This article is based on publicly available information and is for information purposes only and does not constitute any investment advice.
Looking back at 2023, the pharmaceutical industry is still a less popular track, with star companies such as Tongce Medical, WuXi AppTec, Aimeike, and MicroPort Medical all being sold off by investors this year, and pharmaceutical companies that have fallen by more than 30% throughout the year abound.
Although the will of investors has disappeared, there are still many hot spots in the market, such as brain-computer interfaces, GLP-1** drugs, Alzheimer's drugs, etc. Behind these hot spots, there are many companies that have risen amazingly, and even turned into demon stocks.
Through the review of all A-share, Hong Kong-listed and U.S.-listed pharmaceutical companies, we have counted the ten companies with the highest stock price increases in 2023: Baili Tianheng, Xinnuovi, Tonghua Jinma, Changshan Pharmaceutical, Runda Medical, Allist, Gracell Biotech, Mabwell, First Pharma Holdings, and Sanbo Brain.
Chart: 2023 Stock Price Gainers List (as of December 13**) Brocade Research Institute
It is undeniable that most of these companies with the highest gains are hot concept **, but many of them have attracted market attention because of the domestic substitution of key innovative drugs. This also shows from the side that domestic substitution is still one of the latest key logics of Chinese pharmaceutical companies.
Baili Tianheng is definitely the most controversial pharmaceutical company this year. Some people believe that Baili Tianheng is telling a story and its building is about to collapse, but the company responded to Le's previous doubts with an $8.4 billion BD deal.
On December 11, Baili Tianheng announced that it had reached a global strategic cooperation agreement with BMS to grant the development and commercialization rights of EGFR HER3 bispecific antibody ADC product BL-B01D1 to the other party, so as to obtain an initial payment of 800 million US dollars, with a total transaction amount of 8.4 billion US dollars.
The total transaction amount of Baili Tianheng is not as good as that of Columbotai Biologics, but the down payment of 800 million US dollars has set a new record for China's innovative drugs to go overseas.
Chart: Top 20 BD transactions by total transaction volume in 2023, **Damask Research Institute
In the article "In 2023, China's Innovative Drug Investment Bids Farewell to the Era of "Big Gambling", we have made a clear judgment on the license-out transaction, believing that it is a new yardstick to measure the value of innovative drugs. Through license-out transactions, domestic pharmaceutical companies lacking R&D funds can use the down payment to support R&D, which will undoubtedly greatly reduce the follow-up risks of enterprise operations.
BeiGene is not the only way for China's innovative drugs to go overseas, but also for BDs like Legend Biotech, Columbotai and Baili Tianheng to go overseas.
Although relying on BD trading, Baili Tianheng has made a beautiful turnaround, investors should still not ignore the risks in the process of innovative drug research and development. To invest in innovative drugs, we must remain rational and neither crazy nor blindly optimistic.
Asset restructuring has always been a hot topic of A-share speculation, and this year, this hot spot fell on the head of New Novo.
The company itself is of average quality and is a big health company focusing on functional foods and raw materials. It is difficult to attract investors with such a dull business, but fortunately, New Novi has a "good father".
ENBIP is the controlling shareholder of Xinnovo, holding 7335% stake;At the same time, CSPC Pharmaceutical Group is also the controlling shareholder of Enbipu, holding 5406% of the shares. After the equity perspective, CSPC Pharmaceutical Group is actually the actual controller of Xinnuovi.
In order to obtain the A-share financing platform, CSPC Pharmaceutical Group chose to use the listing of Xinnuowei to help Xinnuowei quickly "transform" by injecting assets. With the continuous injection of assets, Xinnovo is also about to become an innovative drug platform of CSPC Pharmaceutical Group.
The transformation from a "big health" company to an "innovative drug" company is the key to investors' hype about New Novo. However, this kind of hype expectation is actually contrary to the overall trend of innovative drugs at this stage, which may bury hidden dangers for the future stock price trend of Xinnuovi.
There has always been no shortage of hot hype in the a** field, and Tonghua Jinma's annual increase of more than 350% is a typical case.
The core reason why Tonghua Jinma's stock price can be so strong is that the company's blockbuster innovative drug succinyl-octahydroacridine tablets phase III clinical trial results were positive and reached the statistical endpoint, which seems to be the answer to Alzheimer's disease that mankind has been looking for.
But the success of a clinical trial does not mean that commercialization is smooth. In 2021, Biogen and Eisai's new Alzheimer's disease drug aducanumab also achieved clinical success, but in the end, due to major controversy, sales were dismal and did not achieve commercial success. In the face of this experience, no one can pack a ticket for the commercialization of succinyl octahydroacridine tablets.
Alzheimer's disease has long been known as the "black hole of R&D" for innovative drugs, and there are countless pipelines that have failed in this indication. The most fundamental reason why human beings cannot defeat Alzheimer's disease is that the pathogenesis of Alzheimer's disease is not yet understood, that is, everything is crossed by feeling the stones.
