Biomedicine is one of the most resilient industries in the entire secondary market, but the inflection point is difficult to fathom. This point, the three major markets in the United States and Hong Kong A have had enough cases of sharp rises and falls that can be used as proof.
But in many cases, this one-sided performance conceals the sustainable value of biomedicine itself: in most subdivided tracks, any company that has the strength to stand firm actually has one or more long-term value lines. As for the entry point for judging this value, from the perspective of business, it is the pipeline and products, and from the perspective of the nature of the pharmaceutical industry, it is the ability to accumulate research and development and the ability to open up the market in the future.
CanSino is a typical example of being universally misvalued. In the vortex, CanSino has its own long-termism and long-term value.
The cyclical fluctuations have been eliminated, and the compound interest value of technology will be released
Vaccines have a long history and are a typical track in the pharmaceutical industry. But at the same time, the continuous and in-depth research of human beings on diseases has led to the continuous emergence of innovative vaccines. This constitutes a prominent feature of the vaccine industry: ultra-long periodicity. One is the long-term research and development and testing process required by biomedicine itself, and the other is the emergence of new populations and new vaccines, so that human needs for prevention are always advancing in a growth-satisfaction cycle.
This means that the vaccine market itself is also an ultra-long cycle track that releases value slowly with demand and technological progress. Statista data shows that before the new crown, that is, as of 2019, the global vaccine market size was about 32.8 billion US dollars, and the compound annual growth rate since 2016 was very stable, around 6.4%.
CanSino is rooted in this soil. Since its establishment in 2009, CanSino has entered an ultra-long R&D cycle. Dr. Yu Xuefeng, Co-Founder, Chairman and CEO of CanSino Biologics, once mentioned in his speech that CanSino’s classic pipeline type, adenovirus vaccine, started to tackle tuberculosis at the end of 2011 and was applied to Ebola vaccine in 2015. In 2019, it quickly became the backbone of the fight against the new crown. From the perspective of development history, CanSino has just crossed an important ten-year node, and is relying on heavy varieties to start the next stage of growth.
This series of processes revolves around the R&D core of CanSino, which is also the fundamental value of CanSino. However, the sudden outbreak caused CanSino to fall into market volatility: responding to major public health and safety incidents is indeed a way to verify and realize the value of the vaccine industry, but the peak performance brought about by major fluctuations is at the cost of destroying CanSino’s original valuation anchor and growth system.
This has been misunderstood by the outside world as that vaccine companies are bound to the needs of the epidemic—in fact, CanSino is following its own research and development process, such as the mRNA vaccine that became famous because of the new crown, and its related synthesis and delivery technologies. Since 2018, CanSino The layout has been started since 2019, and the mRNA vaccine has been developed since 2019.
In addition, putting more energy and production capacity on the new crown vaccine has slowed down the original pace to a certain extent, and the impairment of epidemic assets is also the main reason for performance fluctuations. Fortunately, at this stage, the volatility has come to an end. Zhongtai Securities pointed out in the research report that the conventional varieties of vaccines have continued to recover this year. Whether it is the increase in the volume of new products or the progress of the research pipeline, the time to reevaluate CanSino has come.
It is not very complicated to reorganize its value, because CanSino's advantage is in the vaccine sector, which is visible to the naked eye. The underlying logic of the valuation of the vaccine sector, the key factors are technology platforms and technical achievements.
The reason is that, on the one hand, there is a huge difference between pharmaceutical products and daily consumption products such as fast-moving consumer products. The technological achievements, platforms, and process capabilities accumulated in the medical industry in the long-term R&D and productization process are important barriers and long-term barriers to the industry. Where the value lies, it is difficult to form similar advantages in a short period of time. Strong R&D is not only a long-term advantage in itself, but also a process of building advantages.
CanSino's recent achievements are constantly "refreshing the screen" is an example. On the afternoon of July 23, its recombinant herpes zoster vaccine (adenovirus vector) was approved for clinical trials in Canada. On the evening of July 27, its adsorbed tetanus vaccine received the "Notice of Drug Clinical Trial Approval" issued by the State Drug Administration. On August 8, CanSino announced the signing of the "Product Supply Cooperation Framework Agreement" with AstraZeneca, which will provide AstraZeneca with contract development and production services on mRNA.
These achievements are all based on the platform advantages formed by CanSino's years of research and development, and stand on the world's first-line stage.
For example, my country's first self-developed quadrivalent meningococcal conjugate vaccine - CanSino Manhaixin®, is supported by the core technology platform of CanSino carrier protein and uses the CRM197 carrier with independent intellectual property rights. An enterprise with the capability of industrialization of this carrier has broken the long-standing dilemma that there is only TT as a carrier protein route in China. At the level of adenovirus vectors, CanSino has explored the reproducibility from gene editing to large-scale production, which is the value of the platform and the "compound interest" of technology.
On the other hand, strong technical background also makes CanSino's own commercialization and cooperation development smoother.
The cooperation agreement with AstraZeneca itself is based on the differentiated advantages of CanSino and CDMOs: CanSino's R&D strength can better match the comprehensive needs of AstraZeneca. In addition, CanSino has cooperated with Indonesia to jointly promote innovative vaccine cooperation, and has become a shareholder of SGB Group in Malaysia. The latter is the only company in Malaysia that has the qualification to operate vaccines, and Malaysia is also a member of PIC/S, so it can become Kangxi A fast channel for Nuo to enter the international market. In terms of commercialization, CanSino has already made forward-looking plans for its own route, adjusted strategies in a timely manner to reduce costs and increase efficiency, and increased the importance of team building to prepare for the release of products.
