Yuekang Pharmaceutical (688658. SH) is a large-scale pharmaceutical enterprise group dominated by high-end chemical drugs, and is now one of the top 100 enterprises in China's pharmaceutical industry, with an annual sales scale of more than 4 billion yuan. On December 24, 2020, the company was successfully listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange, raising a net amount of 2.02 billion yuan and a maximum market value of more than 15 billion yuan.
Since its inception in 2001, the company has always taken root in the main business of medicine, and its performance has maintained rapid growth year after year. Even in 2020, which is deeply affected by the epidemic, net profit will achieve high growth of more than 50%. The company also has extremely high profitability, with an ROE of more than 20% all year round, indicating that the management has excellent management ability.
The pharmaceutical industry is the golden track forever. Yuekang Pharmaceutical's business is concentrated in the fields of cardiovascular and cerebrovascular diseases, digestive system, diabetes and other fields, which are all major disease markets and have a broad market space. The company's main products on sale are basically not affected by the collection, and many star products still have huge room for growth in the future. At the same time, the company's R & D pipeline reserves are abundant, and a number of Class 1 innovative drugs are about to be approved for listing, which is expected to become the company's new blockbuster products.
What is more worth looking forward to is that Yuekang Pharmaceutical has strategically laid out the field of nucleic acid drugs through mergers and acquisitions. Today's nucleic acid drugs, like antibodies a decade ago, will form a market of 100 billion US dollars in the future. The company is expected to use nucleic acid drugs to achieve overtaking in the field of innovative drugs and open up long-term growth space.
Forever a golden track
Human beings' pursuit of health is endless, and the pharmaceutical industry is an eternal golden track.
In 2001, Yu Weishi founded Yuekang Pharmaceutical in Beijing. Since its establishment, the company has always adhered to the main business of deep ploughing in medicine, and has developed into a large-scale pharmaceutical enterprise group led by high-end chemical drugs, a national high-tech enterprise driven by R&D and innovation, the main business covers the whole industrial chain of drug research and development, manufacturing, circulation and sales, with injections, lyophilized powder injections, tablets, capsules and other dosage forms and some APIs production capacity, products covering cardiovascular and cerebrovascular, digestive system, anti-infection, endocrine and anti-tumor and other 12 drug fields. The company is now one of the top 100 enterprises in China's pharmaceutical industry, the top ten R&D enterprises in the pharmaceutical industry, the national technological innovation demonstration enterprises, and the national "quality benchmarking" enterprises.
After 20 years of development, the company's total assets and net assets have reached 5.217 billion yuan and 3.651 billion yuan, and the revenue and net profit in 2020 are 4.339 billion yuan and 442 million yuan, respectively. As we all know, 2020 was deeply affected by the new crown epidemic, but even in such a difficult environment, the company's performance in that year also achieved rapid growth, revenue and net profit growth rate of 1.2% and 54.89% year-on-year, respectively. In the first quarter of this year, the company's performance continued to maintain high growth, revenue and net profit increased by 19.22% and 93.51% year-on-year, respectively, and the year-on-year growth rate of non-net profit reached 124.22%.
What is even more valuable is that all the profits earned by Yuekang Pharmaceutical are real money and silver, and the operating cash inflow is strong. Taking the recent 2017-2020 as an example, the company's annual net operating cash flow was 215 million yuan, 193 million yuan, 325 million yuan and 698 million yuan, accounting for 132.72%, 72.01%, 114.04% and 157.92% of the net profit in the same period, and the net profit content was extremely high. As of the end of the third quarter of 2021, the company's book monetary funds were 2.241 billion yuan, accounting for 42.96% of total assets, and the cash reserves were sufficient.
Yuekang Pharmaceutical not only has high growth, but also has extremely high profitability. Wind information shows that from 2017 to 2020, the company's deduction of non-weighted ROE was 22.15%, 26.97%, 28.7%, and 29.21%, respectively, far exceeding the vast majority of A-share listed companies, and ranking among the best among all pharmaceutical listed companies. ROE is the most important financial indicator of buffett, the god of stocks, Yuekang Pharmaceutical has been above 20% ROE for many years, indicating that the management led by Yu Weishi has excellent management ability.
