"It's almost time to lay eggs, kill the chickens".
This is a comment that appeared in the Watson Bio Stock Bar on the evening of December 5. Until late at night, Watson Bio's stock bar was still boiling. Some investors scolded the management of Watson Biology for "disregarding the interests of shareholders", some investors expressed "trust in management", and some investors could only worry about the future stock price direction of Watson Biology in Tieba.
As a leading stock in the concept of biological vaccines, Watson Biology has always been optimistic about retail investors and institutional investors. Behind the investor dispute, Watson Bio issued a series of announcements on the evening of December 4, saying that it would transfer 32.6% of the equity of its subsidiary Shanghai Zerun Biotechnology Co., Ltd. (hereinafter referred to as "Shanghai Zerun") for 1.14 billion yuan, and would no longer be the controlling shareholder of Shanghai Zerun.
Founded in 2003, Shanghai Zerun Biology has been engaged in the research and development of HPV vaccine (cervical cancer vaccine) for many years. In 2011, Zerun Bio's 2-valent HPV vaccine research and development project received approval for new drug clinical trials from the State Food and Drug Administration, and officially became a holding subsidiary of Watson Biotech in 2012; in 2017, its 9-valent HPV vaccine also received new drug clinical trial approval.
As an important gripper for Watson Bio's layout of the HPV vaccine market, the transfer plan of Shanghai Zerun's controlling stake is like a stone, stirring up thousands of waves.
On the afternoon of December 5, Watson Bio held an investor conference call, which was attended by Li Yunchun, chairman of the company, and other executives. At the conference call, some investors sharply asked Li Yunchun whether there was any interest transmission in the equity transfer, whether it was a passive sale of equity, and whether the general manager could be changed. On the evening of the same day, Watson Bio's senior management responded to the media late at night that it would continue to maintain communication with investors and try to gain understanding.
The shock of Watson Bio also quickly attracted the attention of regulators. On the evening of December 6, Watson Bio received an inquiry letter from the management department of the GemNext board of the Shenzhen Stock Exchange, asked to explain the reasonableness of the transfer of control of Shanghai Zerun and whether there was any transfer of benefits.
1.1 billion sold Shanghai Zerun controlling stake caused controversy: Watson Bio received a letter of concern Behind the transaction party Tigermed appeared
65.14%, is the current shareholding ratio of Watson Biology to Shanghai Zerun Biology, which means absolute controlling interest. On the official website of Shanghai Zerun, the company's logo prefix has several large characters of "Watson Bio".
This was broken by the share sale plan made by the management of Watson Biology. On December 4, Watson Bio issued a series of announcements announcing that it intends to transfer 32.60% of the equity of Shanghai Zerun, and after the completion of the transfer, Zerun Bio is no longer a holding subsidiary of the company.
According to the announcement, one of the takeover parties, Zibo Yunze Venture Capital Partnership (hereinafter referred to as "Zibo Yunze"), has only been established for less than 20 days, and the main partners are Ningbo Xiangcheng Venture Capital and Xi'an Taiming Equity Investment. The other takeover party is Yongxiuguan by Zhaode Equity Investment Fund (hereinafter referred to as "Yongxiuguan by"), which was established in June 2019 and has key partners including Shanghai Guanyu Investment and Hangzhou Tiger Equity Investment.
It is worth noting that behind the above two main transaction parties, there is another listed company: Tigermed.
Enterprise investigation data shows that among the shareholding ratio of Zibo Yunze, the capital contribution ratio of Xi'an Taiming equity investment accounts for 99.9%. The shareholders behind Xi'an Taiming equity investment are an investment institution, including Shanghai Orient Securities Innovation Investment Company, Shanghai Venture Capital, Suzhou Industrial Park Biological Industry Development Company, etc., and the largest shareholder is Hangzhou Tiger Equity Investment Partnership (Limited Partnership), which holds more than 15% of xi'an Taiming equity. Behind another Yongxiu Guanyu, the partners also appeared in the figure of Hangzhou Tiger Equity Investment Partnership (Limited Partnership).