A cascade hypothesis, cholinergic hypothesis, tau abnormal phosphorylation hypothesis, neuroinflammation hypothesis, and metal ion disorder hypothesis are all hypotheses formed by the characteristics of Alzheimer's disease patients, but no one has been able to prove that these hypotheses are the ultimate pathogenic mechanism.
Aducanumab was a representative of the A-cascade hypothesis, which was effective in clearing -amyloid, but it was not shown to be effective in patients with Alzheimer's disease. Similarly, succinyl-octahydroacridine tablets are representative of the cholinergic hypothesis, but does it really have an effect on patients?This obviously requires more follow-up validation.
Based on this, although Tonghua Jinma has achieved the success of clinical trials, it is still a long way from the final commercialization success, and it is obvious that the expectations of investors are a little too high.
GLP-1 is definitely the biggest pharmaceutical hotspot in 2023, and Changshan Pharmaceutical is the domestic GLP-1 leader selected by domestic investors.
Unlike companies such as Hanyu Pharmaceutical and Nuotai Biotech, which mainly focus on the GLP-1 industry chain, Changshan Pharmaceutical is a GLP-1 innovative drug in the true sense. At present, Changshan Pharmaceutical has completed the phase 3 clinical trial of ebenatide, which seems to be very likely to become the first truly GLP-1 innovative drug.
However, just when investors were crazy, few people noticed that as early as 2013, Changshan Pharmaceutical had begun to do clinical trials of ebenatide, and ten years later, the drug was still not on the market. On the other hand, the clinical trials of ebenatide are only for diabetes indications, not actual weight loss indications, and even Changshan Pharmaceutical itself has repeatedly reminded of the uncertain risks faced by this drug.
When ebenatide was approved for marketing, it may be the moment when Changshan Pharmaceutical's hype landed.
In addition to GLP-1, AI pharmaceuticals are the hottest concept.
At present, there are three main categories of AI pharmaceutical companies in the market, namely AI-Biotech, AI-CROs, and AI-SaaS. Insilico Medicine and XtalPi, which previously planned to be listed on the Hong Kong stock market, belong to AI-Biotech and AI-CRO respectively, while Runda Medical is the representative of AI-SaaS.
Generally speaking, what Runda Medical does is to use AI technology to empower medicine, such as using large model technology to successfully break through data silos, and using large model technology to analyze and improve patient data. These B-end business investors do not have a deep understanding, so it is difficult to accurately understand the value of Runda Medical, but Runda Medical has become a "designated partner of Huawei's medical scenarios" by binding with Huawei.
Huawei's concept is superimposed on AI pharmaceuticals, and Runda Medical's stock price is a matter of course. However, from the fundamental analysis, investors can simply look at the financial report and find that Runda Medical is far from as dazzling as it seems.
Based on the 2023 interim report data, the company's revenue is 452.1 billion yuan, of which 935% of the revenue comes from the circulation of IVD consumables and reagents, and only 61.55 million yuan of revenue comes from software development services, accounting for about 136%。
Figure: Runda Medical's 2023 interim performance composition, ** company's financial report
Whether it is Huawei's large model or AI pharmaceutical, it is an industry with great development potential, but these halos are not the core value of Runda Medical itself. It is obviously unfair to regard Runda Medical as an AI-SaaS leader based on a casual application case, and it is even more subtle to regard it as the only partner of Huawei Healthcare, because Huawei is actually an open ecosystem.
Based on this, what is the value of Runda Medical?It is worth pondering for investors.
Since the birth of EGFR inhibitors, there have been three generations, and at present, AstraZeneca's third-generation EGFR inhibitor osimertinib has become the mainstream of this target, and its single-year revenue has exceeded 50$1.5 billion.
As a domestic alternative to osimertinib, Allist's furmetinib has completed its task well, achieving revenue of 13 in the first three quarters of this year4.8 billion yuan, a year-on-year increase of 160%. Since Allist only has one product on the market, Furmetinib, which means that Furmetinib's revenue is expected to exceed 1.6 billion yuan this year.
In that year, Betta Pharmaceuticals successfully transformed into an innovative drug with the domestic substitution of the first-generation EGFR inhibitor icotinib. Now that ten years have passed, Allist is expected to replicate the miracle of Betta Pharmaceuticals with the domestic substitution of the third-generation EGFR inhibitor osimertinib, and its revenue trend is much stronger than that of Betta Pharmaceuticals at the same time. Different from the repetition of concept hype, this kind of performance-driven ** is often more solid.
Figure: Comparison of the performance of fumetinib and icotinib in the same period, **Dacade Research Institute
However, with the entry of suvotinib from Dizhe Pharmaceutical, the number of third-generation EGFR inhibitors in China has increased from four to five, and the competition has gradually become fierce, which may be called an uncertain factor in the process of Allist's performance.
