"Investor.com" Cai Jun
Remegen Biotech (688331.sh, hereinafter referred to as the "Company") has reached another critical point.
At the end of March, the company announced a fixed increase plan, planning to raise up to 2.55 billion yuan, all of which will be used for "new drug research and development projects", including RC18, RC48, RC28, RC88, RC148 and RC198 and other innovative drugs under development.
Almost at the same time, the company also released its 2023 annual report. So far, the company's core marketed products include tetanercept, vedicitumab and so on. During the reporting period, the company's operating income increased by 40.26% year-on-year, and the net profit attributable to the parent company was -1.51 billion yuan, and the loss widened compared with 2022.
Just three months ago, the company's share price experienced a sharp swing. Focusing on various rights and wrongs, this fixed increase is more conspicuous. On the one hand, the company has responded to market doubts. On the other hand, the scale of the company is in the critical stage from small to large, and the fixed increase has a richer connotation.
This time, Remegen cannot afford to lose.
Fixed increase under magnifying glass
In January this year, Remegen was caught off guard by the stock decline, attracting investors to "watch".
At that time, there were rumors in the market that the company was short of cash flow, had difficulties in obtaining bank credit, and was at risk of potential litigation from suppliers. In response, the Company clarifies that the content and statements of these comments are factually inconsistent and highly misleading. What is even more intriguing is the timing of the event.
Before the incident, the company's CEO Fang Jianmin talked about "the upgrade from biotech to biopharma" at the annual medical and health conference of JPMorgan Chase in the United States. Biopharma is larger and stronger, covering R&D, production, sales, etc., and is the only way for all pharmaceutical companies to grow from small to large.
After the incident, cash flow seems to have become a must-pass on the road to Rongchang's biological upgrading, and it has been watched by the market with a magnifying glass.
As of 2023, the company's monetary funds will be 743 million yuan, a significant contraction from 2.187 billion yuan at the beginning of the year. In the same period, the company's management, sales, research and development expenses were 304 million yuan, 775 million yuan and 1.306 billion yuan respectively, a year-on-year increase of 14.24%, 75.9% and 33.01% respectively.
In other words, the company's increased expenses do consume cash. In this regard, "Investor.com" asked whether this round of private placement indicates that cash flow is tight, and Remegen responded, "The company's operation is normal and orderly, and the private placement plan is to better promote relevant R&D projects and realize the domestic and foreign listing of products."
In fact, the company's financing channels are not only in the capital market. In 2023, the company borrowed 643 million yuan from banks as collateral for projects under construction, fixed assets, intangible assets, etc. During the reporting period, the company established a production system in line with global GMP standards, and it is expected that the total production capacity of drug substance will expand to more than 80,000 liters in 2025.
Not only that, Remegen has three souls, Chairman Wang Weidong, CEO Fang Jianmin, and Chief Medical Officer He Ruyi. The three of them have built a huge pharmaceutical kingdom, with tentacles covering Saipu Biotech in the upstream culture medium, Remegen Biotech in drug research and development, and Mabray in drug production.
The pharmaceutical system is like a running machine, turning to maintain the daily operation of various enterprises, and even the flow of funds. In 2019, before Remegen was listed on the Science and Technology Innovation Board, the company borrowed 584 million yuan from related parties. Since then, with the successful commercialization of the drug, the company's cash flow has gradually increased.
Moreover, the operation of the system has also fed back new capital operations. In 2023, Mindberry will pass the IPO review of the GEM of the Shenzhen Stock Exchange. During the reporting period, the company purchased R&D services from Mabberry for an amount of 36 million yuan.
Remegen Biotech told Investor.com that "related party transactions are necessary for the company's normal operation and have been approved by the general meeting of shareholders;
Polishing the road to commercialization
If you want to upgrade from biotech to biopharma, any pharmaceutical company has to go through the test of commercialization.
In 2023, the company's operating income will be 1.083 billion yuan, a year-on-year increase of 40.26%. It should be pointed out that the company's accounts receivable in the same period was 298 million yuan, a year-on-year increase of 47.34%. In terms of products, the sales growth rates of tetanercept and vedicitumab were 59.37% and 15.24% respectively, a significant decline compared with 2022.
At the performance briefing, the company also bluntly said that the achievement of the sales target in 2023 does not look ideal. The company also told Investor.com that "there are certain objective factors in 2023 and confidence in sales in 2024."
In 2023, Remegen's sales expenses will be 775 million yuan. Among them, employee compensation and market development expenses were 436 million yuan and 260 million yuan respectively. There are 1,185 sales employees, about half of whom are self-immunized and half of the oncology team. During this period, Tang Gang, the former vice president of the company, jumped to Haichuang Pharmaceutical, and during his tenure in the company, he completed the construction of the marketing system from 0 to 1 and was responsible for the commercialization and promotion of vedicitumab.
The company disclosed at the performance briefing that the sales expense ratio will decrease significantly this year, and this indicator will be 71.6% in 2023. The company also told Investor.com that "the size of the sales team will not be significantly adjusted, but it will be further optimized to improve the quality of the team."
Remegen is still polishing its business path. In the industry, Innovent Biologics, which is recognized as a successful upgrade, has an operating income of 6.206 billion yuan in 2023, a sales expenditure of about 3 billion yuan, and a sales team of about 3,000 people. On the one hand, the company invests heavily in sales, and on the other hand, it has a large number of marketed drugs covering a wide range of indications.
It can be said that the initial R&D choice determines the subsequent commercial development to a certain extent.
For example, vedicitumab, the company's well-known product in the market, is an ADC (antibody conjugate) product, known as a magic bullet that can precisely locate cancer cells and carry out attacks. Up to now, there is only one company of similar drugs listed in China, and the rest are foreign investors such as Roche, Pfizer, Takeda, AstraZeneca/Daiichi Sankyo, and Gilead.
Domestic "heads-up" imports have attracted much attention for a while. In the selection of indications, the company avoided the breast cancer edge of international manufacturers, and the gastric cancer indication was approved for marketing in 2021. In 2021 and 2022, the sales of vedicitumab will be 84 million yuan and 412 million yuan, respectively.
However, Remegen did not disclose sales in its 2023 annual report. Judging from the growth rate of sales, another drug, Tatanercept, may support the company's growth.
In the same period, domestic ADC manufacturers completely opened up the pattern, and the latter wave represented by Baili Tianheng gradually rose. They have developed a wider range of indications, which have been recognized by major international manufacturers and won a large amount of license-out. Under the changes, the company has strengthened its determination to "make up the indications".
Remegen told Investor.com that it will "focus on the layout of key products such as 18, 48, 28 and 88" this year. Among them, 18 and 48 represent the new indications of tetanercept and vedicitumab. (Produced by Thinking Finance)■