Innovative drug emerging track, water sellers are ready to go

The cell and gene therapy industry has never attracted as much attention as it is tod.

The long-acting advantage of a single treatment can achieve a long-term and stable treatment effect through one administration, and even a one-time cure;

It can solve the problems of intractable diseases that cannot be solved by traditional treatment solutions, such as certain tumors and genetic diseases;

Platform advantages, when genes and targets are relatively clear, the technology platform is particularly importa.

The success rate of research and development is high, the industry is in the early stage of development, there are many potential druggable targets, and the targeting is stronger, and the success rate of precision medicine is high.

It can be expected that in the next 5-10 years, we may see the world's top 10 super blockbuster products in the field of cell gene therapy, and there may also be industry giants such as Genentech and Amgen in the field of biopharmaceutica.

01 CGT CDMO Industry Overview

The first question we want to discuss is why the CGT industry is more inclined to outsourcing?

The core reasons should be two poin.

Therefore, we can reasonably expect that in the future, the outsourcing rate of the CGT industry is likely to be higher than the CDMO outsourcing rate of the biopharmaceutical industry for a long ti.

Differences between traditional medicine and CGT CRO/CDMO

The second question is, how big is the industry space?

According to Sullivan's data in Heyuan Bio's prospectus, the global gene therapy CRO market will grow from US$400 million to US$710 million in 2016-2020, with a compound growth rate of 1

From another perspective, as shown in the figure below, the number of global R&D pipelines for cell gene therapy has exceeded 1,300 in 2020, most of which are still in the preclinical sta.

The compound growth rate of 30%-40% of the number of projects can also represent the growth rate of the industry to a certain exte.

However, in the long run, as more products are launched, the production process becomes more mature, and the production efficiency continues to improve, the cell gene therapy industry may see more and more therapies targeting major indications and first-line treatments, even if some companies are considered They will choose to transfer their production capacity back to commercial production, and the market space will also have a large room for improveme.

The third question is what should CDMO companies do, or how do we choose CDMO companies to invest in?

We want to make it clear that from the perspective of the domestic CGT CDMO market, it is still relatively ear.

Compared with small molecule and biopharmaceutical CDMO companies, CGT CDMO head companies will also have two advantages: integrated service capabilities and comprehensive technology accumulati.

In addition, we know that the entire cell gene therapy industry has many sub-fields, AAV (adeno-associated virus), lentivirus, adenovirus, oncolytic virus in cell gene therapy; CAR-T, CAR-NK in cell therapy, involving To solid tumors, universal cell therapy, e.

; broadly speaking, it is like the mRNA field that shines in this epidem.

There are many uncertainties in the development of various fields, and companies need to bet on the development direction of new technologi.

For example, the opportunity to focus on mRNA vaccines will usher in a wave of outbrea.

More than 50 new companies have been established in China in the past two yea.

Companies doing mRNA, including CSPC and CanSino, which have just received clinical approval for the new crown mRNA vaccine, as well as traditional vaccine giants such as Kangtai Bio, Zhifei Bio, and Watson Bio have all deployed mRNA technology through external cooperati.

Non-linear outbreak is one of the important characteristics of the innovative drug indust.

For CDMO companies, it is necessary to prepare technical reserves in various fields in advance, and to grasp the trend in time when the industry trend com.

Of course, for the leading CDMO companies In other words, as long as there are enough cooperating biotechs, it will be easier to cover various technical fiel.

In general, cell gene therapy CDMO is quite different from chemical drug CD.

Since the viral vectors used in cell gene therapy are active, there may be an order of magnitude difference in the activity of viruses produced by different companies, and due to the production ste.

The gap with purification efficiency will also bring about a gap in production co.

In addition, large CDMO companies can use jars of one or two thousand liters, and small companies basically use jars of no more than 100 lite.

The logic of thinking that the industry concentration will be very high is still smooth, but in the short term, because the top companies are still on the same starting line, the industry β is very high, and the industry compound growth rate is 30%-40%, so there is a certain forward-looking layo.

Several second-tier companies can enjoy the growth of the industry beta, and are far from entering the knockout sta.

02 Major domestic players

The main overseas players in the cell gene therapy CDMO industry are Lonza, Catalent, Thermo Fisher, and WuXi Ge.

In the domestic market, the main players include WuXi Pharma (with a strong overall quality system) and Heyuan Biotechnology (with a relatively high quality syste.

Early, the virus is better), GenScript (experience accumulated in nucleic acid synthesis, plasmids are better), and as shown below, Kanglong Chemical, Boten and Asymchem are also in this field There are layou.

(1) WuXi Pharma

WuXi Pharma was originally affiliated with WuXi AppTec's laboratory service business in the United Stat.

After the major adjustment of the business structure in Q3 last year, it was listed as an independent WuXi ATU busine.

The revenue in 2021 is 026 billion yuan, of which about 15% comes from Chi.

, 85% come from overse.

