"investor net" cai jun

at the beginning of December, the stock price of Baili Tianheng (688506, hereinafter referred to as "the company"), which had been consolidated for a period of time, rose one after another. When the market was still speculating, the company quickly gave an answer.

on December 12, Bailey Tianheng announced that the company had reached a cooperation agreement with global biopharmaceutical company BMS (Bristome-Myers Squibb) on BL-B01D1 project. The company is responsible for the development, commerce, production, etc. of drugs in mainland China and for use in other regions, and BMS is responsible for the development and commercialization of other regions.

In terms of amount, BMS will pay the company a down payment of US $0.8 billion and a series of milestone payments, with a potential total transaction value of up to US $8.4 billion.

The deal ignited Baili Tianheng's market and brought new inspiration to the innovative medicine sector in the cold winter. The short-term market is based on the company's choice of research and development direction and the accumulation of capabilities, but the progress of research and development is far from the end. Whether the company is a capital bubble or a big factory tomorrow, time will give the answer.

Three fires lit about 50 billion market value

When the domestic Biotec corporate valuation bubble burst, Bailey Tianheng was still firm.

Biotec refers to innovative pharmaceutical companies that are not profitable. They are listed on Hong Kong stocks or the board, and because of the high value and potential of the R & D pipeline, they can obtain high institutional valuations even if the innovative drug has not yet been commercialized.

Bailey Tianheng is one of them. In the first three quarters of this year, the company's operating income was 0.378 billion billion yuan, down 21.37 percent from the same period last year: the net profit attributable to shareholders of listed companies was -0.515 billion yuan, and the loss was larger than that of the same period in 2022. By business category, chemical and proprietary Chinese medicines are the main sources of revenue, and no innovative drugs are yet on the market.

is such a company, the market value is constantly hitting new highs. As of December 20, 2023, the company's market value is as high as 50.313 billion yuan. What's more interesting is that almost all of Biotec's companies have experienced a decline in share prices this year, and even a situation of halving.

A little red in the green bush. The reason for this is precisely BL-B01D1 of the protagonists of this round of trading.

According to the announcement, BL-B01D1 is a bi-specific topoisomerase inhibitor-based ADC (antibody drug conjugate) that can simultaneously target epidermal growth factor receptor and human epidermal growth factor receptor 3(EGFR × HER3). A professional introduction, including "ADC", "double target", "HER3" and other engines to ignite the market.

When valuing innovative drugs, capital logic is often linked to technology, business, track, etc. The more difficult the technology, the higher the valuation; the greater the commercialization prospect, the higher the valuation; the less crowded the track, the higher the valuation. All three, valuations continue to enlarge.

For example, ADC is called "magic bullet", which is extremely difficult to develop. Among the domestic manufacturers, only Rongchang Biology has been commercialized and its market value exceeds 30 billion yuan.

at this year's ASCO (annual meeting of American society of clinical oncology), Bailey tianheng disclosed a phase I clinical result of BL-B01D1. Including the total efficiency, safety and other indicators, the drug data is better than similar products, ignited the company's valuation of the first fire.

Moreover, the company's choice of EGFR x HER3 targets can cover lung cancer, solid tumors, breast cancer and other gate categories, the market space is broad, ignited the valuation of the second fire.

Further, Guojin Securities in the research report statistics, domestic research in the ADC target is the most HER2, but the same kind has been listed with clinical data of the top DeQutuzhu. In other words, the company avoided hot but small-cap targets, and corner overtaking ignited the third fire of valuation.

The flames ignited by the three fires illuminate the sentient beings of domestic Biotec enterprises.

ADC R & D Double Star

Rome was not built in a day, and the transaction of Bailey Tianheng is also the result of years of accumulation.

In 2014, the company set up a research and development center in Seattle, USA, which is responsible for the research and development of tumor biological drugs. The center consists of tumor immunity and analysis, antibody discovery, antibody engineering, antibody process research and development, clinical development and other departments.

Technically, the core of the U.S. R & D center includes Khalili Zhu Hai and Jahan Salar. Both are from the University of Texas, and the company's second and third highest salary in 2021, totaling 2.285 million yuan.

In fact, there are many domestic manufacturers of ADC research and development, and more than 10 have gone to sea in the past two years. Before Bailey Tianheng, the more famous was Korenbotai. In 2022, Mercadon purchased interests in two ADC research and development projects in Collenbotai with a down payment of $82 million and a milestone payment of $2.264 billion.

The same track, the same international buyers, Bailey Tianheng and Korenbotai are often compared in the capital market.

the first is the transaction amount. although foreign buyers have made a lot of milestone payments, the down payment that can be settled in the near future is the near water. Therefore, Bailey Tianheng's $0.8 billion is full of weight.

But in the long run, Baili Tianheng will share the global development costs of the drug and the profit and loss of the U.S. market with BMS. The analysis company IQVIA has calculated in the report that the average R & D expenditure on overseas anti-cancer drugs is about $0.7 billion. With this in mind, the company's down payment value may be revalued.

in terms of market value, the Hong Kong stock-listed Korenbotai exceeds 20 billion yuan, which is somewhat different from Bailey Tianheng. In the first half of this year, the research and development costs of Baili Tianheng and Korenbotai were 0.333 billion yuan and 0.49 billion yuan respectively. In terms of ADC drug targets, Korenbotai's fastest progress is Trop2 and CLDN18.2, both of which are highly competitive tracks.

Shuffle the big cake?

Anxin Securities has pointed out in its research paper that Bailey Tianheng's ADC drugs are mainly aimed at patients treated with PD-1 monoclonal antibody. Simply put, the big cake of billions may have to be shuffled.

As a broad-spectrum target, PD-1 monoclonal antibodies can theoretically treat various cancers, so the patient base is large and the market space is vast. Up to now, domestic similar drugs are both rolling and making money.

The volume shows that 10 manufacturers have been commercialized. Even so, in the first half of this year, the sales of similar drugs in Baiji Shenzhou and Cinda Biology were 1.836 billion yuan and 1.197 billion yuan respectively, with market values exceeding 150 billion yuan and 60 billion yuan respectively.

In this wave of Bailey Tianheng, the business outlook and valuation may be coupled. Some institutions believe that, compared to PD-1 monoclonal antibodies, the company's dual anti-ADC target is stronger, better efficacy, so there is a possibility of replacement.

There is also a conjecture that the acquisition of BMS is paving the way for the combination of its PD-1 and dual anti-ADC. Combination therapy refers to patients taking two drugs at the same time to enhance the efficacy.

Previously, BMS's competitor, Mercadon, had developed a combination drug for PD-1 + ADC and was approved for listing in the United States. In contrast, BMS's PD-1 drug sales are not as good as those of Merck's similar products. In China, Yu Heng Bio and Rongchang Bio also announced to jointly carry out PD-1 + ADC therapy.

However, no matter how BMS and Baili Tianheng design the transaction, research and development and even commercialization, the success of the company's research and development is the key.

it should be pointed out that the HER3 targets involved in the BL-B01D1 were also targeted and developed by international manufacturers such as Roche, Amjin and DIS, but all failed. The company's current progress has not yet reached the third phase, and it is also unknown whether the short-term market of the capital market will be adjusted in the future. (Thinking Finance and Economics) ■