Kunpeng Project
On January 26, Ascletis Pharma-B (01672.)HK) stock price fluctuated violently, especially in the afternoon due to the sharp decline of WuXi system, with an intraday gap of more than 10%, which was an astonishing decline. As of **, the stock is down 659% to 17 Hong Kong dollars shares, the total market capitalization is only 177.6 billion yuan.
You know, the stock just bottomed out on January 4**, and as of the 25th**, the stock has risen by 4331%, which is quite eye-catching. The current stock price** has also caused panic in the market, and some investors even believe that Ascletis Pharmaceuticals may have to restart its downward trend, which is behind the concern about its business status.
The first stock of 18A, with a rich pipeline under development
Founded in April 2013, Ascletis is committed to the R&D and commercialization of innovative drugs in the fields of viral diseases, non-alcoholic steatohepatitis (primary biliary cholangitis), and oncology (oral tumor metabolic checkpoint and immune checkpoint inhibitors) to address the clinical needs of patients at home and abroad. In August 2018, Ascletis became the first unprofitable biopharmaceutical company to be listed under the Chapter 18A rules of the Hong Kong Stock Exchange.
It has been more than five years since Ascletis went public, but profitability has always been an unsolved problem for the company.
According to the financial report data, from 2018 to the first half of 2023, Ascletis Pharmaceutical's net loss was 197450,000 yuan (RMB, the same below.) 90,000 yuan, 20.9 billion yuan, 19.9 billion yuan, 31.5 billion yuan, 165590,000 yuan, the cumulative net loss is as high as 85.5 billion yuan.
In terms of R&D pipelines, as of the end of June 2023, Ascletis had a total of 12 R&D pipelines. Among them, it includes 5 viral disease product pipelines for chronic hepatitis B, AIDS, new crown pneumonia, respiratory syncytial virus, etc.; 4 NASH PBC (Primary Biliary Cholangitis) product pipelines; Two oncology pipelines for ** glioblastoma and advanced solid tumors, and one pipeline for acne.
Among them, the PD-L1 inhibitor envafolimab introduced by the company from Alphamab Oncology has carried out a number of clinical studies against hepatitis B.
Ascletis announced on September 28 that the Phase IIB expansion cohort of subcutaneous PD-L1 antibody ASC22 (envafolimab) for the functional** treatment of chronic hepatitis B (CHB) (the "Expansion Cohort") has achieved positive interim data and completed the dosing of the first patient.
Hepatitis B is a liver disease caused by hepatitis B virus infection, affecting the lives of nearly 300 million people worldwide, including 86 million in China. At present, there is no hepatitis B** drug on the market worldwide, and once envafolimab can achieve chronic hepatitis B functional**, then it will be a blue ocean that awaits it.
According to Frost & Sullivan's analysis, the size of China's hepatitis B drug market is expected to increase from 156 in 2025900 million yuan, an increase of 723 in 2030300 million yuan.
In addition, Ascletis has also made positive progress in a number of pipelines in the areas of fatty liver disease, acne and other diseases**.
In January 2024, the Phase II clinical trial of ASC41, a drug for non-alcoholic steatohepatitis (NASH), achieved positive interim results.
It is worth noting that nonalcoholic steatohepatitis (NASH) is a complex metabolic disease caused by multiple factors, and due to the complex pathogenesis and high clinical endpoint determination requirements, there is no recognized effective drug approved for marketing so far. However, from the perspective of market demand, the number of people suffering from non-alcoholic fatty liver disease (NAFLD) NASH accounts for about 1 4 of the total population worldwide, and the patient population is huge.
Under the huge demand window, Resmetirom, as the first drug to achieve FDA approval**, has officially submitted an NDA application in June 2023, which is expected to open up the global $10 billion NASH market. It remains to be seen whether Ascletis will be able to seize the lead in the domestic market.
In the same month, the Phase III clinical trial of ASC40 (denifastat)** for moderate to severe acne vulgaris was dosed to the first patient at Huashan Hospital affiliated to Fudan University.
Phase III clinical trials are the most expensive part of the entire innovative drug R&D, and with the continuous advancement of the R&D pipeline, Ascletis has entered or will soon enter Phase III, which will test the company's cash reserves. As of June 30, 2023, Ascletis had cash and bank balances of approximately 25$1.3 billion, which the company expects to be sufficient to support its R&D activities and operations until 2027.
This also puts pressure on R&D, which needs to accelerate R&D progress and enter commercialization as soon as possible.
The hepatitis C business withdrew from the stage, and the new crown drug business became a pillar
Of course, in addition to the pipeline under development, Ascletis has previously commercialized three products, all of which belong to the field of viral diseases, namely danoprevir sodium tablets (Gonovec), ritonavir tablets, and ravidavir hydrochloride tablets (Xinlilai).
Among them, ritonavir tablets are mainly used for new crown pneumonia**, which was approved in China in 2021; Danoprevir sodium tablets (Gonovec) and ravidavir hydrochloride tablets (Xinlilai) are two hepatitis C drugs introduced by Ascletis Pharma from Roche and Presidio, an American biopharmaceutical company, which were approved for marketing in China in 2018 and 2020 respectively.
In view of the broad prospects of the hepatitis C market, Ascletis also acquired the exclusive sales rights of Pegasys, an old drug for Roche's liver disease, in the Chinese mainland market in 2018.
In terms of performance contribution, in recent years, the HCV (hepatitis C virus) product and promotion service business (** Pyroxin) has been the main force of the company's revenue, accounting for as much as 9% of the total revenue in 2021 and 2022.
However, with the gradual improvement of the domestic hepatitis C** program, the market position of Pyroxin has been challenged, and everything will begin to change quietly in the second half of 2022.
In September 2022, Ascletis and Roche signed a supplemental agreement to terminate the provision of Pyroxin's promotional services to Roche with effect from December 31, 2022.
At the same time, Ascletis has gradually stopped investing in hepatitis C. In June 2023, Ascletis further announced that it will no longer actively promote HCV (chronic hepatitis C) products in the future, and will transfer the funds originally earmarked for the promotion of HCV products to the research and development of oncology drug candidates.
At this point, Ascletis has officially failed in the commercialization of hepatitis C drugs, and the new crown drug business has become the company's main revenue**.
In the first half of 2023, Ascletis achieved revenue of 4,65060,000 yuan, a year-on-year increase of 217%；The loss during the period was 165590,000 yuan, a year-on-year decrease of 812%。In terms of business, with the complete withdrawal of the promotion service business, the revenue of the ritonavir business increased from 69 in the first half of 202210,000 yuan increased to 441670,000 yuan, an increase of 62918%。
According to the 2022 financial report, Ascletis Pharmaceutical's production capacity of ritonavir oral tablets is about 5300 million tablets per year, mainly ** Pfizer China, Simcere Pharmaceuticals and an undisclosed Chinese pharmaceutical company.
However, it is worth reminding that as the epidemic has gradually faded, the market size of new crown drugs has gradually shrunk. Taking Pfizer as an example, in the first three quarters of 2023, the company's revenue from new crown oral drugs fell sharply by 7419% to 44$1.4 billion.
In the future, with limited room for growth in the new crown business, only by accelerating the launch of more products to achieve commercialization and contributing to profitability can Ascletis Pharma escape the loss spiral, otherwise the situation may become more and more difficult.
Author: Hong Xiaodou.