The sprint for the science and technology board at a premium will require 2.7 billion yuan in financing.
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Junshi Biological is a relatively well-known enterprise in the field of innovative drugs in China.
Since its establishment, Junshi Bio has not yet made a profit. From 2016 to 2019, the company lost about 135 million yuan, 317 million yuan, 723 million yuan and 748 million yuan, respectively. In just 4 years, the company has accumulated losses of more than 1.9 billion yuan, and in recent years the losses have become larger and larger.
Junshi Biological is one of the earliest pharmaceutical companies in China to develop PD-1 (programmed death receptor-1) drugs. In December 2018, the first domestically produced PD-1 drug teriprilimab (trade name: Tuoyi) developed by Junshi Bio was approved. In February 2019, after the first prescription was issued, sales of the drug soared, and sales revenue in 2019 exceeded 770 million yuan.
However, competition in the domestic PD-1 field has become increasingly fierce in recent years. As of January this year, six PD-1 drugs have been launched in the domestic market. In addition to two imported drugs, four domestic PD-1 drugs developed by companies such as Junshi Biotech, Cinda Biotech, Hengrui Medicine, and Beiji Shenzhou have been approved, and market competition is becoming increasingly fierce.
In the first quarter, the revenue increased by more than 89%
Junshi Bio was born at the end of 2012. Since its establishment, the company’s profit has been negative for many years. In the 7 years from 2013 to 2019, Junshi Bio has accumulated lossesMore than 2 billion yuan. Among them, the loss in the past four years has exceeded 1.9 billion yuan.
In the case of successive losses, Junshi Bio’s net operating cash flow also continued to be negative. From 2015 to 2019, the company’s net operating cash flow was -82 million yuan, -185 million yuan, -311 million yuan, -517 million yuan, and -1.18 billion yuan. Under the constant “blood loss”, Junshi Bio had to continue financing.
In recent years, Junshi Bio has been financing through various channels. In 2015, Junshi Biological entered the new third board. After that, the company implemented several fixed increases, and the total financing amount exceeded 1.8 billion yuan. In February 2018, the company issued 200 million yuan in convertible bonds; in December 2018, Junshi Bio went to Hong Kong for an IPO and raised about 3 billion Hong Kong dollars. This time, the company wanted to land on the science and technology board and raise another 2.7 billion yuan.
A large part of the funds raised was used by Junshi Bio for drug development. The prospectus shows that since 2016, Junshi Bio’s annual R & D investment is 100 million yuan. From 2016 to 2018 and the first three quarters of 2019, the company’s R & D investment was 122 million yuan, 275 million yuan, 538 million yuan and 614 million yuan, respectively.
Because Junshi Biological ’s first product, Treprizumab (Tuoyi) was approved in December 2018, the company’s revenue was very small before that. In 2018, the company’s revenue was less than 3 million yuan, and continuous financing has become an important means for the company to support drug research and development.
Junshi Biotechnology’s revenue has grown rapidly after the approval of teripril monoclonal antibody. Not long ago, the company’s performance report showed that the company’s revenue in 2019 was about 775 million yuan, an increase of 263.575 times year-on-year, but it will still lose 747 million yuan. Junshi Bio estimates that from January to March 2020, it will realize revenue of 150 million to 200 million yuan, an increase of 89.7% to 153%, but it will still lose 198 million to 233 million yuan.
PD-1 competition is becoming increasingly fierce
Traprezumab, a product approved by Junshi Bio, is a PD-1 drug. Unlike traditional chemotherapy and radiotherapy, PD-1 is a tumor immunotherapy. Its main mechanism of action is to kill the tumor by overcoming the immune suppression in the patient and reactivating the patient’s own immune cells.
As of the end of January this year, a total of 7 PD-1 drugs have been approved in the global market, of which 6 drugs were in 2018Approved successively in China in June of this year. Including Bristol-Myers Squibb’s Odivo Opdivo (commonly known as O medicine), Merck’s Creta Keytruda (commonly known as K medicine), Junshi Biotop’s Topex, Cinda Bio’s Daboshu, Hengrui Medicine’s Erica And Baizean from Beige. The first two are imported medicines and the last four are domestic medicines.
Since almost all of the foreign-funded varieties have entered the Chinese market, and similar drugs from domestic competitors have been continuously approved, the domestic market for PD-1 is becoming increasingly fierce and price wars are becoming increasingly fierce. At present, the prices of O and K medicines, which account for the majority of the global PD-1 market, are between 220,000 and 320,000 yuan for each course in China.
The price of domestically produced 4 PD-1 drugs is much cheaper than imported drugs. In 2019, Xindilizumab developed by Cinda Bio was included in medical insurance, and the corresponding annual treatment cost was only about 102,300 yuan. At present, Junshi Biotech and other companies have reduced the annual treatment of teripril mAb in the form of donated medicine. The cost has been reduced from more than 180,000 yuan to 10,800 yuan. Although the price is only equivalent to 1/3 ~ 1/2 of imported drugs, the price competitive advantage for other domestic drugs is not obvious.
“At present, each domestic PD-1 drug has the same cost per treatment, and the company’s products have no obvious price advantage compared to other domestic PD-1 drug products. Although the PD-1 product price system has not been impacted for the time being, but Issuers are facing fierce competition in terms of market promotion, distribution access, etc. If the price of competing products drops significantly in the future, the company will also consider price adjustments in consideration of medical insurance and market conditions. “Junshi Biotech in the prospectus Called.