront of the world, and early clinical trials are being actively promoted.

It has a mature production transformation system and a forward-looking layout of large-scale commercial production capacity. The Taizhou base (Taikang Biologics) has a production capacity of 8,000L of antibody drugs and 4,000L of recombinant protein drugs, and the preparation production line can meet the filling of 1ml prefilled needles and multiple specifications of vials, and has completed the preparation of clinical trial samples for 9 varieties under development and the commercial production of 1 product (denosumab) by the end of 2023. As of the end of 2023, the ADC workshop has completed the preparation of 9MW2821 clinical phase III trial samples, marking that the company's ADC drugs have realized the layout and practice of the whole industry chain from R&D to production. The Jinshan base (Langrun Mawei), a project under construction, is built according to digital engineering standards and plans to serve the global market, with 2 dope lines (6*2000L) and 1 vial preparation line ready for production, and 1 prefilled needle preparation line is currently undergoing equipment commissioning.

Investment suggestions: The company's commercialization is progressing steadily, the sales of biosimilars are expected to be good, and it is expected to increase rapidly, the pipeline is rich in varieties in the later stage, the long-term momentum is sufficient, the forward-looking layout of innovative targets, the differentiated layout in the ADC field, and the R&D strength is strong. Based on the company's 2023 annual report, we adjust the original profit forecast, and expect the company's revenue from 2024 to 2026 to be 3.68/13.31/2.438 billion yuan (4.08/1.071 billion yuan before 2024-2025), with a growth rate of 188%/261% and 83%. Maintain the "Buy-A" recommendation.

Risk warning: the risk of not yet making a profit, the risk that the progress of product research and development is less than expected, the risk of uncertainty of product listing approval, the risk of product sales falling short of expectations, and the risk of intensifying competition in biosimilars.

According to the calculation of the research report data released in the past three years, the research team of Zheng Wei of Guolian Securities has conducted in-depth research on the stock, with an average forecast accuracy of 79.97% in the past three years, and its forecast attributable net profit in 2024 is a loss of 654 million.

The breakdown of the latest earnings estimates is as follows:

A total of 9 institutions have rated the stock in the last 90 days, with 7 having a buy rating and 2 having an overweight rating, with an average institutional price target of 44.03 over the last 90 days.

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