Behind the anxiety of "Lianhua Qingwen", what are China's most potential new crown drugs?

New crown concepts such as new crown drugs, new crown vaccines, and new crown kits are relative certainties in the uncertainty of the capital market, like a straw

Recently, the "Lianhua Qingwen" incident has set off a war of public opinion on the Internet.

This incident actually reflects everyone's anxiety about uncertainty

So which new crown drugs currently have the most potential? How is their R&D going? What is the clinical effect? How is the market doing? What other opportunities are associated with new crown drugs?

01.

In the latest standard treatment regimen for COVID-19 (ninth edition), small-molecule specific drugs and neutralizing antibodies have replaced "old drugs and new" antiviral drugs as the main treatment options for mild, moderate, and high-risk patients

According to the speculation and estimation made by Soochow Securities on the national anti-epidemic drug reserves and the market size of new crown drugs during the new crown period with reference to past epidemics, it is expected that the government will start the reserve of specific drugs within three years from 2022, and the domestic reserves of new crown small molecule drugs It can reach 8% to 10% of the population, and the total reserve may be 112 million to 140 million courses of treatment

In contrast, there are only two specific drugs for the new crown that have been approved for marketing in China

In December 2021, Tengsheng Biopharmaceuticals independently developed the first domestically-produced COVID-19 neutralizing antibody ambavirumab/romisevirumab, which was approved with conditions

At the end of March, Tengsheng Biopharma announced that its subsidiary Tengsheng Huachuang and Sinopharm had reached a strategic cooperation to jointly promote the commercialization of the neutralizing antibody ambavirumab/romisevirumab combination therapy in China

In February 2022, Pfizer's small-molecule oral drug Paxlovid (Nematavir/Ritonavir) was conditionally approved for the treatment of adults with mild to moderate disease with high risk factors for progression to severe disease

At present, the availability of only two drugs is far from meeting the current domestic epidemic prevention and control needs, which also leaves market space for other domestic R&D companies

Source: Soochow Securities Research Report

On April 17, Junshi Biosciences disclosed the latest research results of the new crown candidate drug VV116 published in a journal of nature, showing that it has excellent antiviral effects on multiple RSV-sensitive cell lines

VV116 was originally a new oral nucleoside anti-SARS-CoV-2 drug jointly developed by the Shanghai Institute of Materia Medica of the Chinese Academy of Sciences and other domestic scientific research institutions.

In October 2021, Juntuo, a subsidiary of Junshi Biotechnology, and Wangshan Wangshui, an incubator of the Shanghai Institute of Materia Medica, reached a cooperation to jointly undertake the clinical development and industrialization of VV116 worldwide

At present, VV116 has been released and has obtained emergency authorization for use in Uzbekistan.

Kintor Pharmaceutical's Prolukamide is another domestically-produced small molecule drug for the new crown that has high hopes
.

On April 6, Kintor Pharma announced the key data results of the Phase III clinical trial of proclutamide in the treatment of mild-to-moderate non-hospitalized patients with COVID-19
.
Prokalutamide achieved 100% protection in subjects taking the drug for more than seven days and in subjects with high risk factors
.

Kintor is currently advancing a number of international multi-center clinical trials for mild to moderate and hospitalized patients in Brazil, the United States, Ukraine, and the Philippines
.

According to relevant sources close to Kintor, Kintor is actively applying for emergency use authorization (EUA) to national drug regulatory agencies in China, the United States and other countries and regions.
If the progress goes well, it is expected to be approved within this year
.
Kintor Pharma has previously reached a commercialization cooperation agreement with Fosun Pharma in India and 28 African countries, and has reached a commercialization cooperation agreement with Indonesia's Etana Company in Indonesia
.

Another fast-moving small-molecule drug is azvudine in real life
.

Azvudine was jointly developed by Real Biology and Zhengzhou University, and was approved by the State Food and Drug Administration for AIDS treatment as early as July 2021
.
In 2020, it is considered to be a potential drug candidate for the new crown and is approved for a phase III clinical trial for the treatment of the new crown
.
Clinical Trials data shows that a Phase III clinical trial in Brazil for patients with moderate to severe new coronary pneumonia has been completed, and another Phase III clinical trial for mild patients is expected to be completed in July 2022
.

According to the website of the Center for Drug Evaluation of the State Food and Drug Administration, the status of the Type II communication meeting and Type III communication meeting for real biological applications has been changed to "feedback"
.
According to the "Administrative Measures for Communication and Exchange of Drug Development and Technical Review", a class II meeting refers to a meeting held for a drug at a critical stage of research and development
.
Some sources speculate that this may mean that Azvudine's approval is imminent
.

In addition to these three drugs that have progressed to Phase III, there are many domestic companies such as Simcere, Ascletis, and Genting Xinyao, which are deploying the research and development of new crown small molecule drugs, most of which are in the early stages of research and development
.
Among them, the fastest progress is FB2001 of Frontier Biology
.