Yuekang Pharmaceutical's main business income is mainly concentrated in cardiovascular and cerebrovascular drugs, digestive system drugs, diabetes drugs, anti-infective drugs, in 2020, the four major sectors contributed revenue of 2.168 billion yuan, 494 million yuan, 205 million yuan, 1.181 billion yuan, accounting for 49.98%, 11.38%, 4.72%, 27.23% of the total operating income, respectively.
These are all major disease drugs, which belong to the golden track of subdivision within the pharmaceutical industry.
Cardiovascular and cerebrovascular diseases are one of the main diseases that threaten the health of the people of our country, at present, cardiovascular disease deaths account for the first place in the total causes of death of urban and rural residents, the annual sales of urban public hospitals in China are close to 70 billion yuan, the market share accounts for 9.63%, ranking sixth in chemical drugs. Digestive system diseases are one of the more common multi-morbidities, with a total incidence rate of 10%-20% of the total population, and the sales amount of urban public hospitals in China exceeds 10 billion yuan. Diabetes is also a common disease, the number of diabetes in China is 116 million people, the incidence of diabetes is close to 10%, and the sales amount of domestic urban public hospitals is 27 billion yuan, accounting for 3.73% of the sales of terminal chemical drugs. Although antibiotics are subject to policy restrictions, as an essential drug, the market size is still huge, with annual sales of nearly 120 billion yuan.
China has now entered an aging society, aging faster than the United States and Europe. These major disease areas and the entire pharmaceutical industry still have a lot of room for development in the future. In particular, chronic diseases such as diabetes, heart disease, and hypertension are "addictive" to drugs, and it is difficult for patients to cut off drugs during their illness, which is believed to provide huge market demand for pharmaceutical stocks.
Lin Yuan, a famous investor, publicly stated that the current pharmaceutical sector is not only to buy, but also to run into the market and resolutely buy, in the next 30 years, the pharmaceutical sector is the only investment sector with certainty. Because some diseases brought about by aging are not curable, some drugs can prevent people from dying and prevent complications, and now it is necessary to invest in these drugs, such as hypertension, cardiovascular, and diabetes.
Yuekang Pharmaceutical's 2020 annual report said that the company will continue to focus on major disease areas such as digestive system, cardiovascular and cerebrovascular diseases, diabetes, anti-infection, reproductive system and anti-tumor, and practice the national innovation and high-quality development strategy. In the golden track of these major diseases, Yuekang Pharmaceutical has a broad space for future growth.
Star products have a huge room for growth
The main products currently on sale in Yuekang Pharmaceutical are Ginkgo Biloba Leaf Extract Injection, Gastrodin Injection, Lansoprazole for Injection, Omeprazole Enteric-coated Capsules, Metformin Hydrochloride Extended-Release Tablets, Minkexin, Ceffuroxime Sodium for Injection, and Ceftriaxone Sodium for Injection, contributing a total of 3.276 billion yuan in revenue in 2019, accounting for 78.82% of the main business revenue. These products are all drugs used in the national medical insurance directory.
Among the above main products, except for Ming Kexin, which is an agent product, the rest are self-developed products. These self-developed products are high-end generic drugs, and the market is generally worried about being affected by the collection policy. There is no doubt that the collection of generic drugs has a huge impact, but not all generic drugs will have a significant adverse impact, which requires specific analysis and differential treatment. Judging from the main products of Yuekang Pharmaceutical, not only will it not be affected by collection, but on the contrary, there is still huge room for growth in the future.