WuXi Bio's ATU business was originally mainly based on the testing business and cell manufacturing of laboratory services in the United Stat.

In the past two years, WuXi PharmaTech has expanded this business, including the acquisition of OXGENE and other expansion of adeno-associated virus (AAV) and sl.

The technical strength of the virus, the company has also repeatedly talked about the acquisition of the TESSA platform brought by OXGENE, which can increase AAV production by more than 10 times, of course, this also requires market verificati.

At present, WuXi's cell gene therapy CDMO pipeline has accumulated 74 projects, of which 2 late-stage clinical projects have been delayed in 2021, which also led to a decline in 2021, and is expected to be submitted in 202

In addition, in October and November 2021, 15,300 square meters of CDMO production capacity in Shanghai Lingang and 13,000 square meters of cell gene therapy testing capacity in Philadelphia, the United States will be put into production, and the production capacity will be greatly supplement.

In the future, China will also undertake more international custome.

ord.

(2) GenScript Biotechnology

Pengbo Bio, a subsidiary of GenScript Bio, is one of the leading companies in the domestic cell gene therapy CDMO indust.

Peng Bo Bio’s business includes biopharmaceutical CDMO and CGT CD.

In 2021, the revenue of 520 million yuan has doubled year-on-ye.

Among them, cell gene therapy CDMO achieved more than 200% grow.

GenScript's early experience in nucleic acid synthesis gives it unique advantages in plasmids, but another major advantage of GenScript is that it can do a large number of product tests and applications with the help of Legend Bio's platform, thereby helping the company to improve its products Therefore, the circle of competence of prosperous organisms beyond plasmids will continue to expand to all aspects of cell gene therapy CD.

For example, the technological breakthrough of its domestic magnetic beads can help the industry to greatly reduce the cost of separation and purification, and help reduce the production cost of cell thera.

, and contribute to improving access to medicines in the futu.

(3) and meta-biology

Heyuan Bio was established in March 2013 and has just been listed on the Science and Technology Innovation Boa.

In 2021, the revenue of 255 million yuan will increase by 76% year-on-year, the non-net profit will be 499 million yuan, a year-on-year increase of 57%, and the non-net profit rate will be 10
The company expects In 2022Q1, the revenue growth rate is 39%-50%, and the non-net profit growth rate is 15%-5

The business of Heyuan Biotechnology includes two parts: cell gene therapy CRO and CD.

The CDMO business includes three parts: Non-IND, IND-CMC and Pre-I.

The growth rate of gene therapy CRO business has been low in the past three years, but the CDMO segment has increas.

The speed is very fa.

In 2018-2021H1, the gene therapy CDMO business revenue was 191 million yuan, 283 million yuan, 102 million yuan and 725 million yuan, and the compound growth rate of revenue in 2018-2020 was 18
Jian et .

cooperated with IVD-CMC phase projects, the number of executions increased and the project milestones were further advanced, as well as the execution of clinical phase I/II production projects in cooperation with Innomic.

In addition, judging from the company's on-hand orders, oncolytic viruses account for two-thirds of the orde.

Although oncolytic viruses have developed rapidly in the past two years, there is currently no good commercial product to verify the commercialization in this fie.

The value belongs to the technical route and there is still great uncertainty, which is also a factor that needs to be tracked in the futu.

The IPO fundraising and investment project of Heyuan Bio is expected to start production in 2023, and the launch of new production capacity in 2023 will bring about accelerated revenue grow.

(4) Porton Bio

Proton shares began to deploy CGT CDMO field in 2018, mainly Suzhou Proton Bio is responsible for this part of the busine.

In 2021, Proton's cell gene therapy CDMO achieved revenue of 187 million yuan, an increase of 897% year-on-year, and orders in hand were 170 million yuan, an increase of 205% year-on-ye.

%, the company has 20 customers with orders, 12 companies have achieved revenue, 27 projects have orders, and 18 have reven.

Last year, the company established strategic cooperative relations with 6 custome.

In 2022, Proton will have 16,000 square meters of the second phase of the plant put into use, which will enable the company to maintain rapid growth in this part of the busine.

In general, WuXi, Pharmaron, Asymchem, and Proton are expanding new businesses relatively quickly, and can quickly form billion-level orde.

On the one hand, leading companies have strong capital strength to build production capacity, Recruiting talents and acquiring asse.

On the other hand, these companies have a huge customer base of pharmaceutical companies and the accumulation of reputation in the field of small molecule CD.

Some customers are willing to give opportunities to try when developing new businesses, thereby shortening the need for early developme.

time of customer accumulation and technology accumulati.

Finally, let’s talk about three risks in the indust.

The first is that key production equipment and core consumables are highly dependent on importers; the second is that countries are highly sensitive to genetic safety issues and microbial virus-related biosafety issues, and political risks need to be address.

It is more sensitive; the third is that the cost advantage and customer advantage of extending from upstream suppliers to midstream CDMOs such as Thermo Fisher may bring certain competitive pressure to other playe.