"Soon to lay eggs, kill the chicken."
This is the evening of December 5, appeared in the Watson biological stock bar in a comment. Until late at night, Watson Biologicals' stock bar was still abuzz. Some investors scolded the management of Watson Biological "disregard for the interests of shareholders", some investors state that "believe in the management", there are investors can only be anxious in the bar in the future of Watson Biological stock price direction.
As a leading stock in the concept of biological vaccines, Watson Biological has always been favored by retail and institutional investors. Behind the investor controversy, Watson Biologicals released a series of announcements on the evening of December 4, said: 1.14 billion yuan to transfer the subsidiary Shanghai Zerun Bio-technology Company Limited (hereinafter referred to as "Shanghai Zerun") 32.6% of the equity, is no longer the controlling shareholder of the Shanghai Zerun.
Shanghai Zerun Biologicals was founded in 2003, engaged in HPV vaccine (cervical cancer vaccine) research and development for many years. 2011, Zerun Biologicals 2-valent HPV vaccine research and development project to obtain the approval of the State Drug Administration clinical trials of new drugs in 2012 formally became a controlling subsidiary of the Watson Biologicals; in 2017, its 9-valent HPV vaccine also got the approval of the clinical trials of new drugs.
As the layout of Watson Biological HPV vaccine market is an important hand, Shanghai Zerun controlling stake in the transfer program as a stone, stirring up a thousand waves.
On the afternoon of December 5, Watson Biological held an investor conference call, the company's chairman Li Yunchun and a group of executives attended. This conference call, an investor sharp question Li Yunchun: the transfer of equity whether there is transfer of benefits, whether it is passive sell equity, can change the general manager and other issues. The evening of the same day, Watson biological senior responded to the media late at night, said, will continue to maintain communication with investors, try to strive for understanding.
65.14%, is the current Watson biological shareholding of Shanghai Zerun biological, which means absolute control. In the official website of Shanghai Zerun, the company's LOGO prefix has "Watson Biological" a few big words.
This is the Watson biological management to make the sale of shares to break the plan. December 4, Watson biological released a series of announcements announced that the proposed transfer of 32.60% of the equity of the Shanghai Zerun, after the completion of the transfer of the Zerun biological is no longer a subsidiary of the company's holding.
According to the announcement, one of the receiver Zibo Yunze Venture Capital Partnership (hereinafter referred to as "Zibo Yunze") was established less than 20 days, the main partner of Ningbo to Cheng Venture Capital, Xi'an Taiming equity investment. Another receiver is Yongxiu Guanyu Zhaode Equity Investment Fund (hereinafter referred to as "Yongxiu Guanyu"), which was established in June 2019, and the main partners include Shanghai Guanyu Investment and Hangzhou Taige Equity Investment.
It is worth noting that behind the two major counterparties, there is another listed company: Tiger Pharmaceuticals.
Enterprise search data show that Zibo Yunze's shareholding ratio, Xi'an Taiming equity investment accounted for 99.9%. Xi'an Taiming equity investment behind the shareholders for a kind of investment institutions, including Shanghai Orient Securities Innovation Investment Company, Shanghai Venture Capital, Suzhou Industrial Park Bio-industry Development Company, etc., the largest shareholder for Hangzhou Tiger Equity Investment Partnership (limited partnership), holding Xi'an Taiming equity over 15%. Another Yongxiu Guanyu's back, partners also appeared Hangzhou Taige equity investment partnership (limited partnership) figure.
The data show that Hangzhou Tiger Equity Investment Partnership (limited partnership) for the listed company Tiger Pharmaceuticals subsidiaries, of which Tiger Pharmaceuticals directly held an equity stake of 99.9583%, Shanghai Tiger shareholding ratio of 0.0417%. In fact, before this transaction, Hangzhou Tiger Equity Investment Partnership (limited partnership) has directly held 2.55% of the equity of Watson Biological.
At the same time, the receiver, Zibo Yunze, intends to 110 million yuan to the Shanghai Zerun capital increase to subscribe to the Shanghai Zerun new registered capital; Wuxi Xinwu and Yuan Sheng Investment intends to hold all the convertible debt into equity in the form of Shanghai Zerun capital increase. After the shareholding change, Watson Biologicals will hold 28.5% of the equity of Zerun Biologicals.
It is important to know that Shanghai Zerun's HPV vaccine project progress in the forefront of the country, has always been considered valuation can be expected. It is also this point, Watson Biological is said by many investors is "cheap" Zerun Biological, and questioned Watson Biological abandonment of HPV vaccine market real reason.
December 6, Watson Biological received a regulatory inquiry letter, was asked to supplement the Zibo Yunze, Yongxiu Guanyu since the establishment of the changes in the shareholding structure, Zibo Yunze, Yongxiu Guanyu Shanghai Zerun the next step in the development of the strategic inputs or arrangements for the specific measures.