Ginkgo biloba extract injection is the company's largest star product, with a sales amount of 1.128 billion yuan in 2019, accounting for 27.14% of the main business revenue. The product is a cardiovascular and cerebrovascular drug, mainly used for cerebral and peripheral blood circulation disorders, including acute and chronic cerebral insufficiency and its sequelae, ear and eye blood flow and nerve disorders, peripheral circulation disorders.
Judging from the product name alone, many people believe that Ginkgo biloba extract injection is a traditional Chinese medicine injection. However, this is not the case. The product is made of raw materials imported from the European Union, which is the only ginkgo biloba leaf extract injection that has obtained the approval of domestic chemicals, with clear active ingredients and high safety. Therefore, this drug will not be affected by the restriction policy of Traditional Chinese medicine injections at all.
At the same time, due to the technical difficulty of consistency evaluation of Ginkgo biloba extract injection, there is no relevant variety on the market to be reviewed and declared to the CDE, so there is no time limit requirement for the company's products to pass the consistency evaluation. For a foreseeable period of time, the company's ginkgo biloba leaf extract injection will not be affected by the collection.
The competition pattern of Ginkgo biloba extract injection is good, and the only competitors are dr. Weima Shupei of Germany and The preparation of ginkgo biloba extract produced by Taiwan Jisheng Pharmaceutical Biotechnology. The company's products are highly competitive, with a compound annual growth rate of 51.25% in sales from 2014 to 2019, and a market share of 52.31%, which is in an absolute leading position. In 2020, which was affected by the new crown epidemic, the product still maintained rapid growth, with sales volume increasing by 51.3% year-on-year to 104 million units.
Ginkgo biloba extract injection has been continuously expanded due to its long application time and clear mechanism of action. In November 2019, the "Chinese Expert Consensus on the Clinical Application of Ginkgo Biloba Extract Injection" published by the Chinese Journal of Geriatrics recommended that Ginkgo Biloba Extract Injection be used for the treatment of ischemic stroke, dementia, deafness, tinnitus, vertigo, coronary heart disease, retinopathy and arteriosclerosis occlusion. In 2020, Ginkgo biloba extract injection was liberalized from primary hospitals and increased the indications for medical insurance reimbursement, so sales in the epidemic year still achieved a high growth of more than 50%. Some insiders expect that Ginkgo biloba extract injection will still have several times the room for growth in the future.
According to the prospectus, the company's current production capacity of ginkgo biloba extract injection is about 100 million sticks / year, and the capacity utilization rate in 2019 is 110.36%, which is in a state of full production and short supply. The company's IPO raised funds of 2.192 billion yuan, of which 60 million yuan was used for the construction project of intelligent production line of ginkgo biloba extract injection, and the new production capacity was 300 million sticks / year after completion, and the total production capacity reached 400 million pieces / year. The company's ginkgo biloba extract injection sales in 2019 were 1.128 billion yuan, and the sales volume after the new production capacity was put into operation could reach 4.512 billion yuan, bringing 3.384 billion yuan of incremental revenue to the listed company.
Omeprazole enteric-coated capsules and lansoprazole for injection are the company's digestive system drugs, with sales of 247 million yuan and 188 million yuan in 2019, accounting for 5.94% and 4.52% of the main business revenue, respectively, and the fourth and fifth largest star products in the company's sales amount, respectively. Lansoprazole and omeprazole are proton pump inhibitors, mainly used for duodenal ulcers, but can also be used for gastric ulcers and reflux esophagitis.
According to the company's market positioning, the company's omeprazole enteric-coated capsules are mainly based on non-public medical institution terminals such as private hospitals, clinics, pharmacies and other private hospitals in various provinces and cities. In fiscal 2019, the number of bottles sold in public hospitals was 7.89 million bottles, accounting for 5.67% of the company's total terminal sales. For the sales of the company's products in non-public medical institution terminals, it will not be subject to the restrictions of national collection, that is, 94.33% of the sales business of the company's omeprazole enteric-coated capsules can be carried out normally in the future, and it will not be affected by the collection at all.