According to the data, Hangzhou Tiger Equity Investment Partnership (Limited Partnership) is a subsidiary of tigermock, a listed company, of which tigermock directly holds 99.9583% of the equity and Shanghai tiger holds 0.0417%. In fact, before the transaction, Hangzhou Tiger Equity Investment Partnership (Limited Partnership) had directly held 2.55% of the equity of Watson Biotech.
This transaction also attracts attention to the valuation of Zerun Bio. The overall valuation of Zerun Bio is 3.5 billion yuan, and the transfer price corresponding to the transfer price of Shanghai Zerun's registered capital of RMB296 million to Zibo Yunze and Yongxiuguanyu is RMB1.14 billion.
At the same time, the receiver Zibo Yunze intends to increase the capital of Shanghai Zerun by 110 million yuan to subscribe to the new registered capital of Shanghai Zerun; Wuxi Xinwo and Yuansheng Investment intends to increase the capital of Shanghai Zerun in the form of converting all the convertible equity claims it holds into equity. After the equity change, Watson Bio will hold 28.5% of the equity of Zerun Bio.
It should be known that the hpv vaccine project of Shanghai Zerun is at the forefront of the country and has always been considered to be expected in valuation. It is also this point that Watson Bio is said by many investors to be "selling cheaply" Zerun Bio, and questions the real reason why Watson Bio gave up the HPV vaccine market.
On December 6, Watson Bio received an inquiry letter from the regulator, and was asked to add the changes in the equity structure of Zibo Yunze and Yongxiuguan since their establishment, and the specific measures of Zibo Yunze and Yongxiuguan for the strategic investment or arrangement of Shanghai Zerun's next development.
The Shenzhen Stock Exchange also asked Watson Biology to explain the rationality of the transfer of control of Shanghai Zerun in combination with the research and development progress and market prospects of Shanghai Zerun HPV and hand-foot-and-mouth disease vaccines, as well as the basis for determining the proportion of equity transferred, whether there were any acts that harmed the interests of listed companies and small and medium-sized investors such as the transmission of benefits in this transaction, and required Watson Biologics to submit the relevant explanatory materials to the management department of the ChiNext board of the Shenzhen Stock Exchange before December 8 and disclose them to the outside world.
On December 6, the Beijing News shell financial reporter repeatedly called the office of the secretary of the board of directors of Watson Biology, and the phone was not answered.
Behind the transfer of equity: 1 billion research and development expenses will still be invested in the future Shanghai Zerun has made continuous losses
In the midst of the controversy, why Watson Bio sold Shanghai Zerun has become a point of controversy.
On December 4, Watson Bio said in the announcement that after the equity transfer, the company will concentrate on promoting the expansion of the 13-valent pneumonia conjugate vaccine blockbuster products in the domestic and international markets, and transform the company's first-mover advantage of heavy vaccine products into a sustained victory. On the other hand, the company will focus more on the construction of the technology platform such as the already laid out mna and adenovirus vectors and the development of new products, and continue to maintain the company's advantages in the research and development and industrialization of new vaccine products.
Watson Bio also said that the equity transfer will promote the relatively independent development of Shanghai Zerun, which is conducive to the establishment of a market-oriented incentive mechanism for Shanghai Zerun, resolve the operational risks caused by factors such as insufficient investment in resources required for development, brain drain, etc., and effectively protect the interests of investors and partners. ”
For the HPV vaccine market, on December 5, Li Yunchun, chairman of Watson Biology, replied to investors in a conference call that "the continuous research and industrialization of bivalent and nine-valent HPV vaccines still require at least 1 billion to 1.5 billion yuan of investment" and "2-valent HPV vaccines are more of a public welfare nature, and the competition is fierce after the 9-valent vaccine is listed for several years."
The data shows that under the vigorous investment in research and development of Zerun Biology in recent years, the company has continuously lost money and cash flow has gradually tightened.
In 2019, Zerun Bio achieved a total operating income of 7.6354 million yuan, an operating profit of -47.4322 million yuan, a net profit of -47.3249 million yuan, and a net cash flow from operating activities of 2.6501 million yuan. From January to June 2020, Zerun Bio achieved a total operating income of 1.0905 million yuan, an operating profit of -11.1583 million yuan, a net profit of -11.1583 million yuan, and a net cash flow generated by operating activities of -21.4394 million yuan.
