In May this year, Watson Biological announced that it will work with Aibo Biology to create the first domestic mRNA vaccine, Aibo Biology has the core technology of mRNA vaccine design, stimulated by this news, Watson Biologics stock price sat on a roller coaster, the highest rose to 96 yuan, and then fell all the way, the current retracement of more than 40%, today is in the case of a collective rebound in the biomedical sector, continue to fall sharply.
<b>Watson Creatures, Bottomless</b><b>?</b>
<h3><b>01</b></h3>
<h3><b>Third-quarter results fell short of expectations</b></h3>
Today Watson Bio released the third quarter, the company's revenue in the first three quarters was 2.129 billion yuan (an increase of 35.9% year-on-year), and the net profit was 364 million yuan (down 16.33% year-on-year).
In the third quarter alone, revenue was 779 million (993 million in the same period last year) and net profit was 45 million (374 million in the same period last year). Whether it is year-on-year or month-on-month, the data are significantly behind the previous forecast, what is the problem?
From the perspective of the company's operating expenses, management expenses and R&D expenses have increased greatly over the previous year, with R&D expenses increasing by 180 million yuan and management expenses increasing by 700 million yuan due to equity incentives, a total increase of 250 million yuan. Investment income was negative 111 million. The total reduction in net profit was 361 million, coupled with the positive investment income of 150 million in the same period last year, and the net profit that was probably affected was about 500 million. About 250 million people were affected by the deduction of non-profits. That is to say, measured by the operating investment and investment profit and loss in the third quarter of last year, the net profit in the first three quarters of this year was 860 million, and the deduction was 630 million. The deduction of 630 million yuan in the first three quarters of the year fell at the lower limit of expectations, but it was barely acceptable.
However, the revenue of 2.1 billion yuan is still somewhat far from expectations, and the original expectation was that the revenue in the first three quarters was between 2.5 billion and 3 billion, and the actual revenue was 20% lower. Why is the income 20% lower, and then look at the sales of subdivided vaccine types.
From January to September 2021, the subsidiary Yuxi Watson 13-valent pneumonia conjugate vaccine was approved and issued 4.03 million doses, an increase of 21.75% over the same period of the previous year. In the first three quarters, the total number of batches issued by Yuxi Watson vaccine products was 26.28 million doses (bottles), a decrease of 26.54% over the same period last year, and the number of batches issued by each product was as follows:
Compared with the same period last year, the number of vaccines issued by 100-day rupture and 23-valent pneumonia has dropped sharply, and of course, the batch issuance of 13-valent pneumonia conjugate vaccines is also lower than expected. The main reason for these situations should be that the focus of grass-roots vaccination has been mainly placed on the new crown vaccination this year, the new crown vaccine has been vaccinated more than 2.2 billion doses this year, and more than 1 billion doses have been given in the third quarter alone, which is a staggering number, which naturally has a serious run on other vaccinations. Judging from the non-COVID-19 vaccine business revenue of other listed vaccine companies, it is also greatly affected.
From the perspective of the top ten shareholders, the richest man Zhong Xiaohui's Yangshengtang Co., Ltd. has bought 16.7 million shares from the secondary market, ranking the 9th largest shareholder! Due to the extreme dispersion of Watson Biotech's equity and the current decline in stock prices, for the big guys who are interested in entering cutting-edge biotechnology (mRNA platform), it is really possible to obtain the majority shareholder status of this company with very little money.
<h3><b>02</b></h3>
<h3><b>The future of Watson Bio</b></h3>
After 20 years of development, Watson currently has 7 varieties and 10 specifications of vaccines on sale. At present, China's vaccination rate is low, the vaccination rate of 13-valent pneumonia vaccine in the United States is greater than 90%, and China's vaccination rate is less than 10%, and the vaccine market has broad prospects. The 13-valent pneumonia vaccine will be expanded to 60 million doses per year for future internationalization; currently exported to Egypt, Indonesia, and other 15 countries; Watson is also the only domestic stock solution export company to the United States, with $8.5 million from the Gates Fund and $13.1 million from CEPI.
