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The recent resurgence of COVID-19 and the pressure to prevent variant infections remain significant. Health Yuan and its subsidiary, Lizhu Group, recently announced that "Recombinant Novel Coronavirus Fusion Protein Vaccine" (hereinafter referred to as "Likang V-01"), jointly developed by Lizhu Monoclonal Antibody and the Institute of Biophysics, Chinese Academy of Sciences, has been approved for emergency use as a sequential booster immunization for novel coronavirus prevention, following a suggestion from the National Health Commission and review by the National Medical Products Administration. This provides a more flexible and scientific option for susceptible populations and is of significant importance in curbing the spread of the epidemic.

Industry insiders believe that the approval of Likang V-01 for emergency use as a sequential booster will further enhance Health Yuan's core competitiveness. If subsequently procured and used on a large scale by relevant national departments, it will have a positive impact on its performance, and the company's value will be re-recognized.

As a version 2.0 of the recombinant protein vaccine for COVID-19, Likang V-01 has several advantages.

At the 2022 Health and Industrial Technology Innovation Service Conference, Academician Zhong Nanshan, in his keynote speech on "Scientific Understanding of the Role of COVID-19 Vaccines in Epidemic Prevention and Control," reiterated the importance of vaccines in COVID-19 prevention and control, and mentioned the strategy of actively promoting the complementary advantages of sequential vaccines.

Recombinant protein COVID-19 vaccines have always been a key focus of the industry. What are the characteristics and advantages of Likang V-01, version 2.0 of the recombinant protein vaccine for COVID-19?

It is understood that Likang V-01 was jointly developed by Lizhu Monoclonal Antibody and the Institute of Biophysics, Chinese Academy of Sciences. The project started in July 2020 and received approval from the National Medical Products Administration for clinical trials in early 2021. Whether it's laboratory verification results or real-world clinical data, the safety and efficacy of Likang V-01 are among the best internationally. It is also effective against various variants, and the protective effect is broader after booster immunization. The main comparative advantages are as follows:

1. As a sequential booster for inactivated vaccines, Likang V-01 has demonstrated protection against Omicron through large-scale Phase III clinical trials, comparable to the self-boosting or heterologous boosting protection of mRNA vaccines, while its safety is significantly superior to mRNA vaccines;

2. Likang V-01 can be transported and stored in a 2-8℃ cold chain, and remains qualified for 6 months at 25℃. mRNA vaccines require ultra-low temperature storage; and production does not require a P3 workshop, a conventional GMP workshop can meet the requirements, having advantages in production, storage and transportation;

3. Compared with inhaled adenovirus vaccines, Likang V-01 has larger-scale safety data for the population; and Likang V-01 is administered through traditional intramuscular injection, without the need for special equipment at various vaccination sites;

4. Likang V-01 can be supplied on a large scale and has cost advantages compared to mRNA and inhaled adenovirus vaccines;

5. The vaccine industry chain is independently controllable. Currently, the company's bulk drug production line and preparation production line have passed the on-site inspection of the Guangdong Provincial Drug Supervision and Administration Bureau's vaccine production license, have the production conditions, and have obtained the vaccine production license. The bulk drug production capacity reaches 3.5 billion doses, and the preparation production capacity reaches 1.5 billion doses, which can ensure continuous and stable supply after approval.

6. Likang V-01 is a recombinant protein vaccine with an innovative molecular structure design. Based on the molecular design of RBD dimers in other protein vaccines, it innovatively integrates four parts: interferon, Pan epitope, RBD dimer, and Fc fusion protein, making Likang V-01 more effective and safer.

Usually, the adjuvant of a vaccine largely determines the efficacy and safety of traditional vaccines. Because Likang V-01 incorporates human interferon as a biological adjuvant in its antigen structure, it significantly enhances the level of virus-neutralizing antibodies and produces an effective cellular response.

Zhang Jinyang of Guosheng Securities stated in a recent research report that the advantages of sequential immunization are gradually becoming apparent, and recombinant protein vaccines have unique advantages. Compared with other vaccines, Likang V-01, whether for sequential boosting or basic immunization, has good safety and tolerability, and is safer than mRNA or adenovirus vaccines. Since the start of its research and development, Likang V-01 has steadily advanced its trial work, gradually verifying its excellent immunogenicity, safety, and protection against various variant strains.

We are very confident in achieving a certain market share both domestically and internationally.

Zhu Baoguo, Chairman of Health Yuan & Lizhu Group, emphasized, "Likang V-01 is the world's first to conduct a Phase III clinical trial of sequential boosting based on inactivated vaccines, obtaining clinical results with high protective efficacy against Omicron. Likang V-01 is particularly suitable for the subsequent booster market and for people with underlying diseases and high-risk groups (such as the elderly)."

It is worth mentioning that compared with the previously prevalent Omicron variant, the transmissibility and pathogenicity of the continuously mutating coronavirus have not weakened, and still pose a significant threat to the elderly and people with underlying diseases. On July 23, Zeng Yixin, Vice Minister of the National Health Commission, head of the Vaccine Research and Development Team of the State Council's Joint Prevention and Control Mechanism's Scientific Research and Technological Breakthrough Group, and academician of the Chinese Academy of Sciences, also stated at a press conference held by the State Council's Joint Prevention and Control Mechanism that "Currently, the vaccination coverage rate of the entire population and the population over 60 years old in China has been significantly improved compared to the past. However, there is still room for improvement, mainly in two aspects: firstly, the vaccination coverage rate of the elderly over 80 years old still needs to be improved; and secondly, the booster vaccination rate of the elderly still needs to be improved." Therefore, against the backdrop of the continuous mutation of Omicron, there is still a strong market demand for high-protection-rate COVID-19 vaccines. From a global perspective, vaccine distribution remains uneven, and there is still considerable room for improvement in vaccination rates.