Yuekang Pharmaceutical expects that omeprazole enteric-coated capsules are expected to participate in the centralized procurement of national drugs in 2021. If the product can win the bid, the company, as a barefoot person, is very likely to benefit from this collection.
The company's production of omeprazole enteric-coated capsules ranked third in the national market in terms of sales, and the competitors were only AstraZeneca and ConnBey, and the competition pattern was good. With the continuous expansion of digestive system medications, omeprazole enteric-coated capsules are expected to maintain rapid growth.
According to the prospectus, the company's current production capacity of omeprazole enteric-coated capsules is about 2.5 billion capsules / year, and the capacity utilization rate in 2017-2019 is 113.63%, 111.1% and 98.42%, respectively, and the supply is in short supply. The IPO raised 100 million yuan for the expansion of omeprazole enteric-coated capsules, with a new production capacity of 5 billion capsules per year after production, and a total production capacity of 7.5 billion capsules per year. The company's omeprazole enteric-coated capsules had sales of 247 million yuan in 2019, and sales will reach 741 million yuan after production, bringing incremental revenue of 494 million yuan to listed companies.
Metformin hydrochloride extended-release tablets are the company's main products in the field of diabetes, with a sales amount of 145 million yuan in 2019, accounting for 3.49% of the main business revenue, making it the seventh largest star product in the company's sales amount. The product is a biguanide oral hypoglycemic drug, which belongs to the insulin sensitizer and can reduce the blood glucose of type II diabetes patients on an empty stomach and after meals. The product is also dominated by non-public medical institution terminals, and the sales volume in public hospitals in 2019 was 65.17 million pieces, accounting for 12.26% of the company's total terminal sales, that is, 87.74% of the sales business of the product will not be affected by collection and procurement.
In the third batch of national collection in 2020, the company's 0.5g * 60 tablets specifications of metformin hydrochloride sustained release film bid, the winning bid price is 0.128 yuan / piece (excluding tax price of 0.113 yuan / piece), the procurement cycle is 3 years, the first year of the agreed procurement volume in the three provinces (regions) a total of 92.5 million pieces. The winning bid price decreased by about 34.01%, but the purchase volume increased by at least 41.93%. The prospectus predicts that the sales revenue of the company's metformin hydrochloride sustained release tablets in the first year of the third batch of centralized procurement cycle is expected to decline by 2.84 million yuan, and the impact on listed companies is negligible.
In 2019, the company's metformin hydrochloride sustained-release tablets ranked second in the national market in terms of sales, with a market share of 6.83%. The main competitors in this field are Sino-US Shanghai Squibb Pharmaceutical Co., Ltd. and Beijing Shengyong Pharmaceutical Co., Ltd. Among them, Sino-US Shanghai Squibb Pharmaceutical Co., Ltd. is a Sino-US joint venture, and its products account for 44.1% of the domestic market, which is in a leading position.
Compared with competitors, the metformin hydrochloride extended-release tablets produced by the company belong to the extended-release dosage form, and through the development of new sustained-release materials, the prescription process of metformin hydrochloride extended-release tablets is optimized, which reduces the tablet weight and improves patient compliance compared with the original research drug. The company's products are expected to quickly replace similar competitors in the future, and the market share will have a large space for improvement. In addition, the expansion of the diabetes market will continue to provide new growth space for the company's products.
According to the prospectus, the company's current production capacity of metformin hydrochloride sustained release tablets is about 900 million tablets / year. The IPO raised 80 million yuan for the construction of production lines of adenafil citrate tablets and metformin hydrochloride extended-release tablets, with a new production capacity of 5 billion tablets /year after production, most of which is the new production capacity of metformin hydrochloride extended-release tablets. The company's metformin hydrochloride sustained-release tablets in 2019 sales of 145 million yuan, the new production capacity will increase several times after the commissioning.
Compared with the above star varieties that still have huge growth potential, the growth potential of the company's remaining products is not as good as the former, but it is expected to maintain stable development in the future.