The Shenzhen Stock Exchange also asked Watson Biological combined with Shanghai Zerun HPV, hand, foot and mouth disease vaccine research and development progress and market prospects, explain the reasonableness of the transfer of control of Shanghai Zerun, as well as the basis for determining the proportion of the transfer of equity, the transaction is whether there is a transfer of benefits to the listed company and small and medium-sized investors in the interests of the behavior, and other issues, and required Watson Biological in December 8 before the description of the material The company also asked Watson Biological in December 8, will be sent to the Shenzhen Stock Exchange GEM Company Management Department, and disclosed to the public.
Behind the transfer of equity: the future will still invest 1 billion in research and development costs Shanghai Zerun continuous losses
The following is an example of why Watson Biologicals sells Shanghai Zerun, which has become a point of contention.
December 4, Watson Biological in the announcement that the transfer of equity, the company will focus on promoting the 13-valent pneumonia conjugate vaccine heavyweight products in the domestic and international market expansion, the company's heavyweight vaccine products into a sustained advantage. On the other hand, the company will focus more on the construction of mRNA and adenoviral vectors and other technology platforms and the development of new products, and continue to maintain the company's advantage in the research and development and industrialization of new vaccine products.
Watson Biologicals also said that the equity transfer will promote the relatively independent development of Shanghai Zerun, which is conducive to the establishment of a market-based incentive mechanism for Shanghai Zerun to resolve the operational risks caused by the lack of resources required for the development of in-place investment, the loss of talent and other factors, and to effectively safeguard the interests of investors and partners, "after the transfer of the equity stake in the company, the company still as a significant shareholder of Shanghai Zerun, will take full advantage of the vaccine industry, the company will be the most important shareholder in the vaccine industry. After this equity transfer, the company remains as an important shareholder of Shanghai Zerun, and will make full use of its advantages and capabilities in vaccine industrialization to continue to support the development of Shanghai Zerun and create value for investors."
And for the HPV vaccine market, December 5, Watson Biologicals Chairman Li Yunchun replied to investors in a conference call, said, "two-price and nine-price HPV vaccine continued research and industrialization still need at least 1 billion to 1.5 billion yuan investment" "2-price HPV vaccine is more of a public welfare nature, 9-valent vaccine marketed a few years after the fierce competition".
The data show that Zerun Biological in recent years, under the vigorous investment in research and development, the company continuous losses and cash flow gradually tight.
In 2019, Zerun Biological realized total operating income of 7.6354 million yuan, operating profit -47.4322 million yuan, net profit -47.3249 million yuan, and net cash flow from operating activities was 2.6501 million yuan. 2020 January to June, Zerun Biological realized total operating income of 1.0905 million yuan, operating profit -11.1583 million yuan. Net profit -11.1583 million yuan, net cash flow from operating activities was -21.439 million yuan.
As of June 30, 2020, Shanghai Zerun's total assets amounted to 1.127 billion yuan, and net assets were 600 million yuan.
The transaction will also improve Watson Bio's cash flow. Watson Biological said that after the completion of this equity transfer, the company will get 1.14 billion yuan equity transfer, mainly used for the company's production and operation, research and development and introduction of new products and new technologies, domestic and international market expansion and other key business of the company. The company's financial department preliminary estimates, the transaction is expected to generate net profit of about 1.18 billion yuan - 1.28 billion yuan.
Years of layout: has been accepted by the 2-valent HPV vaccine production application and has long been built in the plant
In fact, HPV vaccine has been in short supply. In April of this year, Wantai Biologicals' Xiamen Wantai developed a successful bivalent prophylactic HPV vaccine to get the certificate of approval, which means that the domestic cervical cancer vaccine can formally enter the market circulation, causing the market to vibrate.
Also in April, Wantai Biological successfully listed, the total market value had exceeded 120 billion yuan in August this year. At that time, some organizations predicted that by 2020, China's HPV vaccine market size can reach 12 million doses, sales of about 13 billion yuan, the market potential is huge.
The same high expectations are placed on the 2-valent HPV vaccine and 9-valent HPV vaccine developed by Zerun Biologicals.
In 2003, Shanghai Zerun Bio was established in Zhangjiang Hi-Tech Park, Pudong New Area, Shanghai, focusing on the research and development and industrialization of new recombinant human vaccine products.
In 2004, Watson Biologicals transferred the technology of the company's refined inactivated Hepatitis A Vaccine (Vero cell) to Shanghai Zerun Bio. 2012, Watson Biologicals decided to increase its capital in Zerun Bio, and completed the integration of Zerun Bio by the end of 2012, which was a significant increase from the previous year. In 2012, Watson Biologicals decided to increase its investment in Zerun Biologicals and completed the integration of Zerun Biologicals at the end of the year.
According to the official website of Zerun Biologicals, the company's current 2-valent HPV vaccine has been in the end of phase 3 clinical stage (in June 2020, Watson Biologicals announced that the clinical research phase of the 2-valent HPV vaccine has been completed and submitted to the application for the production of new drugs), the 9-valent HPV vaccine has been in the first phase of the clinical stage, and in addition to the therapeutic HPV vaccine has been clinically approved, and the projects under development also include recombinant hand, foot and mouth disease vaccine, other novel recombinant prophylactic vaccine and other new vaccines. The research and development program also includes recombinant hand, foot and mouth disease vaccines, other new recombinant preventive vaccines and therapeutic vaccine programs.
