A stock price without warning suddenly pulled the originally low-key Remegen Biotech into the whirlpool of controversy. Aside from the common issues discussed in the industry such as cash flow and sales expense ratio floating on the water, the "lining" of Remegen Biotech sunk under the water seems to be often overlooked, and this is more related to the long-term development of an innovative pharmaceutical company.
In the context of the capital winter, cost reduction and efficiency increase, everyone's life is not easy, and all parties in the industry are more cautious. Since the second half of last year, companies in the pharmaceutical industry have sometimes had no reason to "kill stock prices", roughly there are two main lines, one is brought about by the progress of clinical trials, and the other is the structural adjustment of stock prices. Remegen Biotech and other ADC companies encountered this cruel scene not long ago.
Surrounded by the industry environment, after experiencing an unexpected stock price fluctuation, Remegen has been caught in a lot of controversies in recent days. From the perspective of combing, most of the concerns are some common problems in the industry, and almost many innovative pharmaceutical companies are facing similar torture, such as cash flow, sales expense ratio, product pipeline progress, etc.
When putting aside some of the appearances floating on the water, is Rongchang Biology wronged? What is the foundation? The hustle and bustle faded away, and an unseen Glory creature began to emerge.
Commercialization keywords: focus and efficiency
Behind the sharp drop in stock prices, whether the cash flow is sufficient has become a particular concern for investors.
In fact, since the deterioration of the financing environment in the second half of 2021, the industry's focus on biotech's cash flow has been brought to a more critical position. Behind this, on the one hand, there are concerns about Biotech's self-hematopoietic ability, and on the other hand, it is the ability to continue financing.
So does Remegen have enough funds to support its operations?
As early as the day's investor meeting, Remegen gave its own answers from four aspects. First, independent commercialization will continue to bring a certain scale of cash flow to it, and it is more confident in the market prospect of product commercialization; second, it has sufficient bank credit; Third, potential international cooperation may also bring a certain scale of cash flow; Fourth, capital market financing at an appropriate time is also a plan that can be considered.
If you know enough about Remegen, you will find that its shareholder, Remegen Pharmaceutical, is already a pharmaceutical company that has gone through many rounds of cycles, with a history of 30 years, and is one of the leading pharmaceutical companies in Yantai. This background is undoubtedly the "icing on the cake" for Remegen, and it is different from the existence of other start-up biotechs.
In addition to the cold winter, since the middle of last year, the challenges faced by the pharmaceutical industry have increased due to well-known policy factors. In a variety of contexts, the logic of industry investment and financing has also changed. On the basis of focusing on potential products, more attention is paid to the ability of sustainable financing for biopharma under the premise of compliance, "depending on whether the commercialization of the product is done well or not, and also on the control of rates". In the final analysis, it is whether it can achieve refined operation and achieve cost reduction and efficiency increase.
The outside world's questions about Remegen are also based on two common problems of BioPharma: one is the concern about performance expectations, and the other is the control of sales rates. So is Remegen's "sales expansion" in 2023 reasonable? How exactly do you weigh the risks internally?
To answer these questions, we must first return to the product itself in order to get a glimpse of its overall idea of commercialization. At present, Remegen's pipeline layout is concentrated in three major areas: autoimmunity, oncology and ophthalmology. Among them, there is one commercialized product in the field of autoimmunity and one in the field of oncology, namely tetanercept (RC18) and vedicitumab (RC48), which were approved for marketing in March and June 2021, and both entered the national medical insurance at the end of that year, and the commercialization of Remegen Biologics was fully launched.
Remegen, which holds two blockbuster products, was ambitious in the early years, and chose to build two commercialization teams in different fields, and established two commercialization teams of autoimmunity and oncology including medicine, marketing and sales.
But in fact, the high sales expense ratio is more of an inevitable situation of phased development. After the expansion of personnel and the construction of the commercial team in 2023, the construction of the Remegen team has been basically completed, and this situation will most likely change significantly in 2024. In addition, like most pharmaceutical companies, Remegen is also trying to reduce costs and increase efficiency with more measures, such as controlling the size of the team this year and making corresponding adjustments; In addition, in terms of the use of funds, priority will be given to the use of funds for projects with better marginal returns and more prospects in the future to ensure a more balanced development.