Gastrodin injection is the company's third largest single product, with sales of 311 million yuan in 2019, accounting for 7.5% of the main business income. The product is a cardiovascular and cerebrovascular drug, mainly used for neurasthenia, neurasthenia syndrome and vascular neuropathic headache, etc., in 2019, the sales amount ranked 3rd in the national gastrodin preparation market. In 2018 and 2019, the sales of the product increased by 96.55% and 24.87% respectively year-on-year, and the sales volume affected by the epidemic in 2020 fell by 22.17% to 19.4 million units, and in the future, as the epidemic situation improves, sales are expected to return to normal levels. In addition, the product is technically difficult to carry out consistency evaluation work, and there is no relevant variety on the market for review and declaration to CDE, and it will not be affected by the collection within an estimated period of time.
Ceftriaxine sodium for injection and ceftriaxone sodium for injection are the company's anti-infective drugs, with sales amounts of 168 million yuan and 121 million yuan respectively in 2019, accounting for 4.03% and 2.9% of the main business revenue, respectively, and the sixth and eighth largest single products in the company's sales amount, respectively. Although anti-infective drugs are restricted by policies, after long-term standardized management, the overall market has shown a bottoming out trend, and the sales of the company's two anti-infective drugs have basically remained stable. In addition, the sales of these two anti-infective drugs are mainly based on non-public medical institution terminals, and the number of sales in non-public medical institutions in 2019 accounts for more than 80%, which is very affected by collection.
Ming Kexin is the company's second largest single product, with sales of 968 million yuan in 2019, accounting for 23.3% of the main business income. This product is the exclusive agent of the company by the Italian Essett Pharmaceutical Factory produced by the injection of cefuroxime sodium, in 2019 sales in the national market sales amount ranked first, the market share of 30%. Agent products are not the focus of the development of Yuekang Pharmaceutical, and with the increase in the proportion of its own products in the future, the impact of Ming Kexin on the performance of listed companies will become smaller and smaller.
Yuekang Pharmaceutical product line is not only the above eight main products, the rest of the many products although the current sales are not high, but many of them have great growth potential. For example, the company's currently vigorous promotion of the heart pill products, is expected to become a new main product.
Huoxin Pill is a compound preparation of traditional Chinese medicine designed for the development mechanism of ischemic heart disease in 1981 according to the principle of "activating blood stasis and strengthening luck" of the Guangdong Provincial Institute of Materia Medica, and has been verified by a large number of clinical practices for a long time. The formula is composed of 10 kinds of precious Chinese medicinal materials including ginseng, appendages, artificial musk, safflower, ganoderma lucidum, toad crisp, bear bile, in vitro cultivated beef yolk, pearls and ice chips, which have the effect of invigorating blood and warming the meridians.
More than 30 years of clinical practice since the listing of the heart pill has confirmed that the effect of the heart pill on coronary heart disease and angina is remarkable. With the intensification of the aging trend of the population, the number of patients with coronary heart disease in China continues to increase. In view of the consumption habits and recognition of drug users, especially middle-aged and elderly patients, proprietary Chinese medicines have their own advantages in the treatment of coronary heart disease, and their market size shows a trend of increasing year by year, with the current market size exceeding 70 billion yuan.
From the perspective of the route of administration, the traditional Chinese medicine for coronary heart disease is divided into injection medicine and internal medicine, and the heart pill belongs to the internal medicine. At present, the proportion of injectable drugs is higher than that of internal drugs, but because most of them are included in the list of auxiliary drugs in various places, their use is restricted. Therefore, the proportion of the market for injecting drugs will show a downward trend in the future, and internal drugs will benefit from this for a long time.
Proprietary Chinese medicine for coronary heart disease is a market where large varieties are easily born. From the perspective of internal medication alone, the large varieties are Tasly (600535. SH) compound danshen drop pills, Yiling Pharmaceutical (002603. SZ) of Macaroni Capsules, Shanghai Pharmaceutical (601607. SH) musk baoxin pills, etc., are more than 1 billion yuan of large items, of which compound salvia drip pills in 2020 sales of nearly 4 billion yuan, ranking first.