Subsidiary Yuxi Watson undertakes the production of bacterial vaccines, currently listed seven products, the development and production of new crown mRNA vaccines, Shanghai Zerun undertakes the research and development of recombinant protein series products, including HPV vaccines, recombinant new crown vaccines, Beijing Watson undertakes the productization of new crown recombinant vaccines, the research and development and industrialization of chimpanzee adenovirus new crown vaccines, and Jiangsu Watson undertakes the research and development and industrialization of quadrivalent influenza vaccines.
The details of the company's products in the registration and declaration stage during the reporting period are as follows:
Bivalent HPV has entered the final sprint stage of CDE, will soon get the production approval, 9-valent HPV has been in trial production, get clinical approval, it will enter the third phase of clinical; global HPV vaccine currently annual sales of 4 billion US dollars, later sales will be further expanded, Hpv2 price first supply Gates organization orders, sales are guaranteed, performance is guaranteed.
Brain flow vaccine is the company's blockbuster product, this year the state has raised a type of seedlings: the price of bivalent flow brain vaccine, the vaccine is currently produced by Lanzhou Institute and Watson; many countries lack of brain vaccine, meningitis vaccine product company has three, is applying to the WHO quadrivalent flow brain vaccine batch purchase registration, WHO next month sent experts to the company to the quadrivalent flow brain PQ on-site inspection, after getting PQ certification, it can be sold to the world; the company's quadrivalent flow brain polysaccharide conjugate vaccine is in the third phase of the clinical stage, and the next year will be approved for production applications Egypt for four consecutive years to purchase the company's quadrivalent brain vaccine, very grateful to the company for the timely supply of the vaccine, meningitis vaccine is currently the company's largest export volume of products, the future will have greater room for growth, the international convection brain vaccine demand is strong, insufficient supply, large demand, while the demand for alternative products is also large, the current world two companies to provide quadrivalent conjugate vaccine price is expensive, the company quadrivalent polysaccharide vaccine for other countries to bring hope for immune substitution.
The company will be fully internationalized, with the Gates Foundation, CEPI and other international organizations to maintain contact, and receive funding, has been to innovation and research and development as a strategy, increase investment in scientific research, and strive to develop new technologies, new products.
According to the minutes, 58 people in Yuxi Watson participated in the third booster needle experiment, inactivated after two injections of 10 micrograms of vaccine, neutralizing antibody levels: the original strain was 33 times higher than before immunization in the 14 days after the exemption, and the delta strain was 18 times higher than the front of the immunization (the small range data is great). Turkey wants to find Watson to do phase III clinical trials, and Watson will submit the data obtained to Turkey, which is expected to directly carry out intensive needle experiments
The brain conjugate vaccine is awaiting the WHO on-site review (there are more than 40 days to go), and the order is expected to be 100 million doses, Watson quoted $3.50, and the average overseas price is $27.5. It is expected to earn 12 yuan per stick, corresponding to 1.2 billion profits! (It has not been announced to the public, and it will be waited for the end of the on-site audit.) Old products going to sea are equivalent to steady and profitable this year).
13 prices are recently expanding production, with a target production capacity of 60 million doses. Because there are 6 million doses signed with the Philippines recently, which is equivalent to the amount of one year in China. Sales start next year and are expected to contribute an additional 400-600 million yuan to net profit.
Fosun executives went to Watson on 9.11, the agent mRNA was rejected, and wanted to negotiate vaccine cooperation with Watson and buy it to the Indian market (Fosun has acquired an API factory in India, and the sub-packaging capacity is sufficient).
<b>03</b>
<b>End</b>
Epidemics and diseases are mainly composed of bacterial polysaccharide antigens and protein antigens, and the vaccine developed by mRNA technology can solve the disease caused by protein antigens, and the newer superposition is fast, the vaccine production time is short, and it can deal well with the new crown mutation. mRNA technology represents the future development direction of medical innovation technology, which will play an important role in basic research, disease treatment, and prevention in the future.
Therefore, whether Watson's mRNA new crown vaccine can be listed in the expected time will have a significant impact on Watson's future performance.