Looking back at 2023, the Federal Reserve continued to raise interest rates and uncertainty about macroeconomic recovery remained, causing the pharmaceutical investment and financing market to continue to be sluggish, while regulatory measures such as pharmaceutical anti-corruption also caused emotional disturbances. The pharmaceutical sector as a whole remained in a retreat and adjustment channel throughout the year.
At this stage of market decline, investment opportunities in the pharmaceutical sector are gradually emerging as multiple favorable factors bring signs of recovery.
From a market perspective, most institutions expect the Federal Reserve to enter a cycle of interest rate cuts this year, and market liquidity expectations will resume; from an industry perspective, the recently held national “two meetings” sent a signal of positive support for the innovation and development of the pharmaceutical industry. The national health insurance policy is stabilizing, and the pharmaceutical industry is expected to rebound.
When selecting investment targets in the pharmaceutical industry, the scarcity of product pipelines, future market space, and commercial monetization progress are all important factors to consider. For biotech companies with high-growth varieties, as time points such as clinical data release, approval for listing, and product release arrive, stock prices will all gain significant upward momentum under favorable catalysis.
According to information, Quanxin Bio-B (02509) will be publicly traded on the Hong Kong Stock Exchange on March 12, and will become “the first domestic autoimmune stock” after listing. It is on a self-driving circuit with great potential, and commercialization of major varieties is about to be implemented. Its dual attributes of scarcity and growth have attracted the attention of many investors.
Deeply cultivate the 100 billion free circuit, and highlight the scarce attributes of rich pipeline layout
Compared with the oncology circuit where capital is piled up and pharmaceutical companies are frantically involved, the field of autoimmune treatment not only has a huge patient base and rapidly growing market demand, but is still a blue ocean that is booming.
According to Frost & Sullivan data, the global autoimmune disease drug market is about US$131.7 billion in 2022, and the field of self-immunity has become the second largest treatment field in the world after tumors; it is expected to increase to 176 billion US dollars by 2030. Among them, the Chinese market benefits from advances in innovative treatments and potential medical demand, and is expected to record a higher growth rate.
As reflected in the capital market, the popularity of the self-defense sector is also rising year by year. According to J.P. Morgan's “2023 Biopharmaceutical Licensing and Venture Capital”, the self-defense sector ranked fourth in terms of early investment last year.
According to the Zhitong Finance App, autoimmune diseases refer to diseases in which the body's own tissues are damaged due to an immune response to its own antigens. They also include allergic diseases caused by an autoimmune system hypersensitivity reaction. Common ones include psoriasis, ankylosing spondylitis, atopic dermatitis, chronic sinusitis, asthma, and food allergies. As a chronic disease, self-preventable diseases have characteristics such as being difficult to cure and complicated pathogenesis. For a long time, patients' awareness was not high, and diagnosis and treatment rates were low.
Compared to the global level, the domestic self-protection sector started later. From a market perspective, the accessibility of self-defense drugs is low, imported drugs have dominated for a long time, and high prices have limited patients' needs; from a corporate perspective, although dozens of domestic companies have already entered the self-defense circuit, innovative pharmaceutical companies focusing on the field of self-defense are still scarce.
It is worth mentioning that Quanxin Biotech, which will soon be listed on the Hong Kong Stock Exchange, is one of the few innovative pharmaceutical companies in China that focuses on a single self-defense circuit. It is in the first tier in China in terms of pipeline layout and development progress in the field of self-prevention and allergy.
According to Quanxin Biotech's prospectus, it has already disclosed 9 products in the field of self-immunity, and the number of IND (new drug clinical trial) licenses has reached 19, making it one of the companies with the highest number of IND in the field of self-immunity in China;
Judging from the target layout, Quanxin Biotech is the only biotech in China with full coverage of interleukin targets. The products cover IL-4R, IL-17, IL-23, IL-33, IL-31R, etc. The multi-faceted collaborative layout will help manage patients throughout the life cycle.
Furthermore, the company is expected to commercialize QX001S, which is the first domestically produced usinudan biosimilar drug to be submitted to BLA in China, which is expected to break the sales pattern where usinumab antigen is the only one in the domestic market.
The usinumab antigen drug was approved by the FDA in 2009 and approved domestically in 2017. It is the first biopharmaceutical to target IL-23 and IL-12 pathways, and is also one of the main treatments for psoriasis worldwide.
As a second-generation biopharmaceutical for psoriasis treatment, the IL inhibitor race track is not crowded, and multinational pharmaceutical companies have always occupied most of the market share. Among the two common psoriasis treatment targets, IL-17 and IL-23, IL-23 targeted by usinumab is upstream of the Th17 signaling pathway in the pathogenesis of psoriasis. Targeting IL-23 (including IL-12/23) can achieve deeper and longer lasting inflammation relief, showing superior long-term efficacy and safety in clinical studies.
