The window period left for Wantai and Zhifei to restart may not be long
As the first brother of domestic HPV, in the past six months, Wantai Bio's performance in the capital market has been like a roller coaster, with ups and downs.
Since hitting a new low of 40.14 yuan in October last year, the company's share price has rebounded rapidly to 88 yuan, and then fell all the way to 47.62 yuan, and recently rose to a maximum of 81.5 yuan under the catalyst of related good news.
The same ups and downs in the stock price are the first decline in revenue and net profit of Wantai Biotech in the past five years. A few days ago, the 2023 annual report released by Wantai Biotech showed that in 2023, the company will achieve operating income of 5.511 billion yuan, a year-on-year decrease of 50.73%, and a net profit of 1.248 billion yuan, a year-on-year decrease of 73.65%.
Source: Choice
As for why there is such a big fluctuation in performance, the company said at the performance meeting on April 8 that firstly, the expansion of Merck's nine-valent HPV products has stolen a considerable part of the market, and secondly, the unit price decline caused by the fierce market competition of bivalent HPV vaccine has led to a decline in revenue and net profit in 2023.
So, why is the performance of Wantai Biotech in the capital market reasonable when the HPV business on which it depends is surrounded and blocked? Behind the huge stock price fluctuations, where is the difference in investors' perception of the company's value? What are the key points of the company's future development?
01
After the reversal of supply and demand, domestic bivalent HPV vaccines are still challenged by "consumption bias".
Behind the decline in Wantai Bio's performance is the change of China's HPV (human papillomavirus) vaccine from a difficult to find a shot to an application.
"Back then, I was looking for a nine-price substitute on a certain duoduo, and the total price of three injections was about 2,000 yuan, and at that time, if you wanted to sprout, 3,000 yuan might not be able to stop. Guan Yutong, a 24-year-old who had just joined the work, told the odd-even faction about her experience of HPV vaccination four years ago, "At that time, there were also female classmates who couldn't get the vaccine and chose to go to Hong Kong for vaccination, but the cost of vaccination in Hong Kong was higher than looking for scalpers."
"It's better to grab a lot now, some time ago I helped my sister who just became an adult to make an appointment for the HPV vaccine, and I only need to make an appointment on the official account of our local disease control on the 1st of every month, and I didn't make an appointment for the first time, but I made an appointment for the second time. ”
Source: Wuhan CDC
Guan Yutong's personal experience actually reflects the process of the transformation of the mainland's HPV vaccine from a shortage of supply to a balance between supply and demand.
Based on the data published in the 2020 China Statistical Yearbook, the HPV-age population (9-45 years old) in 2024, four years after the statistics, will be the total population aged 5-40 in the table, that is, 320 million women of appropriate age.
That is to say, even if the relevant statistical error is calculated, the total number of women suitable for vaccination in China is between 3-350 million, but no matter what kind of vaccine, unless there is a mandatory national policy requirement, the general penetration rate is between 50% and 80%, and HPV, as a relatively high-priced and self-paid vaccine category, has a lower penetration rate, which also means that the ceiling of domestic demand is about 160 million to 200 million people.
On the supply side, according to the statistics of the official account Summer Investment Research and Huatai Securities Research Institute, as of 2023, the current supply of HPV vaccines has reached 182 million, covering more than 60 million people according to the proportion of all three shots, and according to the vaccination rate in 2023, the ceiling of demand will be reached in five years. In 2023 and 2024, the key node of turning from a blue ocean market to stock competition, the price war will naturally become more intense.
Source: Odd and even drawing
In the process of gradually balancing market supply and demand, the domestic bivalent HPV represented by Wantai and other enterprises has also been "discriminated against".
The bivalent vaccine mainly protects against HPV16 and 18 viruses, while the 9-valent cervical vaccine can prevent HPV6, 11, 16, 18, 31, 33, 45, 52, and 58 infections.
Therefore, when the appeal is to prevent cervical cancer, then the bivalent vaccine can actually meet the demand, but in reality, the vaccine selection behavior is far more than a simple cost-benefit analysis. In fact, many women still show a strong preference for the 9-valent vaccine when faced with vaccination decisions.
In response to this phenomenon, local disease control is also constantly popularizing relevant knowledge and promoting the "bivalent sufficient theory", but the effect does not seem to be so good.
