The stock price dropped after the product was launched, what will KEYMED BIO-B (02162) use to boost the next round of valuation after the commercialization benefits are realized?

On September 12th, KEYMED BIO-B (02162), one of the two twin stars in the domestic IL4R monoclonal antibody field, announced the approval of its core product Sipuchibai monoclonal antibody (Kangyueda) in China, becoming the second drug targeting IL-4R globally after Sanofi's star product Dupilumab monoclonal antibody. Then, on September 18th, Professor Zhang Jianzhong of Peking University People's Hospital issued the first prescription for Sipuchibai monoclonal antibody nationwide, marking the official entry of the drug into the clinical application stage. In less than a week from approval to the first prescription, for Kangnoya, which had just started product commercialization, it can be said to be efficient, reflecting Kangnoya's sense of urgency in commercializing Sipuchibai monoclonal antibody. In the secondary market, investors reacted positively to the news of Kangnoya's first product commercialization. Due to high market expectations for the company's product launch, coupled with the disclosure of the company's interim report on August 27th, Kangnoya has seen a sustained upward trend, with the stock price rising from HK$32.05 on August 27th to a high of HK$41.00 on September 16th, an increase of 27.93% within the period. And after 4 months, Kangnoya's stock price once again crossed the HK$40 threshold. With the good news landing, is it a bad sign? In fact, this round of Kangnoya's stock market trend is more evident in its trading volume. It can be observed that on August 27th, the company's stock traded only 302,800 shares in the secondary market, but after the interim report was released that day, Kangnoya's stock trading volume quickly surged to over 2 million shares from August 28th to 30th. Then in September, on the day when Kangnoya announced the approval of Sipuchibai monoclonal antibody, the trading volume of the stock that day exceeded 3 million shares, reaching 3.536 million shares. Before this, there were only 2 days in September when Kangnoya's trading volume was below 1 million shares, with the rest all above. From the trading volume data, it can be seen that the core of the trading between the buying and selling parties revolves around Kangnoya's interim report, and the rising stock price is a product of the bullish anticipation of the landing expectation of the core product Sipuchibai monoclonal antibody. With the good news landing, the bulls lose support in the short term. According to the data, on September 16th and 17th, the short selling ratio of Kangnoya rose significantly compared to the previous trading days, reaching 29.78% and 36.00% respectively, and then on the 18th, there was a large volume of selling, with Kangnoya's trading volume reaching 2.283 million shares that day, a significant increase from the previous two trading days of 690,000 shares and 150,000 shares, indicating that large funds unloaded in bulk that day causing a rapid and significant decline. Looking at the broker positions over the past 10 days, the Shanghai-Hong Kong Stock Connect was the main seller, with a cumulative net selling of 2.2025 million shares. On September 20th and 23rd, Kangnoya's market trading volume continued to decline, reaching 1.296 million shares and 1.165 million shares respectively. Especially on September 23rd, the stock showed a trend of declining volume and price, with the largest price drop of 9.56% that day, a maximum decline of 12% in 3 days, indicating a decrease in the willingness of funds to buy, reflecting a lack of new valuation support points for Kangnoya in the short term. From a technical perspective, Kangnoya's stock price is currently entering the "MACD death cross" zone, indicating a difficult trend in the short-term stock price decline. How big a slice of the cake can the "second in the market" take? From Kangnoya's pipeline disclosed in the interim report, the company currently only has one commercialized indication for Sipuchibai monoclonal antibody. In addition, the indications for chronic sinusitis with nasal polyps and seasonal allergic rhinitis for Sipuchibai monoclonal antibody are still in the NDA stage. Apart from Sipuchibai monoclonal antibody, the progress of the company's other pipeline products is only in phases II/III. In other words, in the short term, Sipuchibai monoclonal antibody needs to rely solely on the commercialization of a single indication to support Kangnoya's entire company valuation. On the commercialization path of Sipuchibai monoclonal antibody, it will always be intertwined with direct competition with Dupilumab monoclonal