As of June 30, 2020, Shanghai Zerun had total assets of RMB1.127 billion and net assets of RMB600 million.
The transaction will also improve Watson Bio's cash flow. Watson Bio said that after the completion of the equity transfer, the company will receive 1.14 billion yuan of equity transfer payment, mainly for the company's production and operation, the research and development and introduction of new products and new technologies, domestic and international market expansion and other key businesses. According to the preliminary calculation of the company's financial department, the company is expected to generate a net profit of about 1.18 billion yuan to 1.28 billion yuan.
Multi-year layout: the application for the production of 2-valent HPV vaccine that has been accepted and the factory building that has been built long ago
In fact, hpv vaccines have been in short supply. In April this year, the bivalent preventive HPV vaccine successfully developed by Wantai Biology under Wantai Biotech received a batch issuance certificate, which means that the domestic cervical cancer vaccine can officially enter the market circulation link, causing market shock.
Also in April, Wantai Bio was successfully listed, and the total market value exceeded 120 billion yuan in August this year. At that time, some institutions predicted that by 2020, the market size of HpV vaccine in China would reach 12 million doses, with sales of about 13 billion yuan, and the market potential was huge.
Also pinning high hopes on the 2-valent HPV vaccine and the 9-valent HPV vaccine developed by Zerun Bio.
In 2003, located in the Zhangjiang Hi-Tech Park in Pudong New Area, Shanghai, Shanghai Zerun Biology was established, focusing on the research and development and industrialization of new recombinant human vaccine products. In 2004, Watson Biologics transferred the company's refined hepatitis A inactivated vaccine (vero cell) technology to Shanghai Zerun Biologics. In 2012, Watson Bio decided to increase the capital of Zerun Bio and completed the integration of Zerun Bio at the end of the year.
According to the official website of Zerun Biology, the company's current 2-valent HPV vaccine has been in the end of Phase 3 clinical phase (June 2020 Watson Bio announced that the clinical research phase of the 2-valent HPV vaccine has been completed and a new drug production application has been submitted), the 9-valent HPV vaccine has been in Phase 1 clinical trials, in addition, the therapeutic HPV vaccine has obtained clinical approval, and the research projects also include recombinant hand-foot-and-mouth disease vaccines, other new recombinant preventive vaccines and therapeutic vaccine projects.
After Watson Bio acquired Zerun Biotech, it has been vigorously laying out the HPV vaccine market. In 2019, Shanghai Zerun received a $2.5 million project fund from the Gates Foundation to accelerate the clinical research and industrialization of the 9-valent HPV vaccine, and on this basis, prepare for the Pre-certification of the World Health Organization to supply bulk procurement by international organizations.
At that time, Watson Bio said, "After the 9-valent HPV vaccine obtains who is pre-certified, it will enter the bulk procurement of international organizations, paving the way for Shanghai Zerun to enter the international market." “
On June 16 this year, Watson Bio issued an announcement that the 2-valent HPV vaccine independently developed by Zerun Bio received the "Notice of Acceptance" of the new drug production application issued by the State Food and Drug Administration on June 15. Watson Bio said, "This means that after the xiamen Wantai divalent HPV vaccine was listed this year, the research and development of the second domestic bivalent HPV vaccine has made breakthrough progress, and it is expected to be listed in the next 1-2 years, bringing increments to the market." ”
It is worth mentioning that Watson Bio has been preparing for the production of HPV vaccines for a long time. In February 2018, in Yuxi, Yunnan, the Watson Biological New Cervical Cancer Vaccine Industrialization Base Project was completed, when the executives of Watson Biology also said that "we are taking the development of a new cervical cancer vaccine as the primary task" and "the new plant is successfully completed, and the bivalent cervical cancer vaccine will achieve the goal of annual output of 15 million bottles".
According to the disclosure of Watson Biology, the production plant not only meets the domestic gmp standard, but also is designed and constructed according to the WHO-PQ standard under the special funding of the Bill & Melinda Gates Foundation, which can help the bivalent HPV vaccine pass the WHO-PQ certification faster and supply the global market in the future.