Compared with similar products, Huoxin Pill adopts multi-target, multi-channel and multi-link intervention, with small dosage, good efficacy, long-lasting efficacy, and few toxic side effects, which has the advantage of pharmacodynamics. In February 2017, Huoxin Pill entered the National Medical Insurance Class A Directory, and in October 2018, it entered the National Essential Drugs List. Benefiting from this, the amount of huoxin pills has been rapidly increased in recent years, and it is expected to replicate the growth logic of compound danshen drop pills in the future, becoming a large single product in the field of traditional Chinese medicine for coronary heart disease.
Blockbuster innovative drugs are about to be launched
R&D is the future of pharmaceutical companies. Yuekang Pharmaceutical implements the R&D strategy of R&D generation, reserve generation and transformation generation, and has abundant reserves of products under research. In 2020, the company invested 156 million yuan in research and development, an increase of 4.92% year-on-year, and was at the leading level in the industry.
According to the prospectus, the company has a total of 39 research projects and 24 consistency evaluations, including 4 new drug projects of class 1 of chemical drugs, 2 new drug projects of class 1 of traditional Chinese medicine, and 3 projects of class 2 new drugs. Among them, two new Class 1 drugs are particularly worth looking forward to, namely edenafil citrate tablets and APIs, hydroxysafflower yellow pigment A and APIs for injection.
Adenafil citrate tablets are a new class 1 chemical drug used to treat erectile dysfunction in men, which is commonly known as "domestic Viagra". At present, the project has completed clinical research, the product is being declared for listing, and it is expected to be approved for marketing soon.
Erectile dysfunction (ED) is one of the most common andrology diseases, and at present, with the improvement of people's living standards, as well as the increase in work, life and mental stress, the incidence of this disease has increased year by year, and the prospect of ED drugs in the Chinese market is considerable. At present, the overall scale of the domestic ED market is close to 5 billion yuan, and the potential market size in the future is expected to reach the level of 10 billion yuan, and the market space is vast.
At present, although a number of Viagras have been listed and sold in China, the company's phase III clinical results of adenafil citrate tablets show that the efficacy and incidence of adverse events of the drug are overall better than those of similar international landmark products. It is believed that adenafil citrate tablets are expected to stand out among many competitors after listing, conservatively calculated according to the 10% market share, and have the potential to become a large single product with annual sales of more than 1 billion yuan in the future.
Hydroxysafflower yellow A for injection is a new class 1 drug of traditional Chinese medicine, which is clinically used for acute ischemic stroke. The project adopts chromatography column and membrane filtration purification technology to obtain a purity of more than 95% of hydroxychamus safflower yellow pigment A, no pollution, no heavy metal residues, etc., laying a good foundation for clinical evaluation and marketing. The results of clinical phase II show that its safety and efficacy are better, and the phase III clinical study is currently being carried out, which is not far from the time of approval to market.
Stroke, also known as stroke, is an acute cerebrovascular disease characterized by high morbidity, high mortality and high disability rate. The medical community lists it as one of the three major diseases that threaten human health along with coronary heart disease and cancer, and mostly occurs in middle-aged and elderly people. According to statistics, there are about 13 million stroke patients in China, the annual death toll is about 1.5 million, and the number of new cases is about 2 million per year. At present, the scale of China's stroke market has exceeded 100 billion yuan, and with the intensification of population aging, the market size will continue to grow.
Hydroxysafran acetin A for injection is used for the treatment of acute ischemic stroke, and there is only one similar drug competitor in the domestic market, and the competition pattern is good. The only competitor to this is CSPC Pharmaceutical Group (01093. HK) developed sodium butanphthalide chloride injection (trade name "Enbipu"), mainly used for the treatment of acute ischemic stroke, its softgel dosage form and injection dosage form were launched in 2005 and 2010 respectively, maintaining rapid growth for many years, and the sales of Enbipu reached 6.574 billion yuan in 2020.
