[Good Companies of China] IPO of AIM Vaccine: Securing Technology Advantage with High R&D Input

2021-09-15 Source:Sina Finance

[Introduction] As China’s economic and social development enters a new stage with more emphasis on high-quality and sustainable development and more focus on social equity and well-being of the people, the standards for capital market investment and company value evaluation should also progress with the times. For this purpose, Sina Finance is looking into company value with new ideas and new perspectives, in search of good companies of China contributing to scientific and technological progress, promoting the prosperity of market economy, and facilitating the lives of the people, to share investment opportunities in new driving forces and new economic fields.


On September 12, AIM Vaccine, China’s No.1 private-owned vaccine industrial group, submitted its prospectus to the main board of HKSE, planning to use raised fund for enriching vaccine R&D pipelines, constructing production facilities, sales and marketing campaigns, with Goldman Sachs, CICC, China Securities International, and MACQUARIE as co-sponsors.


As a leading enterprise of China’s vaccine industry, AIM Vaccine is the only Chinese vaccine manufacturer with mRNA platform technology and a vaccine in clinical trials and under development using mRNA technology. This technology advantage has on the one hand secured a high market share for AIM Vaccine, and on the other hand increased its R&D investment. In the first half of 2021, the proportions of R&D expenditure of AIM Vaccine reached as high has 20.8%, up by 12.1% year-on-year.

Due to the expansion of market demand and an increase in policy support, the revenue of AIM Vaccine continues to increase. In 2020, its revenue grew considerably by 72.01% on a year-on-year basis to reach 1.64 billion yuan. In the first half of 2021, its revenue went up by 26.49% year-on-year to 674 million yuan.


With 60% of Revenue from Rabies Vaccine for Human Use, AIM Vaccine Seizes Market Opportunities with Vaccine Combinations under Research


According to the prospectus, being China’s No.1 private-owned vaccine industrial group, AIM Vaccine’s business scope ranges from R&D and manufacturing to the entire commercialized value chain, with a lot release amount of about 60 million doses achieved in 2020. Also, AIM Vaccine is the second largest vaccine manufacturer in China (only next to CNBG) and one of the first two Chinese human vaccine companies granted with P3 laboratory construction permit according to the Fourteenth Five-Year Plan of China.


By the first half of 2021, AIM Vaccine has commercialized eight vaccine products targeting six types of disease, including a rabies vaccine for human use (Vero cell), two recombinant hepatitis B vaccines (high dose and low dose), two inactivated hepatitis A vaccine (human diploid cell) (high dose and low dose), live attenuated parotitis vaccine, HFRS vaccine and meningococcal polysaccharide vaccine.


Among them, the primary source of AIM Vaccine’s revenue is rabies vaccine for human use (Vero cell) and recombinant hepatitis B vaccine (hansenula polymorpha), which are taking the lead in the Chinese market. According to the lot release amount of 2020, rabies vaccine for human use (Vero cell) and recombinant hepatitis B vaccine (hansenula polymorpha) accounted for a market share of 24.7% and 59.4% respectively.


In recent years, these two vaccines have contributed to more than 80% of the AIM Vaccine’s revenue. In the first half of 2021, rabies vaccine for human use (Vero cell) reached a sales revenue of 404 million yuan, accounting for 60.1% of the total revenue, while recombinant hepatitis B vaccine (hansenula polymorpha) reached 218 million yuan of sales revenue and accounted for 32.5% of the total revenue.


As opportunities emerge in the vaccine market against the backdrop of COVID-19, AIM Vaccine has started to deploy a strategic plan of diversified vaccine combinations with its strong R&D ability. By the first half of 2021, AIM Vaccine has been developing four vaccines against COVID-19, one bivalent hand-foot-and-mouth disease vaccine (EV71-CA16), three pneumococcal vaccines, three combined vaccines (DTcP, DTaP and DTP-Hib), and several other vaccines with market potential.