At the same time, it is also necessary to see the other side, with the improvement of the sales team, and after entering the medical insurance volume, the performance of Remegen's two commercial products has increased year by year after listing, of which Tatanercept has increased from 47.3 million yuan in 2021 to about 3300 million yuan; vedicitumab increased from $84 million in 2021 to about $4 million in 20221.2 billion, which can achieve partial cash flow replenishment.
As for the outside world that is more worried about the "now is the capital winter, pharmaceutical companies should be more cautious and not take too big steps", for Remegen, is the expansion of the sales force too fast? Is it necessary? It also pointed to the logic of Remegen's commercial layout.
In fact, it is understandable to choose to establish two sets of commercial teams to achieve refined management. There are also many peers in the industry, such as BeiGene's commercialization path is also developing in a more specialized direction as much as possible, focusing on the two major subdivisions of solid tumors and hematological tumors; Innovent has also adopted different products to match different commercialization teams to respond to changes in the external environment and diversified product needs, and has established a number of business divisions, covering IO, VEGF, TKI, blood, GBU and non-oncology businesses.
Compared with the companies in the industry, Rongchang Biotech focuses on "focus" tactically, and is more advanced at its own pace. This can be seen from the layout of its product pipeline, the overall pipeline is relatively "pure", most of them are built according to the logic of large single products, and the clinical promotion is extremely efficient, and multiple indications have entered key clinical phase 3, and the predictable market potential is probably the main consideration for Remegen's commercial layout and team building in advance.
For example, at present, Remegen has only one new star product in the field of autoimmunity, namely Remegen's first commercial product, Tatanercept, which is also the world's first dual-target** systemic lupus erythematosus biological new drug. The most important thing is that the promotion of the indications of this product has a sense of going hand in hand. In addition to the systemic lupus erythematosus indications that have been approved in China, there are also 8 multi-center phase 3 clinical studies in China or around the world, such as neuromyelitis optica spectrum disease, rheumatoid arthritis, IgA nephritis, Sjögren's syndrome, and myasthenia gravis. This means that multiple indications are close to commercialization, and once approved, the market potential is particularly impressive for Tatanercept, which is built according to large single products in the autoimmune track.
This kind of commercialization thinking is also reflected in the layout of Remegen's tumor pipeline, and the clinical research of core products has been advanced to the critical phase 3, although the test of funds is greater, but when the commercialization milestone is approaching, the team is like an arrow on the bow and has to be released, and it needs to be considered for commercialization in advance.
Under the current circumstances, it may be necessary to give Remegen some more time to better confirm the compatibility and forward-looking nature of its commercialization strategy.
The story may have just begun
Aside from the former domestic ADC leader, with the frequent rise of ADC rising stars, the outside world is boiling, but most of the time in the past two years, Rongchang Biotech has disappeared and is often ignored by the outside world.
But in fact, the power that Rongchang has gradually accumulated is at the critical point of exploding. There are not many innovative pharmaceutical companies that can achieve rapid self-hematopoiesis and long-term steady development, and most of the time there are three aspects that need to be considered. First, the company's foothold is strong enough; Second, the market potential of listed products should be large enough, and the competitive situation is favorable; The third is to hold heavy products under development. Remegen has been working steadily all the way and is developing more convincingly in these three directions.
In the three main areas, Remegen Biotech has autoimmunity and ophthalmology in addition to tumors. The core strategy of new drug development is to create differentiation and raise barriers. This is reflected in the deployment of the Remegen team in both clinical strategy and commercialization strategy.
In terms of clinical strategy formulation, Remegen has a relatively luxurious team. In particular, Chief Medical Officer He Ruyi has many years of experience in FDA and NMPA review and approval, and is familiar with the entire clinical registration clinical strategy, and since taking up the position of Chief Scientific Officer of Remegen Biosciences in 2019, he has always emphasized that differentiation is the basic strategy of clinical research and development, which has provided a lot of experience and empowerment for the formulation of follow-up clinical strategies.