In the well-competitive stroke market, after the listing of hydroxysafflower yellow pigment A for injection in Yuekang Pharmaceutical, it is expected to replicate the rapid growth logic of Enbipu and become a large single product with annual sales of billions.
In addition to the above two innovative drugs that are about to be listed, Yuekang Pharmaceutical also has an innovative drug in the pre-clinical stage, which is also worthy of attention.
Umustat hydrogen sulfate capsules and APIs belong to the new class of chemical drugs, which are mainly intended for pancreatic cancer, breast cancer, and colorectal cancer. The product is a prodrug for the uPA inhibitor WX-UK1, which greatly improves the absorption of the gastrointestinal tract, greatly improves the bioavailability, and greatly enhances the inhibition of uPA. The project received clinical approval in May 2017 and is currently undergoing Phase I clinical studies. At present, there are few effective drugs in the field of pancreatic cancer treatment, and once it is listed, the application prospects are good.
Strategic layout of nucleic acid drugs
A COVID-19 pandemic has made mRNA technology famous. Both Pfizer and Moderna have achieved more than 90% effectiveness in both vaccines developed using mRNA technology. Pfizer expects mRNA covid-19 vaccine sales to be as high as $15 billion in 2021.
Behind mRNA technology is the rise of nucleic acid drugs.
The traditional drug target is a protein. Although there are nearly 20,000 proteins in the human body, the number of proteins that have been approved for related drugs is only about 700, and most of the rest are considered not to be druggable. This is an almost insurmountable barrier for small molecule drugs and antibody drugs, but it is an advantage for nucleic acid drugs that "skip" proteins.
Nucleic acids are one of the most basic substances that make up life, and are divided into deoxyribonucleic acid (DNA) and ribonucleic acid (RNA). DNA and RNA play an important role in the synthesis of proteins. Therefore, unlike the mechanism of traditional small molecule chemical drugs and antibody drugs combining with proteins and then playing a role, nucleic acid drugs expand the drug target to the upstream of the protein, can specifically upregulate or downregulate the specified gene expression, and the research and development cycle is short, the drug target screening is fast, and it is not easy to produce drug resistance and other side effects, which belongs to the strategic frontier of biopharmaceutical innovation.
With the emergence of key technological breakthroughs and blockbuster drugs, nucleic acid pharmaceuticals have now become the hottest field of biomedicine, and there is a great trend of forming the third revolutionary wave of modern pharmaceuticals after small molecule drugs and antibody drugs, showing great development potential and socio-economic value. At present, 14 nucleic acid drugs have been approved worldwide, 2 mRNA vaccines have obtained the FDA's EUA, and many nucleic acid drugs are in clinical trials, covering the central nervous system, cardiovascular, anti-infection and tumors. Among them, Spinraza, a nucleic acid drug developed by Ionis for the treatment of spinal muscular atrophy, reached sales of $2.097 billion in 2019, becoming the first "blockbuster" in the field of nucleic acid drugs.
Today's nucleic acid drugs are like antibodies from a decade ago. Given the many advantages of nucleic acid drugs, nucleic acid drugs are likely to catch up in the next decade and form a market of 100 billion US dollars. Faced with a period of major strategic opportunities for nucleic acid drugs, Yuekang Pharmaceutical resolutely entered the field of nucleic acid drugs through mergers and acquisitions.
On February 6 this year, Yuekang Pharmaceutical issued an announcement that the company acquired 100% of the equity of Hangzhou Tianlong Pharmaceutical Co., Ltd. (hereinafter referred to as "Tianlong Pharmaceutical") with its own funds of 21 million yuan, and at the same time, it undertook the payment obligation of Tianlong Pharmaceutical to pay the progress payment of the original cooperative unit of 9 million yuan CT102 project. After the completion of this transaction, the company will hold 100% of the equity of Tianlong Pharmaceutical.