With the adoption of mRNA, inactivated virus, recombinant adenovirus vector and recombination protein technologies, AIM Vaccine’s COVID-19 vaccine combination consists of four vaccines under research. The first mRNA vaccine under research is one of the three domestic mRNA COVID-19 vaccines being developed, which are currently in clinical trials; the second is a second-generation Delta-specific inactivated vaccine; the third is a potential broad-spectrum COVID-19 vaccine targeting various coronaviruses (e.g., SARS-CoV-2, SARS and MERS); and the last is a recombination protein vaccine which may become the first COVID-19 vaccine based on nanostructured recombinant proteins, and is among the first batch of domestic vaccines against major variants of COVID-19.


Its pneumococcal vaccine combination consists of three vaccines under research for pneumococcosis. The first is PCV13, a vaccine under development and in Phase I clinical trials, which is planned to be launched in 2024; the second is a PCV20, a vaccine under development with preparations underway for submitting clinical trial application by the fourth quarter of 2021, which may offer better protection than PCV13 and PPSV23; and the third is PPSV23, also a vaccine under development and in Phase I clinical trials, which is planned to be commercialized in 2023.


EV71-CA16, a bivalent HFMD vaccine under preclinical research, is the world’s first potential bivalent HFMD vaccine under research targeting EV71 and CA16 strains. As an innovative vaccine, it can make for the deficiency of the globally commercialized HFMD vaccine that can only resist EV71 strain. According to plan, its application for clinical trial will be submitted by in fourth quarter of 2021.


Other vaccines under research mainly include DTP-based combined vaccines (DTaP, DTcP and DTP-Hib), three rabies vaccines for human use, one MCV4 vaccine, two flu vaccines, two HPV vaccines (including HPV2 and HPV9), one herpes vaccine and one RSV vaccine. With its comprehensive layout of vaccine combinations, AIM Vaccine has enriched its product matrix to seize market opportunities.


Establishing Industry-leading Technology Roadmap with R&D Expenditure Ratio Exceeding 20%


According to the data of China Insights Consultancy cited in its prospectus, AIM Vaccine is the only Chinese vaccine enterprise owning all five verified human vaccine platform technologies worldwide, including bacterial vaccine platform technology, viral vaccine platform technology, genetic engineering vaccine platform technology, combined vaccine platform technology and mRNA vaccine platform technology.


The vaccine industry is a technology-driven industry. To consolidate its technology advantage, AIM Vaccine has been increasing the ratio of its R&D input year after year. From 2018 to 2020 and in the first half of 2021, its R&D expenditure is 56 million yuan, 99 million yuan, 158 million yuan and 140 million yuan respectively, accounting for 5.1%, 10.4%, 9.6% and 20.8% of its total input. The amount of its R&D expenditure in three years adds up to over 300 million yuan. According to the prospectus, the R&D team of AIM Vaccine mainly includes two vaccine research institutions (AIM Explorer and LIVERNA) and the respective R&D teams of four operating subsidiaries (i.e., AIM Hissen, AIM Convac, Rong’an Bio and AIM Vacin), with a R&D management center established at the group level, to coordinate and supervise all R&D activities of the research center and operating subsidiaries.


In addition, AIM Vaccine has enhanced its R&D ability through acquisition and cooperation. On the one hand, AIM Vaccine has merged with LIVERNA through acquisition in May 2021. LIVERNA is one of the only three Chinese companies with COVID-19 mRNA vaccine in clinical trials, and owns patented mRNA platform technology covering drug design, production and delivery. Through this merger, AIM Vaccine has not only obtained a mRNA COVID-19 vaccine under research for clinical development, but also absorbed industry-leading mRNA platform technology as well as the practical experience and expertise of top-notch mRNA pharmaceutical scientists. On the other hand, AIM Vaccine has cooperated with Shanghai Public Health Clinical Center on the development of two new recombinant adenovirus broad-spectrum vaccines against coronavirus (including COVID-19 and its variants) and flu, which are still under research. Shanghai Public Health Clinical Center is the WHO Collaborating Center for Clinical Management, Training and Research on Emerging and Re-emerging Infectious Diseases, one of the first Chinese institutions with P3 laboratory, and a most distinguished institution of the world in the field of infectious diseases. It has a research team consisting of over 200 scientists (including world-class etiologists, epidemiologists and vaccinologists and immunologists).

(Reported by: Caro, Public Company Research Institute, Sina Finance)