In 2023, Johnson & Johnson earned 10.8 billion US dollars from the usinumab product alone. Now that this major product is about to be imitated for the first time in China, the future growth potential of the QX001S goes without saying.
Quanxin Biotech has a rich product pipeline and is leading in overall R&D progress. With the gradual implementation of subsequent products, it is expected to form a new increase in performance. Including QX001S, QX002N and QX005N, the company already has 6 candidate biopharmaceuticals in different clinical stages. In the past six months, Quanxin Biotech's products under development have achieved milestones such as 1 BLA acceptance, 1 phase III launch, 2 phase II phases reaching major clinical endpoints, 1 BTD certification, and multiple IND licenses.
Looking at the domestic competition pattern in the field of self-immunity, as innovative domestically produced self-defense drugs enter the public eye, the situation where imported drugs dominated in previous years is being broken, and the price advantage of domestic alternatives is also helping to further increase the penetration rate. The huge patient base, long-term or even lifelong demand for medication, combined with the increased willingness of patients to pay brought about by rising economic standards, will gradually unlock the potential of the self-defense market.
Commercialization is frequently reported, and core varieties will enter the harvest period
In addition to the R&D pipeline layout potential, Quanxin Biotech is also spreading frequently in the commercialization process.
According to the Zhitong Finance App, the usinudan biosimilar drug QX001S was accepted by the NMPA in August 2023. It is expected to be the first domestically approved and marketed drug, and will be the company's first commercialized drug;
The core product, QX002N, is a high-affinity monoclonal antibody targeting IL-17A. Phase III clinical trials for ankylosing spondylitis were initiated in September 2023 and are expected to be completed in the second half of 2025;
Another core product, Qx005n, aims to inhibit IL-4Rα. This target is a target that has been fully verified to be applied to a wide range of indications. The company has obtained IND approval for seven indications, and is the drug with the most indications among IL-4Rα-targeted drug candidates in China. Currently, the QX005N III clinical communication application for AD (atopic dermatitis) and PN (prurigo nodosum) has been submitted, and phase II clinical trials for the treatment of CRSwnP (chronic sinusitis with nasal polyps) have also begun in April 2023.
In terms of commercialization, the company has built a production base in Taizhou, Jiangsu, with an annual production capacity of about 300 kg of therapeutic antibodies. It has also reached a strategic partnership with Huadong Pharmaceutical, which has rich experience in chronic disease management and a strong sales network for autoimmune and allergic drugs.
According to information, Huadong Pharmaceutical covers more than 3,000 (or more than 90%) of China's top three hospitals and more than 15,500 level-II hospitals and below. With Huadong Pharmaceutical's mature sales channels, Quanxin Biotech's new varieties are expected to penetrate the primary care network after commercialization, quickly gain market share and establish a leading edge.
Quanxin Biotech has reached a commercialization agreement with Huadong Pharmaceutical for the QX001S project. The total down payment and milestone payment were 50 million yuan, and in the future, half of the product's domestic pre-tax profit will be obtained in the form of shares. Considering that the drug will bring a steady stream of revenue to the company in the future, the profit prospects of Quanxin Biotech are worth looking forward to.
In addition, Quanxin Biotech also reached a product cooperation with Health Yuan, a leading company in the respiratory field, in January 2024 to authorize the development, production and commercialization rights of Health Yuan QX008N (TSLP Antibody) in China (including Hong Kong and Macao), adding a strong partner in the respiratory field. Health Yuan is one of the main competitors in the domestic respiratory field. The respiratory sector's sales for the full year of 2022 were 1.17 billion yuan, and the respiratory sales reached 1.11 billion yuan in the first three quarters of 2023. Its respiratory preparations covered more than 3,800 domestic hospitals above level II.
epilogue
In recent years, the Hong Kong Stock Exchange has introduced a number of reforms and new policies to enhance its appeal. Since December 2023, the number of companies going to Hong Kong for IPOs has also shown an upward trend, showing signs of recovery.
In a situation where pharmaceuticals have “just what they need” and the population structure is aging, the pharmaceutical industry is still a “long slope and heavy snow” Chaoyang racetrack, which is expected to begin a new recovery cycle. At a time when undervaluation contains investment opportunities, the broad blue ocean of the market, rich R&D pipeline reserves, and promising new drug varieties will jointly reinforce Quanxin Biotech's ambition to embark on a path of high growth.