After burning 520 million RMB in 9 months, How does Rikke Make a sprint for “The first HPV vaccine in Hong Kong”?
The HPV vaccine business has been a long road ahead.The author | paniculate swallowwort root editor 丨 Li Yiming source | mustang financial “HPV vaccine business how to make money?”While the subject has long been discussed, Reco Bio, which recently filed a prospectus with the Hong Kong Stock Exchange, offers another lesson: how expensive is the HPV vaccine business?The company, founded in May 2012, is one of the few companies that can develop new adjuvants on its own.The company has a total of 12 vaccine pipelines, including HPV vaccine, COVID-19 vaccine, adult TUBERCULOSIS vaccine, hand, foot and mouth disease vaccine, influenza vaccine, but mainly focuses on the development of HPV vaccine candidates.Nearly nine years after its founding, the company has yet to commercialize its products and lost 520 million yuan in the first nine months of 2021 alone, with research and development costs reaching 372 million yuan in the same period.According to the World Health Organization, cervical cancer is the second most common cancer in women worldwide, affecting more than half a million women and killing an estimated 342,000 in 2020.This year, about 53,000 people died of cervical cancer in China, accounting for 18% of female malignant tumor deaths, which has become a major hidden danger and hazard to the health of millions of women.The HPV vaccine is gaining acceptance after it was shown to be effective in reducing and preventing cervical cancer.Who’s Global Strategy to Accelerate the Elimination of Cervical Cancer recommended that 90% of girls be vaccinated against HPV by the age of 15 by 2030.Countries are also responding, with 110 including HPV vaccines in their routine national immunization schedules by the end of 2020.HPV vaccines have been approved for male immunization in the United States, The United Kingdom, Australia and other countries.Currently, there are three HPV vaccines available in the international market, namely glaxoSmithKline’s bivalent HPV vaccine, Merck’s quadrivalent and nine-valent HPV vaccine.Since 2011, however, GLAxoSmithKline’s sales have been declining, leaving MSD alone with the majority of the market.China’s HPV vaccine industry started late, and currently relies on imports.Flavibio, which represents Merck’s HPV vaccine, is worth more than $300 billion.At the end of 2020, Zhifei bio renewed the exclusive agency of Merck.Since the HPV vaccine was launched in China, the cumulative number of batches issued has reached 27,322,800 vials per dose.According to the report of Qianzhan Industry Research Institute, according to the census combined with the main application population of HPV vaccine in China and census data, excluding about 10 million people who have been vaccinated, it can be estimated that the current stock demand gap of HPV vaccine is still 320 million people.Under the demand, domestic HPV vaccine research and development is also moving.More and more companies are pouring into the HPV vaccine circuit, including Reco Bio, Vowatson Bio and Shenzhou Cell, which have related products in clinical studies.In 2020, Wantai bivalent HPV vaccine was approved for marketing, officially opening the era of domestic HPV vaccine.In the development of a bivalent HPV vaccine, data from the Phase III clinical trial of Watson Biology has been unblinded.Although the indigenous bivalent HPV vaccine has initially entered the market.Due to strong demand, HPV vaccines are always out of stock and the market is highly structured.In contrast, quadrivalent and nine-valent HPV vaccines have higher protection rates and thus have more market prospects, but due to production problems, there is a serious shortage of supply.REC603, a recombinant HPV nine-valent vaccine currently in phase III clinical trials, is the core product of REC603, a recombinant HPV nine-valent vaccine that is currently in phase III clinical trials.One of Reco’s strengths is that it is one of the few companies that can develop new adjuvants on its own.This means that Reco bio is able to discover and deploy novel adjuvants in the next generation of vaccine candidates without relying on adjuvant suppliers.The favor of capital followed.From March 2019 to June 2021, the company completed 4 rounds of financing within 2 years. With the advancement of the company’s R&D pipeline, the company’s valuation increased to 3.686 billion yuan in Round B in December 2020.In June 2021, Rikbio announced the completion of round C financing of about 1 billion yuan, which was jointly led by Qingchi Capital and Temasek, and continued to be invested by Kinglink Capital and Sequoia Capital China Fund. The company’s round C financing valuation once climbed to 8.965 billion yuan.The HPV vaccine is one of the most commercially viable vaccines in the world.In 2020, the global market size was $4.2 billion, accounting for 11.5% of the total global vaccine market in terms of production. By the end of 2020, the output value of the domestic HPV vaccine market reached 13.1 billion yuan, accounting for 17.4% of the total output value of the Chinese vaccine market.The demand for HPV vaccine in China is expected to maintain high double-digit growth, and the market size is expected to reach 69 billion yuan by 2030.But in a crowded HPV vaccine development track, can Reco Survive?”First of all, it’s clear that Reco bio