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by "Northeast Medicine Yuheng Pharmaceutical , founded by King Zhu Jiman, became famous in the industry through successive large-scale mergers and acquisitions of many pharmaceutical companies such as Aonuo Pharmaceutical and Shanghai Huatuo. In the end, it also failed due to frequent mergers and acquisitions. Caught in a downturn.
Recently, Yuheng Pharmaceutical handed over its first semi-annual report after restructuring. The net profit attributable to the parent company in the first half of 2024 was 125 million yuan, a year-on-year increase of 342.39%, and the profit increased significantly.
How did Yuheng Pharmaceutical's "vital energy" recover so quickly? We have to start with pd-1.
pd-1/l1 city,
masters are everywhere
In June 2024, CSPC Pharmaceutical Group 's application for listing of enlasubumab was officially approved. So far, at least 15 pd-1/l1 monoclonal antibodies have been approved for marketing in China. payment. The PD-1/L1 track, which is being pursued by major pharmaceutical companies, is as fierce as a besieged city. Those in the city want to get out, and those outside the city want to get in.
innovation and transformation starts from pd-1. In 2015, the State Council issued the "Opinions on Reforming the Review and Approval System for Drugs and Medical Devices", which kicked off the reform of my country's drug and medical device review and approval system. This year also became a watershed in the development of my country's pharmaceutical industry. Countless domestic pharmaceutical companies On the road to innovation and transformation, driven by k-drugs and o-drugs, pd-1 seems to be the only stop for innovation and transformation.
At that time, Yuheng Pharmaceutical was also thriving in the domestic pharmaceutical industry. In 2015, its revenue was 2.681 billion yuan, and its net profit attributable to the parent company reached 665 million yuan, a year-on-year increase of 40.69% and 49.81% respectively. Continued It retains the title of the annual top 100 pharmaceutical industry in China.
Yuheng Pharmaceutical was also attracted by the magic of PD-1 in the initial stage of innovation and transformation. In 2015, it signed the "Anti-PD-1 Fully Human Innovative Antibody Drug Cooperation Development Agreement" with WuXi AppTec . In March 2017, Its anti-PD-1 monoclonal antibody product gls-010, jointly filed with WuXi AppTec, has received clinical approval, and Yuheng Pharmaceutical has officially become a member of the PD-1/L1 track.
There are so many experts that it is difficult to show their skills. In order to make a name for itself on the PD-1/L1 track, in August 2018, Yuheng Pharmaceutical injected the biopharmaceutical products, assets and R&D team of tumor immunotherapy with gls-010 as the core into its wholly-owned subsidiary Yuheng Biotechnology, and introduced strategic investors through capital increase and share expansion. After the transaction is completed, Yuheng Pharmaceutical holds 49% of the equity of Yuheng Biotechnology. Since then, Yuheng Biotech has experienced multiple capital increases, and Yuheng Pharmaceutical finally held 42.12% of its equity.
Yuheng Pharmaceutical’s research and development strategy on the PD-1/L1 track is doomed to the final outcome. In 2018, there are more than 20 pharmaceutical companies in China researching PD-1/L1, and major pharmaceutical companies have made extensive arrangements for many indications. However, Yuheng Biotech has only launched 2 studies in Hodgkin lymphoma. Phase 1 clinical study.
In August 2021, Yuheng Pharmaceutical’s cepalizumab (gls-010) was approved for marketing by the State Food and Drug Administration for the treatment of relapsed or refractory classical Hodgkin lymphoma (chl) after second-line systemic chemotherapy. ) Adult patients, at this time, among the 8 PD-1 drugs on the domestic market, only Junshi Biotechnology ’s toripalimab has not applied for this indication.
Although the objective response rate (ORR) of cepalizumab for the treatment of r/r chl, was higher than the other 6 PD-1 drugs that had been marketed in China at that time, reaching 91.67%, but as a "top student" ", there is not a big gap between . Except for Merck's K drug ORR is 71.9%, the other 5 products have ORR exceeding 80%, especially BeiGene 's tislelizumab, and Kangfang Biotech’s ’s Pembrolizumab has an ORR of nearly 90%, and its complete response rate (CR) is far higher than that of Cepalizumab.
It is worth noting that Innovent Biologics , Hengrui Pharmaceuticals and BeiGene’s three products have been commercialized in the domestic market for several years with the balanced advantages of ORR not inferior to O drugs and CR higher than K drugs. , it is difficult for Cepalizumab to stand out among the many experts in CHL indications.To be competitive on the
pd-1/l1 track, in addition to making breakthroughs in clinical data, we also need to pursue the expansion of indications. Yuheng Pharmaceutical has targeted cervical cancer as the next indication for cepalizumab. It is more powerful than in the chl indications and ranks first in the pd-1 circle. In September 2023, the indication of cepalizumab for the treatment of recurrent or metastatic cervical cancer patients with PD-L1 positive expression (CPS ≥ 1) who have failed platinum-containing chemotherapy was approved by the State Food and Drug Administration, becoming China's first drug. The first and only PD-1 monoclonal antibody approved for cervical cancer.
But at this time, cervical cancer therapy has already been upgraded to the dual-antibody era . In June 2022, Kangfang Biological's dual-antibody product Cardunil was used to treat recurrent or metastatic cervical cancer that had failed platinum-containing chemotherapy ( r/m cc) patient indications were approved by the State Food and Drug Administration. For patients with cps ≥ 1, the ORR of carduniride reached 43.8%.