Yuan Yuan, who has been vaccinated with 9-valent, told the odd-even pie, "Although the disease control and control in various places are now promoting bivalent to prevent cervical cancer, everyone will think that the 9-valent protection effect is better, at least women of my age will still choose 9-valent." ”
"When the nine-price age limit was before, I also regarded the two-price as the last choice for the nine-price, not to mention that now the nine-price age limit has been released, everyone thinks why not go to the nine-price, although the price is relatively expensive, but for their own safety, it is not unacceptable to spend a little more money and grab a few more times. ”
It is also under the combined effect of the gradual transformation of the market from short supply to supply and demand balance and the "discrimination" of consumers against bivalent products, the decline in the performance of Wantai Bio, which only has bivalent products, has become an inevitable reality, and seizing the window period of nine-valent and higher-priced vaccines has also become the last "life-saving straw" for domestic HPV companies represented by Wantai.
02
With declining revenue and fierce competition, "Brother Yi" urgently needs to break the situation as soon as possible
Back in October 2021, at that time, the bivalent human papillomavirus vaccine developed and produced by Wantai Biotech - Xinkorinin obtained WHO Prequalification, becoming the first cervical cancer vaccine product produced in China to obtain this certification.
In fact, at the end of 2019, Xinkonin had been approved by the National Medical Products Administration to obtain drug registration approval, and was officially marketed in China (excluding Hong Kong, Macao and Taiwan) in May 2020. As the world's fourth HPV vaccine and the first domestically produced HPV vaccine product, its emergence makes China the third country in the world after the United States and the United Kingdom to achieve independent supply of cervical cancer vaccines.
On the one hand, compared with another imported HPV vaccine at that time, Xinkorin was applicable to a wider range of people, covering women aged 9~45. The former is approved for application at an age of 9~25 years old, and official data shows that on average, 1 in 5 women aged 25 to 45 in China may be infected with high-risk HPV. Cinkonin fills a huge share gap.
On the other hand, in 2019, the batch issuance of Xirui was nearly 1.2 million, and by 2020, the batch issuance volume was only 690,000, and the supply was seriously insufficient. In terms of product performance, because Wantai Bio has the world's unique E. coli prokaryotic expression virus-like particle vaccine technology system, which is different from yeast and insect cell baculovirus eukaryotic expression system, the technical system has the characteristics of low production cost, high efficiency, easy scale and high safety.
What really makes Cinkonen stand out is the price.
After its launch, it is priced at 329 yuan per shot, with two doses for women aged 9 to 14 at a cost of 658 yuan, and three doses for women over 14 years old, with a full cost of 987 yuan. In contrast, the listing price of Xiruishi is 580 yuan per piece, and the former is much more affordable to the people, not to mention the expensive and "hard to find" imported nine-valent HPV vaccine at that time. At that time, Wantai Biology, relying on Xinkonin, was in a prosperous period.
However, with the subsequent launch of other domestic vaccines, the competitive landscape has reversed.
In 2022, Walvax's bivalent HPV vaccine "Wozehui" will be launched, and according to the approved documents, the specification of "Wozehui" is 0.5ml/bottle or stick (dosage form: injection), and the two specifications are 319 yuan per injection and 329 yuan per injection, respectively, which is already lower than Xinkorinin at that time. In May of that year, Walvax Biotech and Wantai Biotech 2-valent HPV vaccine jointly won the bid for the Nanjing government procurement HPV vaccine procurement project, the former got a 70% share through a lower price, while Wantai Biotech only won the bid 30%;
Although Wantai also defeated Watson in other projects in the follow-up, this price war with a thousand injuries and a self-loss of 800 did not bring an increase in sales.
Reflected in Wantai Bio's semi-annual report, in the first half of 2023, the company's revenue was 4.164 billion yuan, a year-on-year decrease of 9.78%, and the net profit attributable to shareholders of listed companies was 1.702 billion yuan, a year-on-year decrease of 36.78%.
The number of issued batches has increased sharply, but the revenue and net profit have plummeted, and more and more people have questioned that Wantai Bio has entered a recession cycle.
Source: Choice Terminal
At the same time as the bivalent frustration, the window period left for Wantai's nine-valent vaccine is getting shorter and shorter, if the former reflects the financial price, then the latter reflects the capital value.
In fact, Wantai Bio's nine-valent HPV vaccine obtained the approval for drug clinical trials as early as November 6, 2017, and has been pinned on the market to win the first domestic nine-valent HPV vaccine because the research and development progress is significantly ahead of its peers.
Since then, 12 visits (V1-V12 visits) have been set up in the phase III clinical trial of Wantai Biotech's nine-valent HPV vaccine.
In July 2023, the Center for Drug Evaluation of the State Food and Drug Administration issued the Technical Guidelines for Clinical Trials of Human Papillomavirus Vaccines (Trial), which stipulates that the iterative vaccine can choose 12-month persistent infection (PI12) as the surrogate endpoint of clinical trials, rather than the histopathological CIN2+ (referring to cervical intraepithelial neoplasia with CIN2 or higher) endpoint. This is undoubtedly a big benefit for Wantai, which already has a bivalent vaccine.