In the face of involution, Allist chose to further iterate and introduce a new generation of EGFR inhibitors from Abbisko Therapeutics in order to solve the mutation problem of EGFR gene exon 20 C797S, which cannot be solved by third-generation EGFR inhibitors.
No products have yet been launched, and Gracell Biotech is also an innovative pharmaceutical company that relies on the support of expectations.
Although there are already four CAR-T** models on the market in China, it is still a future-oriented technology. Even though the car-t*** of Heyuan Biotech has dropped to 9990,000, but those who can afford such a ** are still a minority of the few. The extremely high price and extremely low efficiency are destined to prevent the current CAR-T products from becoming mainstream.
Gracell Biotech is a company focusing on CAR-T**, but it does not focus on commercialization, but focuses on building the next generation of CAR-T technology, with dual-target CAR-T and heterologous CAR-T both directions of its research and development. In particular, the CD19 BCMA dual-target CAR-T**GC012F has extended the CAR-T technology to the field of autoimmunity and achieved good clinical efficacy.
However, even so, commercialization is still a chasm in front of Gracell Biotech, and perhaps the "legendary model" of cooperation with giants will become a new direction pursued by Gracell Biotech in the future. It is undeniable that CAR-T** does have merit, but if you want to go further, you must solve the problem of high costs.
If PD-1 is China's first platform technology to go global, then ADC is the second. Throughout 2023, a large number of MNC have introduced ADC pipelines from China, which has also made the domestic market blow a shot of ADC.
In 2022, when ADCs have not yet fully emerged, Mabwell's core value is still biosimilars, but in exchange for a stock price of 58% in a single year. And in 2023, under the east wind of ADC, Mabwell's share price will finally usher in an explosion. The annual increase of 132% is perhaps the best reward for Mabwell's focus on innovation.
Focusing on Mabwell's ADC pipeline, there are many differentiated targets such as Nectin-4, TROP-2, B7-H3, etc., and its core 9MW2821 pipeline has become the first domestic NECTIN-4 ADC pipeline to enter the phase III clinical stage, and the current R&D progress ranks first in the world. There are even voices that believe that the NECTIN-4 ADC will be the next big hit after the DS8201.
These expectations support Mabwell's **, but they can also be reversed at any time due to failure. For innovative pharmaceutical companies, they have always had no shortage of cutting-edge pipelines, but only a few of those pipelines are ultimately converted into profits, and Mabwell investors should also observe for a longer period of time.
Similar to the logic of EGFR inhibitors, ALK inhibitors are also inertial substitution logic, and ALK inhibitors have also launched three generations of products.
Based on the principle of "inertial order**", the second-generation ALK inhibitor alectinib is based on about 17At US$2.7 billion, it has become the world's most profitable ALK inhibitor product, and although the third-generation ALK inhibitor lorlatinib has filled the gap, it has not been rapidly scaled up.
Figure: Revenue of three generations of mainstream ALK inhibitors, **Brocade Research Institute
First Pharma Holdings is a company focusing on the domestic substitution of ALK inhibitors, and its core pipelines SY-707 and SY-3505 are its self-developed second-generation ALK inhibitors and third-generation ALK inhibitors, respectively. In particular, SY-3505 is the first domestic third-generation ALK inhibitor to enter clinical trials and the fastest R&D progress in China, and is expected to be the first to complete domestic substitution.
However, unlike Allist's overall performance, First Pharma Holdings is still expected to speculate, and the market space of ALK inhibitors is far less than that of EGFR inhibitors, and the market competition is also fierce. These unfavorable factors have exacerbated the investment risk of First Pharma.
As a new stock listed in May this year, Sanbo Brain Science ushered in the wind when it first appeared in the capital market.
On May 26, Neuralink, a brain-computer interface company founded by Elon Musk, announced a major development: it has been approved by the FDA and will conduct clinical trials in humans. This incident has also been interpreted by many investors as an important step in the implementation of the brain-computer interface industry.
Affected by this news, the domestic capital market has also set off a brain-computer interface investment boom, and Sanbo Brain, which has just been listed, has naturally become the darling of the market, and hit 118 on June 2The stock price of $22 is at an all-time high.
But in fact, Sanbo Brain Science does not have much correlation with brain-computer interface. The core business of Sanbo Brain Department is 6 private hospitals mainly focusing on brain medicine, and the core business model is the operation of chain hospitals. If you have to make an analogy, Sanbo's business model is more similar to that of Hygeia, which is listed on the Hong Kong stock market.
When the storm hits, crazy investors have long lost their minds, even if the business is not highly related to brain-computer interfaces, but investors still stick to their own judgment. Although the fundamentals of Sanbo Brain are not bad, after the brain-computer speculation, the company is repaying debts for the previous market speculation, and the stock price has fallen for half a year, making investors complain.
The hot hype is not sustainable, and the company's stock price will always be in line with the company's fundamentals.