has a first-mover advantage.The logic of the vaccine industry is that the Matthew effect, in which the first mover wins the market, stays there for a long time.With its first-mover advantage, established sales channels in advance, resulting in scale effect and slowly built industry barriers.Since then, both revenue and profits are bound to quickly close to the head of the enterprise.”Industry analysts pointed out that, second, Reco bio’s closest vaccine to commercialization is the current gap is large nine-valent vaccine, which is its product advantage.The frost Sullivan report, a consultancy, predicts that China’s first HPV vaccine will be approved in 2017.Since then, the market size of HPV vaccine has grown to 13.1 billion yuan in 2020 and is expected to reach 69 billion yuan by 2030.Among them, nine-valent HPV vaccine will become the mainstream product and occupy the largest market share.Currently, the Chinese HPV vaccine market is mainly dominated by imported products, and from the current clinical research and development progress, there are 4 domestic companies that have entered the clinical phase III of nine-valent HPV vaccine products in China.Rike bio, Kangle Guard, Bowei Bio and Wantai Bio.The nine valent HPV vaccines of these four companies have entered phase III clinical trials, and the patient recruitment of these four companies has been basically completed, which has opened a large gap with other entrants.Among them, suitable for the age of 9-45 years old products only Ruike biological, Bowei biological two.Thirdly, The clinical development area of Reke Biological Company is the high-incidence area of HPV infection — Henan, Shanxi and Yunnan, of which Henan is the main “position”, accounting for half.The characteristics of the largest number of enrolled subjects and the high incidence of cervical cancer in the enrolled region may accelerate the clinical work of Recco to reach the clinical end point as soon as possible, thus helping it win the short-term battle.However, at present, Ruike biological products are not commercialized.The company is currently building an HPV vaccine production base in Taizhou, Jiangsu Province, with a design capacity of 5 million doses of HPV nine-valent vaccine or 30 million doses of HPV bivalent vaccine per year. The construction of the HPV vaccine production base in Phase I is expected to be completed by the end of 2022.The project is expected to begin trial production in October 2023 and officially enter operation in 2024.Commercialization is still some way off.With the expansion of losses and the uncertainty of commercialization, the products fail to be commercialized and it is difficult to make blood by themselves. Therefore, funds have become a big worry for Ruike Biology.In 2019 and 2020, The loss of Rike Bio reached 138 million yuan and 179 million yuan respectively.In the first nine months of 2021, the deficit reached 520 million yuan (72.49 million yuan in the same period last year).The r&d costs in the same period amounted to $63.3 million, $131 million and $372 million respectively.According to the prospectus, Reco plans to use the proceeds for “research, development, production and commercialization of HPV vaccine products,” “ReCOV,” “other vaccine candidates,” “further strengthening research and development capabilities and improving operational efficiency,” and to supplement working capital.It will continue to generate net losses for the foreseeable future and may not be able to achieve or maintain profitability, so the business is entirely dependent on financial support from the early investors.Besides money, there is time.Reco bio’s financial outlook depends on the successful development, approval and commercialization of the clinical and preclinical vaccine pipeline.But vaccine development is notoriously long, costly and uncertain.Vantai bivalent human papillomavirus vaccine “Xinkoning” was officially launched in China in May 2020 after 18 years of research and development.According to the prospectus, Reco bio is currently conducting a phase III clinical trial in China and is expected to recruit 15,000 subjects. As of the disclosure of the prospectus, only 1,500 subjects were recruited.After the recruitment is completed in 2021, the three-dose vaccination will be completed in the first half of 2022, and the BLA application will be submitted to sFDA in 2025.The company is also stepping up clinical trials of its nine-valent HPV vaccine, and it is unclear who will be the first to do so.Policy is a double-edged sword for Reco bio.”On the one hand, after several negative events such as the ‘fake immortality vaccine’, the regulatory authorities have formulated a series of laws and regulations on vaccine research and development, product registration, production, production inspection, distribution and abnormal reaction handling.Relevant policies supporting domestic substitution are also constantly introduced, which is undoubtedly good news for Reco bio.”On the other hand, speeding up the high-quality development of domestic vaccines comes at a time when the industry is highly regulated and regulations may change, which could affect the approval and commercialization of vaccine candidates, industry analysts said.This also greatly increases the uncertainty of the commercialization of Reco biology.Have you been vaccinated against HPV?What about the domestic vaccine business?Let’s talk in the comments section.