Source: The official website of the Drug Evaluation Center of the State Food and Drug Administration
In March this year, the official website of China's drug clinical trial registration and information publicity platform announced that Wantai Bio's nine-valent HPV vaccine started phase III clinical trials, and in April, Wantai Bio announced that the company's nine-valent HPV vaccine had completed the specimen testing of the V8 visit as planned, and the main results of the phase III clinical trial were in line with expectations. This means that Wantai's HPV 9-valent vaccine is one step away from the marketing application.
However, Wantai is not the only one in the entire nine-price market: on the one hand, there is a blockage in front of it.
As the only 9-valent vaccine manufacturer in the world, Merck & Co., Ltd. issued 159 batches of 9-valent vaccine in 2023, more than double the 65 batches in 2022. In August 2022, Merck's 9-valent HPV vaccine "Jiadaxiu 9" was expanded to women aged 9 to 45 years. Compared with the previous target group of women aged 16 to 26, the vaccination population has been expanded. In January this year, the imported 9-valent HPV vaccine added a two-dose vaccination schedule for children aged 9 to 14. The decline in sales of Wantai's bivalent vaccine is one of the factors.
Despite this, Merck has long realized that the past two years may be a transition period for the nine-price market from the blue ocean to the purple ocean or even the red ocean.
In January 2023, Merck and Zhifei, the only supplier in China, renewed the "Supply, Distribution and Joint Promotion Agreement", in which the basic procurement amount of HPV vaccine from the second half of 2023 to 2026 will be 21.406 billion yuan, 32.626 billion yuan, 26.033 billion yuan and 17.892 billion yuan, respectively. That is, the purchase amount will reach a high point in 2024 and then continue to decline.
Reflected in the performance, in the financial report announced on the evening of April 22, although Zhifei's annual revenue rose by 38.30% in 2023, the revenue growth rate in the first quarter of 2024 slowed down sharply to 2%, and the net profit also fell by nearly 30%, which was less than expected.
Source: Zhifei Biotechnology
On the other hand, Wantai also had to face a large number of domestic competitors.
In its annual report released in March, Recbio, known as the "first domestic HPV nine-valent stock", said that the phase III clinical trial of REC603, a recombinant HPV nine-valent vaccine, has completed the 24th month visit;
The nine-valent HPV vaccine developed by Bowei Biotech is even ahead of Wantai Bio, and is the first domestic nine-valent HPV vaccine to enter phase III clinical trials in China, and the former started the first phase III clinical enrollment in April 2020, 5 months earlier than the latter;
The phase III clinical trial of the former has entered the case monitoring stage and is undergoing 30-36 month visits, while the latter is currently the only domestic HPV vaccine for men in phase III clinical trials.
Although the phase III clinical trial of Walvax Biotech's nine-valent vaccine has not yet begun, its bivalent vaccine "Wozehui" has already been on the market, and it has the same possibility of "taking shortcuts" as Wantai Biotech.
In terms of estimated production capacity, the scale of these enterprises is not small: the planned production capacity of Wantai Biology is 60 million pieces/year, the planned production capacity of Kangle Guardian is 40 million pieces/year, and the first phase production capacity of Reco Biology can reach 20 million pieces/year.
It is worth mentioning that Stefano Malvolti, a senior consultant in the vaccine industry, and others said in a study that the current global HPV vaccine supply capacity has basically met the demand, and it is expected that the supply will most likely exceed the demand from 2025 to 2030.
Another U.S. population-based study found that among people with at least one heterosexual partner, the average lifetime probability of HPV infection was 84.6% for women and 91.3% for men. Under the popularization of the concept of "men may also be infected with HPV", the male HPV vaccine may become the main battlefield in the future.
The pressure faced by Wantai Biotech has narrowed its decision-making window, and the difficulty of exerting its growth potential is further increasing over time.
03
Write at the end
Today's Wantai, Watson, Zhifei and even the entire HPV market behind it are experiencing a decisive period where every second counts.
Despite the controversy over its performance, it has generally maintained a strong position in the capital market, which is not only the endorsement of its name as the "first brother of domestic HPV vaccine", but also the willingness of investors to project the company's current situation and prospects into the future "vote with their feet".
However, in the increasingly turbulent capital market and the increasing risk aversion, how to make good use of this only window period and transform their theoretical advantages into actual performance when the second and ninth prices are facing different degrees of challenges, I am afraid that the company's senior management needs to hurry up and find a way.