antibody. In other words, how much of the domestic market cake can be snatched from Dupilumab monoclonal antibody will directly determine Kangnoya's future valuation. From the perspective of the main competitor Sanofi, in recent years, Sanofi has experienced research failures in BTK inhibitors and other products, and the company itself is also downsizing, with a growing focus on Dupilumab monoclonal antibody. Currently, as the most successful target in the TH2 pathway, Sanofi's Dupilumab monoclonal antibody has been approved for atopic dermatitis and asthma indications. After the success in chronic urticaria and COPD last year, Dupilumab monoclonal antibody is on the rise in 2024 and has become the king of new drugs in the field of self-immunity, with sales of $6.66 billion in the first half of this year, replacing Omalizumab as the new king in the field. In the domestic market, Dupilumab monoclonal antibody was included in the national medical insurance catalog just 5 months after its launch in China, becoming the only targeted biologic agent for moderate to severe atopic dermatitis in the new medical insurance catalog. Sales of Dupilumab monoclonal antibody have soared to over 1.8 billion yuan in 2022, reaching 1.6 billion yuan in the first three quarters of 2023, demonstrating the product's leading position in terms of commercialization. It is understood that without a head-to-head research comparison, the clinical performance of the two products in the indication of moderate to severe atopic dermatitis in Chinese adults has its own advantages, and both can meet the current treatment needs in the domestic market. In terms of clinical administration, both are administered by subcutaneous injection once every two weeks. Therefore, without a head-to-head study showing better efficacy and safety and no advantage in administration, in order to capture the market, Sipuchibai monoclonal antibody can only rely on lower prices. As mentioned earlier, Dupilumab monoclonal antibody has been included in the national medical insurance, with a terminal price in the hospital of 2780.8 yuan for 300mg:2ml per vial (pre-filled) and 4077.52 yuan for 200mg (1.14mL) * 2 vials per box. And Sipuchibai monoclonal antibody, due to its approval time, has not yet entered the medical insurance this year, with a current market price of 2488 yuan per box for 300mg (2ml) per vial (subcutaneous injection), and a buy-two-get-one-free policy, equivalent to 1659 yuan per vial. The aggressive pricing strategy reflects both Kangnoya's confidence in its cost side and its sense of urgency in capturing the market. In terms of commercialization teams, Kangnoya expects its core commercialization team size to exceed 250 by the end of 2024, which is far from Sanofi China's huge team, soThe only hope for Sipuxibaidankang to overtake in the bend is to secure next year's medical insurance quota through faster hospitalization by trading price for quantity. Looking at the current situation where the commercial pricing of Sipuxibaidankang is lower than the medical insurance pricing of Dupliyoudankang, the former's pricing after entering medical insurance will only be lower, not higher. This also reflects Conoa's market strategy, which is to first compete by forcing down the price of Dupliyoudankang through low pricing, and secondly, to block the overtaking position of newcomers by squeezing the profit margin in the track.Because in addition to Dupilumab, many companies such as AstraZeneca, AKESO, CannoYa, Qiansheng Biology, Maiji Biology, and Hengrui are also focusing on the IL-4R target. Moreover, products targeting IL-4R from AKESO, Zhixiang Jintai, Qiansheng, Jiangsu Hengrui Pharmaceuticals, etc., have already been completed or entered Phase II clinical trials, with research and development progress lagging behind CannoYa by less than 2 years. However, CannoYa's proactive price reduction at the commercial level also means giving up some product profits, which obviously does not receive support from the secondary market. Also, the logic of exchanging price for volume in the early stages of commercialization has not been validated by market data, which will further lower the company's valuation. For CannoYa, the medical insurance negotiation at the end of this year is particularly crucial. At the company level, this is a key prerequisite for whether the Dupilumab pricing strategy of "exchanging price for volume" by Smith Kline can be successfully implemented; at the secondary market level, investors can obtain before and after market sales growth data of Dupilumab before and after medical insurance negotiations after the mid-year report next year. Only data that meets or exceeds expectations can truly boost CannoYa's valuation.