In the first half of the year, the overall number of batches issued by the vaccine industry was 2,087, a year-on-year increase of 8.1%. Southwest Securities pointed out that the main target worth choosing in the vaccine industry requires a leader with heavy-weight pipelines, a fast pace of volume, and excellent long-term technical capabilities. CanSino, is a standard sample.
The structure of the secondary market is positive, and the upward momentum is sufficient
CanSino’s image is also built against the overall background of the medical industry. The recent anti-corruption attacks by the regulatory authorities have continuously provoked the nerves of a large number of old companies on the track, and also verified how external forces can seriously affect stock prices.
However, in this situation, the advantages of CanSino as a technology research and development-driven enterprise have become clearer.
On the one hand, its value is not similar to that of a sales-driven type. Instead, it will benefit from the suppression of unhealthy competition by medical anti-corruption in the process of increasing the volume of its own new products, and enjoy a clearer competitive environment. Huachuang Securities pointed out that under the background of anti-corruption, "drugs and consumables with better clinical data will be more favored by doctors, and the model of relying on sales alone will become increasingly unfeasible in the market." Driven businesses tend to be more valuable.
From the first day of its establishment, CanSino Biologics has positioned itself as a global vaccine supplier rooted in China, committed to providing innovative, high-quality, and accessible vaccines to the world. growth code. For more than ten years, CanSino Biologics has established a pipeline of 18 innovative vaccine products covering more than 10 indications, relying on five world-leading technology platforms, laying a solid foundation for the company to build an industrial system that meets international standards.
On the other hand, the original intention of the anti-corruption policy is to give high-quality scientific and technological innovation companies more opportunities to speak out with their strength. This can also be seen from other trends in the industry. Last month, at the State Council Information Office's "Authoritative Department Talks Start" series of themed conferences, the relevant person in charge of the State Food and Drug Administration made it clear that it will continue to strengthen support for R&D and innovation, and focus more resources on products with clear clinical value.
In addition, the State Council proposed in the "Opinions on Further Optimizing the Foreign Investment Environment and Enhancing the Attraction of Foreign Investment" to accelerate the implementation of foreign investment projects in the field of biomedicine and to encourage foreign-invested enterprises to carry out clinical trials of overseas marketed cell and gene therapy drugs in accordance with the law. test. This has promoted the layout of a series of cooperative projects of CanSino.
Finally, the revaluation of CanSino’s secondary market has also benefited from the major changes that have occurred and are brewing in the Hong Kong Stock Exchange. The core of HKEx’s move is to improve market liquidity and pave the way for the return of corporate value. For example, the Hong Kong Securities and Futures Professionals Association has responded to its leaders’ activities to collect public opinions and demanded that the stamp duty on stocks be abolished.
In terms of capital circulation, on August 18, the China Securities Regulatory Commission clearly pointed out in an answer to reporters’ questions that it is necessary to coordinate and increase the activity of A shares and Hong Kong stocks, and will add RMB stock trading counters to the Hong Kong Stock Connect to support the development of the Hong Kong market. In the future, the foundation for the restoration of the capital side of the Hong Kong stock market has begun.
This brings me back to the topic at the beginning of the article. The market elasticity of medical companies is high, and it is very easy to form an upward momentum from the bottom of the market. At this stage, the selling pressure brought about by CanSino’s holding reduction has clearly come to an end, and the bottoming has been completed. In addition, the upward trend of the 23H2 industry prosperity is relatively clear. For example, the CanSino epidemic meningitis vaccine has been significantly increased, and the market sentiment is about to change.
Another point is that the long-term trend of the Hong Kong stock CanSino Biologics is similar to the Hang Seng Medical and Health Index. The latter has repeatedly bottomed out below 3,000 points, and it is currently resonating with the trend of CanSino, showing signs of rebound.
German stock god Andre Kostolani has a dog-walking theory: the relationship between value and price in the stock market is like the relationship between people and dogs when walking the dog. Sometimes it is higher than the value, sometimes it is lower than the value, but sooner or later it will return to the value; just like when walking a dog, the dog sometimes runs in front of people, sometimes runs behind people, but generally not too far away from people. When walking the dog, people usually walk forward slowly, while the dog hops left and right, east and west, just as the fluctuation of stock prices is often much greater than the fluctuation of fundamentals. Trend investors like to run after the dog (price); value investors like to follow people (value), patiently waiting for the dog to get tired and return to its owner. Sometimes, the dog runs farther and farther away from its owner than you can tolerate, making you wonder if the rope has snapped. In fact, the rope is only sometimes longer than you think, but it never breaks.
We should pay attention to value investment when investing, and we should not pay too much attention to short-term price fluctuations. Excessive attention to prices will consume more energy, cause unnecessary mood swings, and form bad operating habits. Holding the value in hand, why bother to care too much about fluctuations. Under the resonance of multiple factors, it can be predicted that the interim report will become an important node in the transformation of CanSino. In the long run, the "value depression" of CanSino has reached the eve of the dawn when the value returns to the right track.
Source: Songuo Finance