Even though the "force value" of cepalizumab is higher than that of PD-1's "comrades", facing the "jianghu" where "talents" are emerging in large numbers, there are some regrets that it was not born at the right time. In addition, because of the reputation of the pharmaceutical industry The merger and acquisition fell into a financial crisis, and it was no longer able to continue the research and development of other products of Yuheng Biotech. It had to make the decision to sell all the shares held by Yuheng Biotech before the cervical cancer indication of cepalimab was approved.
Take a step back for now, the sky is brighter
After divesting its equity in Yuheng Biotech, Yuheng Pharmaceutical has returned to its main business of generic drugs. This time, it will focus on reorganizing its layout on difficult-to-imitate and improved new drugs.
takes off the burden and travels lightly. pd-1 assets have always been a big burden that drags down the performance of Yuheng Pharmaceutical. In 2021 and 2022, the company's net profit will be -38.6748 million yuan and -66.6588 million yuan respectively. After unloading the burden, the number of new product projects in Yuheng Pharmaceutical's main R&D projects has increased significantly. According to the 2023 annual report, 8 drugs in the main R&D projects are new products, which is twice as many as in 2022. , and in 2021, among the main R&D projects, there will be zero new product projects.
It is worth mentioning that although the new products are all generic drugs, there are many hot-selling products. In February 2024, Sitagliptin Metformin Sustained-release Tablets, which was cooperated by Yuheng Pharmaceutical and Ambisun, obtained drug approval. The products are dipeptidyl peptidase-4 (dpp-4) inhibitors and metformin compound products. From 2018 to 2022, the five-year compound growth rate of sales of dpp-4i/metformin compound preparations exceeded 70%, and sales in 2022 have Nearly 1.2 billion yuan. In July 2024, Yuheng Pharmaceutical's sitagliptin metformin extended-release tablets will officially start sales, which is expected to become a new performance growth point.
html Among the 08 new products, except for sitagliptin metformin extended-release tablets, which have been approved, the details of the other products have not been disclosed. Based on the "product is king" strategy currently implemented by Yuheng Pharmaceutical, it is speculated that the other 7 treats will be "unlocked" "Most of the products are large varieties of generic drugs.
Figure 1 Yuheng Pharmaceutical’s main R&D projects
Picture source: Yuheng Pharmaceutical’s 2023 Annual Report
Yuheng Pharmaceutical’s test of innovative drugs, which is both bitter and sweet , returns to the development idea of the main business of generic drugs , has not extinguished its dream of innovative drugs, because in the process of saving the company's financial crisis, it would rather sell Aonuo Pharmaceutical, a star pharmaceutical company for children's calcium supplements, than liquidate its investment shares in Wuxi Healthcare Ventures II, L.P.
Interestingly, one of the main investment targets of Wuxi Healthcare Ventures II, L.P. is CStone Pharmaceuticals. Just last month, CStone Pharmaceuticals’ sugemalimab became the world’s first combined chemotherapy first-line treatment for squamous cell carcinoma to be launched in Europe. It is the first domestic PD-L1 monoclonal antibody to be successfully launched into the international market.
The secret to reducing revenue and increasing profits. Judging from the revenue structure of Yuheng Pharmaceutical in the first half of 2024, it is really difficult to understand how the declining revenue can support the net profit that has increased several times.
Although many of Yuheng Pharmaceutical’s core products are firmly at the top of the market share, sales have increased and revenue has declined due to price cuts in winning bids for centralized procurement. Among the core products, only Annao pills/tablets will be launched in 2024. Sales revenue increased by more than 50% in the first half of the year, supporting the traditional Chinese medicine segment to become the only segment with positive revenue growth. However, it still failed to prevent the 1.04% revenue decline of the cardiovascular and cerebrovascular drugs segment to which this product belongs.
Figure 2 Yuheng Pharmaceutical’s revenue structure in the first half of 2024
Picture source: Yuheng Pharmaceutical’s 2024 semi-annual report
Only by working together can we regain confidence, since 2024, the total number of concerted actions of Yuheng Pharmaceutical’s largest shareholder It increased its holdings by 10.2724 million shares. In addition, the company implemented equity incentives and granted 72.391 million restricted shares to 105 incentive targets who met the conditions for the first grant. The two-pronged measure stimulated the confidence and enthusiasm of core employees and ensured the company's cost reduction and growth. Effectively carried out smoothly. The 2024 semi-annual report of
shows that the company’s sales expenses fell by 28.03% year-on-year, administrative expenses (excluding equity incentive expenses) decreased by 20.20% year-on-year, and financial expenses decreased by 94.83% year-on-year. The total year-on-year decrease of the three expenses was approximately 200 million yuan. It can be said that in 2024 The profit in the first half of the year was largely "saved back".
Conclusion
"Moving towards innovative drugs at the right time" was the answer given by the management of Yuheng Pharmaceutical regarding the company's future prospects during the investor survey event in July 2024. This also proves that Yuheng Pharmaceutical has not paid much attention to innovative drugs. In addition, the substantial improvement in operating efficiency will also gather internal strength for its further innovation and transformation.
It is worth mentioning that Yuheng Pharmaceutical is trying to enhance its R&D strength through CXO business, and has completed the transformation from the CMO business of its subsidiary Pude Pharmaceutical to the R&D end CDMO. With the recovery of vitality, Yuheng Pharmaceutical The industry will eventually return to the innovative drug track.
Reference sources: Yuheng Pharmaceutical’s official website, official WeChat account, announcements and annual reports
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