At present, only three companies in China and overseas markets can supply HPV vaccines, including merck's world's first quadrivalent HPV vaccine to prevent cervical cancer launched by Merck in June 2006 and the nine-valent HPV vaccine launched in 2014. The two vaccines were approved for marketing in China in 2017 and 2018, and in July 2016, the divalent HPV vaccine launched by GlaxoSmithKline in 2009 entered the Chinese market.
Since June this year, the stock price of Watson Biology has also risen, and the total market value of Watson Biology exceeded 100 billion yuan in July, which shows the market's expectations for Watson Biology.
Shifting the target to the MNA vaccine market: Institutions expect Watson HPV vaccine to be slashed in total market capitalization in 4 months
Time back about 20 days ago. To celebrate the company's 20th anniversary and 10th anniversary of its listing, Watson Bio held a celebration and premiered a documentary with the theme of "Craftsmanship, The World's Watson".
According to the documentary, Li Yunchun wrote two wishes to be realized in 2020 10 years ago: one is to create a new vaccine or new drug that has an important contribution to human health, and the other is to achieve the listing of Watson Biology and reach a market value of 100 billion. Li Yunchun in the video reviewed this dream in July this year, and said with great enthusiasm that the market value of 100 billion yuan has been there, but the goal of an original new vaccine is still on the way, and if there is a product in the technical route of the mna vaccine in the future, it is possible that this dream will be realized.
Pictured: In the Watson Bio documentary, Li Yunchun shows the goals he wrote down in 2010.
The mrna vaccine is the future key development direction that Li Yunchun has mentioned many times in the investor conference call.
In May this year, Watson Bio also issued an announcement that it signed a "Technology Development Cooperation Agreement" with Suzhou Aibo Biotechnology Co., Ltd. (hereinafter referred to as "Aibo Biotechnology") to jointly carry out preclinical research, clinical trials and commercial production of the new coronavirus MRA vaccine, as well as to cooperate in preclinical research, clinical research and commercial production of herpes zoster nmrna vaccine.
In June, Watson Biotech once again issued an announcement that the clinical trial of the new coronavirus MRA vaccine cooperated with Aibo Bio was approved, and it is also the first MRA new coronavirus vaccine approved to enter the clinical trial stage in China, and only the new coronavirus MNA vaccine in a few countries such as the United States and Germany has entered the clinical trial stage.
According to Li Yunchun's reply to investors on December 5, the MRNA technology line of the new crown vaccine and herpes zoster vaccine, once made, is not less valuable than hpv vaccine.
Although there is a new direction, the transfer of Zerun Biological Equity is also considered by investors to have "sold a Wantai Biologics". Looking back at the research reports produced by the institution, it is not difficult to see the expectations for the Watson Bio HPV vaccine.
For example, Bank of China Securities said in the research report on November 5 that Watson Bio's research and development pipeline was fully promoted in the first three quarters, with research and development expenses of 154 million yuan, an increase of 262% year-on-year, "At present, the company is fully promoting the declaration and production of bivalent HPV vaccines, and accelerating the research and development progress of projects such as nine-valent HPV vaccines and recombinant EV17 vaccines." ”
Tianfeng Securities also said in the november research report that Watson Bio "is expected to open a new stage of development of the company, and the hpv vaccine series and the brain series have great sales potential in the future, which is also worth looking forward to."
In June this year, when the good news came out of Watson Bio's 2-valent HPV vaccine, Tianfeng Securities also issued a research report saying that Watson Bio's "peak sales of 2-valent HPV vaccine are expected to exceed 2 billion yuan".
Data show that on August 5 this year, the total market value of Watson Bio reached its peak, exceeding 140 billion yuan. Since then, the stock price has continued to decline. As of the close of trading on December 4, the closing price of Watson Bio was 45.66 yuan / share, corresponding to a total market value of 70.474 billion yuan.
This means that in 4 months, the market value of Watson Bio has been slashed.
Beijing News shell financial reporter Li Yunqi Editor Wang Jinyu Yue Caizhou Proofreader Li Ming