It is reported that Health Yuan has made full preparations for the product's launch in terms of production, sales, and other aspects. In addition to the aforementioned production preparations, the company has also initially established a sales team for COVID-19 vaccines, and the relevant training for market academic promotion and marketing personnel has been initially completed. Lizhu has first-class commercialization capabilities and a complete and extensive terminal coverage. The company will adjust its sales policies and management methods in a timely manner based on the development of the epidemic and national prevention and control policies.

In addition, the company has been closely monitoring the mutation of the coronavirus and actively promoting the upgrading and iteration of COVID-19 vaccine products (including bivalent vaccines and broad-spectrum vaccines targeting the Omicron variant), and the existing research results have also shown positive effects. Subsequent research on mutant strains will mainly focus on the development of the next generation of COVID-19 vaccines, including Beta+Delta bivalent vaccines and bivalent vaccines containing the BA.5 variant.

It is reported that in addition to the sequential immunization included in the emergency use this time, the basic immunization of Likang V-01 has also submitted a listing application to the CDE, and the EUA materials of Likang V-01 in the Philippines, Indonesia and Malaysia have been submitted, and WHO certification is being carried out simultaneously.

Health Yuan's president, Yu Xiong, expressed confidence in achieving a certain market share both domestically and internationally.

The company's value will be recognized again.

Currently, the approval of Likang V-01 for sequential booster immunization emergency use has not caused significant fluctuations in the stock prices of Health Yuan and Lizhu Group. However, Mu Bai of "polypeptide chain" believes that this does not mean that the Likang V-01 vaccine has no value contribution to Health Yuan and Lizhu Group. "In fact, during the breakthrough process in the field of COVID-19 vaccines, the listed companies have significantly improved their R&D level, technical capabilities, industrialization maturity, and market strategy, which has greatly increased their investment value."

A research report from Founder Securities also stated that Likang V-01, as the company's first product to conduct a multi-center Phase III clinical trial globally, the smooth progress of its Phase III clinical trial has accumulated richer resources and experience in organizational management, partners, team capabilities, and registration applications for the company's subsequent internationalization of innovative drugs and more drugs conducting global multi-center clinical trials. It assumes that the price of Likang V-01 after listing will be 20 yuan/dose, and it is estimated that the annual sales volume from 2022 to 2024 will be 2 million doses, 10 million doses, and 20 million doses respectively, with sales revenue of 0.41 billion yuan, 2 billion yuan, and 6 billion yuan respectively. The net profit from 2022 to 2024 will be 1.646 billion yuan, 1.914 billion yuan, and 2.271 billion yuan respectively, maintaining a "strongly recommended" investment rating.

I noticed that the All-China Federation of Industry and Commerce recently released the "2022 Top 500 Chinese Enterprises" and its series of rankings, and Joincare Pharmaceutical Group Industry Co., Ltd. was ranked on the "2022 Top 500 Chinese Manufacturing Enterprises" list.

Over the years, Health Yuan has continuously focused on China's large health industry, paying attention to investment in innovative technologies and the construction of R&D platforms. Based on a mature R&D platform for innovative drugs and high-barrier complex preparations, it has carried out rich pipeline layouts around areas with significant clinical needs, such as respiratory, digestive tract, assisted reproduction, mental health, and tumors. It has developed and launched many blockbuster innovative drugs and high-barrier complex preparation products, strongly building the group's diversified product matrix and R&D drug pipeline. In recent years, it has also relied on multiple high-quality inhalation preparations to gradually break through the "bottleneck" development in the sub-industry, becoming the first enterprise in the respiratory drug field to break the international market monopoly, successfully achieving coverage of all categories of asthma and COPD inhalation treatment drugs for existing and R&D varieties, and quickly opening up and covering the domestic market through opportunities such as national negotiations and centralized procurement.

A recent research report from Guosheng Securities stated that the respiratory field is a key R&D area for Health Yuan, with continuous pipeline progress and multiple future highlights. Three inhalation preparations [Budesonide suspension for inhalation, large specification (2ml:1mg), Compound Ipratropium Bromide Solution for Inhalation (Shutanlin), Ipratropium Bromide Solution for Inhalation (Liwu'an)] were selected in the fifth batch of centralized procurement, ensuring the sales revenue of the inhalation preparation sector for the next three years. It is estimated that the company's net profit attributable to the parent company from 2022 to 2024 will be 1.537 billion yuan, 1.809 billion yuan, and 2.123 billion yuan respectively, with growth rates of 15.7%, 17.7%, and 17.4% respectively. Maintaining a "buy" rating.

Tan Guochao of Hu'an Securities also believes that, combined with the rapid growth of Health Yuan's respiratory preparations and equity incentive targets, the company's value needs to be recognized again.

In addition, Health Yuan's issuance of GDRs has recently been approved by the China Securities Regulatory Commission, and after completion, it can be listed on the SIX Swiss Exchange. CICC believes that the issuance of GDRs is expected to enhance the company's brand awareness overseas, improve its multi-channel financing capabilities, and further promote the company's internationalization process. (Zhang Gong)

Source: Du Chuang