Tianlong Pharmaceutical has the first national and local joint engineering research center for nucleic acid drugs approved by the National Development and Reform Commission, and is the backbone unit of China Nucleic Acid Production, Education and Research Alliance, Zhejiang Nucleic Acid Drug Engineering Center, Zhejiang Science and Technology Small and Medium-sized Enterprises and Hangzhou Chick Ying Enterprise.
Tianlong Pharmaceutical is mainly engaged in the research and development of nucleic acid drugs, its chemical drug Class 1 new drug CT102 is China's first completely independent research and development of antisense nucleic acid (ASO) drugs, freeze-dried dosage forms, for the treatment of primary hepatocellular carcinoma, in March 2018 obtained the "Drug Clinical Trial Approval" issued by the State Drug Administration, is currently preparing for Phase I clinical research. At the same time, the target company has also stockpiled other nucleic acid drug candidates, but they are still in different pre-clinical research and development stages.
Some domestic new drug research and development enterprises are also actively laying out nucleic acid drugs, but they are still in the early stage of research, and no nucleic acid drugs have yet been approved in China. At the same time, at present, the participation of China's large pharmaceutical companies in the field of small nucleic acids is close to zero. As one of the earliest leading enterprises in China to lay out nucleic acid drugs, Tianlong Pharmaceutical has obvious first-mover advantages.
Nucleic acid drug development is divided into a variety of technical routes, including antisense nucleic acid (ASO), small interfering RNA (siRNA), and microRNA
(miRNA), small activating RNA (saRNA), messenger RNA (mRNA), aptamer, etc. Tianlong Pharmaceutical's CT102 project adopts the antisense nucleic acid (ASO) research and development route. CT102 is a sodium salt of thiodeoxyoxy oligonucleotide with a length of 20 nucleotides, targeting human insulin-like growth factor 1 receptor (IGF1R) messenger ribonucleic acid (mRNA), inhibiting the activity of IGF1R through antisense action, thereby causing apoptosis of tumor cells or inducing their differentiation, so as to achieve the purpose of treating diseases.
As one of the most important areas of nucleic acid drugs, antisense nucleic acid technology has shown extremely attractive application prospects in many diseases. At present, 7 of the 13 nucleic acid drugs that have been approved worldwide are ASO drugs, of which Spinraza, a blockbuster drug with annual sales of more than 2 billion US dollars, belongs to ASO nucleic acid drugs.
As the pioneer of ASO nucleic acid drugs in China, Tianlong Pharmaceutical has developed CT102 for the treatment of liver cancer, and is the only pharmaceutical company in China that has obtained clinical approval in this field. At present, the first ct102 subject was successfully enrolled, the subject was in a good clinical state, and no adverse events or adverse reactions occurred. CT102 is expected to become the first liver cancer drug in the field of ASO nucleic acid drugs in China, with great potential.
Liver cancer is the fourth common malignant tumor and the third most common cause of tumor death in China, with more than 400,000 patients per year. With the continuous increase in the number of liver cancer patients and the improvement of China's medical insurance policies, the market size of the liver cancer drug industry will continue to expand in the future, and it is expected to exceed 40 billion yuan by 2022. CT102, as a new class of gene-targeted therapy drugs, is characterized by a clear target, easy to design, and the ability to treat diseases "fundamentally". Compared with traditional cytotoxic chemotherapy drugs, CT102 has few adverse reactions and more accurate efficacy, and once successfully developed and listed, it will produce huge social and economic benefits.
In addition to CT102, Tianlong Pharmaceutical has also stockpiled other nucleic acid drug candidates, and the future is also worth looking forward to.
Through the acquisition of Tianlong Pharmaceutical, Yuekang Pharmaceutical is expected to achieve overtaking in the field of innovative drugs with the help of nucleic acid drugs. Nucleic acid drugs will be a market of 100 billion US dollars in the future, and yuekang pharmaceutical has huge room for long-term growth.