In terms of fields.
Remegen has bet on a lot of ADC pipelines in the field of oncology, and in the face of the menacing latecomers of domestic ADC pharmaceutical companies, will Remegen's existing pipelines resist fighting? At this time, the overall advantages of Remegen are reflected. Out of differentiation considerations, Remegen Biotech has been looking for multiple coupling solutions for its ADC as early as possible, and has realized clinical differentiation through forward-looking layout, and a battle of ADC+PD-1** has begun.
In order to create differentiation, we have previously vigorously deployed the combination of this product, focusing on the "strong combination", such as the combination of PD-1** cervical cancer combined with radiotherapy **HER2 expressing solid tumors in combination with Yuheng Biologics; In the field of urothelial cancer, the efficacy of vedicitumab combined with Junshi Biosciences PD-1 was explored. At the same time, overseas clinical trials are also progressing smoothly, and the clinical trial of Urothelial Carcinoma in the United States is also progressing steadily, and it has also received FDA breakthrough designation**. Once the BA is filed overseas, the listing process will also be accelerated.
In fact, vedicitumab is only a pioneer in Remegen's ADC layout, and there are a number of ADC pipelines under development in the future. As the first domestic ADC, vedicitumab, which has a first-mover advantage among many latecomers, is also accelerating its expansion with multiple indications and combinations**, and can also pave the way for commercialization of subsequent ADC pipelines under development.
In the tumor pipeline, there is also a little-noticed mesothelin (MSLN) ADC drug RC88, which has a rapid clinical development speed, not only obtained the US FDA license to carry out international multi-center clinical studies, but also obtained the Fast Track designation granted by the FDA at the beginning of the year for patients with platinum-resistant** epithelial ovarian cancer, fallopian tube cancer and primary peritoneal cancer (PROC). For this ADC pipeline, Remegen also bet on the combination of ADC+PD-1 chessboard, and in June 2023, it cooperated with Innovent Biologics sintilimab to carry out a clinical research cooperation on combination drugs.
The bigger story of Remegen Biotech may not be in the ADC, and the layout of autoimmunity and ophthalmology is also quite interesting.
Although Remegen has only one product on the market in the field of autoimmunity, tetanercept, it is obviously created according to the logic of large single products, especially when multiple indications are pushed to the phase 3 clinical stage.
From the perspective of competition, for the only approved indication of this product for systemic lupus erythematosus, there are only a handful of approved biological products in the world, and the competition pattern is good. According to the estimation of the penetration rate of 5% and 10% in 2025, the market size of China's Tatarercept in 2025 will be 263.5 billion yuan-52between 700 million yuan. With the approval of a number of new indications, the imagination of Tatanercept is huge.
Looking at the ophthalmology layout, although it is not as good as Remegen's tumor and self-absorption, it is well known in the industry, but there is also no shortage of blockbuster "potential stocks", and it is also advancing rapidly.
At present, among the two products under development, RC28 and RC218, RC28 is the world's first VEGF FGF dual-target fusion protein drug, and the two indications of wet age-related macular degeneration and diabetic macular edema have been pushed to key Phase 3. There has been a research institute**, and the product will reach 100 million yuan in sales in the first year of listing.
More importantly, Remegen may have a lot of replicable experience in ophthalmology projects. The project is led by Fang Jianmin, CEO of Remegen, who is the inventor and designer of China's first ophthalmic class I biological new drug with independent intellectual property rights, Conbercept, which was developed and marketed after the transfer of the drug to Chengdu Kanghong Pharmaceutical. Today, Conbercept has become the leader of Kanghong Pharmaceutical.
The pipeline layout is gradually becoming clearer, and with most of the products being pushed to the critical clinical stage, the two commercial teams that have taken the lead early may be able to play a greater role. At the same time, many products may usher in potential BD opportunities, which is also one of the starting points that Remegen will focus on next. Remegen is clearly waiting for the right moment, with the right partner, and the right format for BD.
Remegen, which has many promising products, seems to have just begun the story with the arrival of key time nodes.
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