FB2001 is an orally available peptidomimetic anti-new coronavirus candidate drug jointly developed by the Shanghai Institute of Materia Medica of the Chinese Academy of Sciences and other domestic research institutions and units, and appeared on the cover of Science in June 2020
.
In May 2021, Frontier Bio and Shanghai Institute of Materia Medica reached a cooperation to obtain the global rights of clinical development, production, manufacturing and commercialization of FB2001.
Currently, Phase I clinical trials have been launched in China and the United States
.

Although there are deficiencies, neutralizing antibodies are still an important part of the current treatment regimen in China
.
Especially at the stage where small molecule oral specific drugs have not been widely popularized, there is a certain market space for the use of neutralizing antibodies
.

At present, in addition to Tengsheng Biopharma's ambivirumab/romisevirumab that has been approved, four neutralizing antibodies from Shenzhou Cell, Luye Pharmaceutical Jimin Trust, and Maiwei Bio have entered Phase II clinical trials.
There are multiple neutralizing antibodies in clinical phase I and preclinical stages
.

02.
New crown oral drug beneficiary companies in the tuyere

The progress of COVID-19 drugs has also brought opportunities to China's CDMO companies and API companies
.

The first type of enterprise is a CDMO company that directly provides contracted custom R&D and production for the new crown oral original drug
.
Asymchem and Proton shares are the representatives of the beneficiaries
.
Due to commercial confidentiality, the two companies did not admit that their orders were related to Pfizer, but various indications and reports showed that the two companies’ orders were mainly related to new crown oral drugs
.

Starting from November 2021, Asymchem has successively announced three major contract orders, with the three announced amounts being US$481 million (approximately RMB 3.
065 billion), RMB 2.
72 billion, and RMB 3.
542 billion, accumulatively amounting to approximately 9.
327 billion US dollars.
billion-dollar performance
.
For Asymchem, it is of great significance.
You can refer to Asymchem's cumulative operating income of 10.
249 billion yuan in the past three years
.

In fact, according to people familiar with the matter, the order began as early as early 2021
.
The capital market also gave a positive answer.
In 2021, the cumulative increase of Asymchem's stock price will be close to 50%, exceeding the industry average increase of 37.
74%
.

Coincidentally, the two orders announced by Proton shares were worth US$217 million and US$681 million respectively, with a total of approximately RMB 4.
45 billion
.
The revenue of Proton shares in 2021 is about 3.
1 billion yuan
.
In terms of stock price, the cumulative rise and fall of Proton shares in 2021 will exceed 150%
.

The second type of beneficiary companies are the API companies that have obtained the authorization of the new crown oral drug
.

On January 20, the Pharmaceutical Patent Pool Organization (MPP) announced the authorization of the generic oral drug Molnupiravir (monupiravir), five companies including Fosun Pharma, Borui Pharma, Shijiazhuang Longze Pharma, Shanghai Desano, and Langhua Pharma.
Chinese pharmaceutical companies are among them, the top four of which are licensed to produce both APIs and finished drugs, and Langhua Pharmaceuticals is licensed to produce APIs
.

On the first trading day after the announcement, Fosun Pharma and Borui Pharma both opened at the daily limit, Borui closed with a 20% increase in stock price, and Fosun Pharma closed up 5.
98%
.

On March 17, Pfizer's new crown oral drug was authorized by MPP (Geneva Drug Patent Pool Organization) to 35 pharmaceutical companies, including 5 domestic companies; among them, Jiuzhou Pharmaceutical was authorized to produce Nirmatrelvir (Nimatvir) raw materials Huahai Pharmaceutical, Puluo Pharmaceutical, Fosun Pharmaceutical, Desano can produce APIs and preparations
.

After the announcement of this news, the four listed companies of Jiuzhou Pharmaceutical, Fosun Pharmaceutical, Huahai Pharmaceutical, and Puluo Pharmaceutical all hit their daily limit during the session, but they all closed calmly in the end
.

It seems to be a big positive, but a difficult game has taken place in the attitude of the capital market
.
Taking the authorization of Pfizer’s new crown oral drug as an example, some investors believe that, on the one hand, the authorization of MPP does not include ritonavir single drug, so companies authorized by MPP need to solve the source of ritonavir in co-packaging by themselves
.
On the other hand, the drug is still in the patent period, and the licensed companies may not be able to imitate it successfully and mass-produce it eventually
.
Therefore, as a patented drug, the new crown specific drug may only be Pfizer in the downstream
.
There is also an optimistic view that these generic drugmakers will not be able to supply products to the market until at least 2023
.

The third type of beneficiary enterprises are those involved in the circulation and sales of new crown oral drugs
.
Sinopharm is a representative example.
In March 2022, Sinopharm's stock experienced 13 daily limit increases, and its stock price increased by more than 230% throughout March, exceeding the industry's average increase of 12.
93%
.
The reason behind the huge increase is indeed the rumored Covid-19 partnership
.
On March 9, 2022, Sinopharm signed an agreement with Pfizer, announcing that it will be responsible for the commercial operation of Pfizer's new coronavirus treatment drug Paxlovid in the Chinese mainland market in 2022
.

Reference: Soochow Securities "Innovative Drug Disease Perspective Series Industry Research - New Coronary Virus Infection"