After Watson Biologicals acquired Zerun Biologicals, it has been vigorously laying out the HPV vaccine market.
In 2019, Shanghai Zerun received a $2.5 million project fund from the Gates Foundation for accelerating the progress of clinical research and industrialization of the 9-valent HPV vaccine, and on this basis, preparing for the World Health Organization's pre-certification to supply the international organization's bulk purchase.
At the time, Watson Biologicals said, "After the 9-valent HPV vaccine obtains WHO pre-certification, it will enter the bulk purchasing of international organizations, paving the way for Shanghai Zerun to enter the international market. "
On June 16 this year, Watson Biological released an announcement that Zerun biological self-developed 2-valent HPV vaccine on June 15 received a new drug production application issued by the State Drug Administration "Notice of Acceptance". Watson Biological self-reported, "This means that, following the listing of Xiamen Wantai bivalent HPV vaccine this year, the second domestic bivalent HPV vaccine research and development has made breakthrough progress, and is expected to be listed in the next 1-2 years, bringing incremental volume to the market."
It is worth mentioning that Watson Bio has been preparing for the production of HPV vaccine for a long time. in February 2018, located in Yuxi, Yunnan, Watson Bio's new cervical cancer vaccine industrialization base project was completed, and at that time, Watson Bio executives also said, "We are taking the development of a new type of cervical cancer vaccine as a top priority". "With the successful completion of the new plant, the bivalent cervical cancer vaccine will achieve an annual production of 15 million units."
According to Watson Bio's disclosure, the production plant not only complies with domestic GMP standards, but is also designed and constructed according to WHO-PQ standards with special funding from the Bill & Melinda Gates Foundation, which will help the bivalent HPV vaccine to be certified by WHO-PQ faster in the future and supply the global market.
Currently, there are only three companies in China and overseas markets that can supply HPV vaccines, including the world's first quadrivalent HPV vaccine to prevent cervical cancer, which was launched by US-based Merck Sharp & Dohme in June 2006, and the nine-valent HPV vaccine, which was launched in 2014. These two vaccines were approved in China in 2017 and 2018, in addition, in July 2016, GlaxoSmithKline's bivalent HPV vaccine launched in 2009 entered the Chinese market.
Since June this year, Watson Biologicals shares have also risen, and the total market capitalization of Watson Biologicals exceeded 100 billion yuan in July, which can be seen in the market for the expectations of Watson Biologicals.
Shifting the goalposts to the mRNA vaccine market: organizations are looking forward to Watson's HPV vaccine, and in 4 months, the total market capitalization of Watson has suffered a severe slash
Back in time, about 20 days ago. To celebrate the 20th anniversary of the company's founding and the 10th anniversary of its listing, Watson Biologicals held a celebration and premiered a documentary film with the theme of "Made by the heart, the world of Watson".
Photo: Watson Bio documentary, Li Yunchun shows the goals that were written in 2010.
The mRNA vaccine is one of the key areas of future development that Yunchun Li has mentioned many times on investor calls.
In May of this year, Watson Biological also announced that it signed a "technology development cooperation agreement" with Suzhou Aibo Bio-Technology Co. cooperation to carry out preclinical research, clinical research and implementation of commercial production of herpes zoster mRNA vaccine.
In June, Watson Biologicals again announced that the clinical trial of the new coronavirus mRNA vaccine in cooperation with Abbott Biologicals had been approved, and it was also the first new coronavirus vaccine with mRNA to be approved to enter the clinical trial stage in China, and at present, there are only a few countries such as the United States, Germany and so on, whose new coronavirus mRNA vaccines have entered the clinical trial stage.
According to Li Yunchun's reply to investors on December 5, the new coronavirus vaccine and herpes zoster vaccine of the mRNA technology line, once made, is not less valuable than the HPV vaccine.
Although there is a new direction, and the transfer of Zerun Biological equity, but also by investors as "sold a Wantai Biological". Reviewing the research report issued by the organization, it is not difficult to see the expectation of Watson biological HPV vaccine.
Such as BOC Securities in the November 5 research report, said Watson Biological R & D pipeline in the first three quarters of the full force of the R & D expenditure of 154 million yuan, an increase of 262%, "the company is fully committed to promoting the declaration of the production of bivalent HPV vaccine and the listing of the work, and at the same time to accelerate the nine-valent HPV vaccine and recombinant EV17 vaccine projects. R&D progress."
Tianfeng Securities also said in a research report in November, Watson Biological "heavy 13-valent pneumonia vaccine is expected to open the company's new stage of development, HPV vaccine series, rheumatoid brain series of the future sales potential, is also worth looking forward to".
In June of this year, Watson Biological 2-valent HPV vaccine good news, Tianfeng Securities has also issued a research report that Watson Biological "2-valent HPV vaccine sales are expected to peak at more than 2 billion yuan".
The data show that on August 5 this year, the total market value of Watson Biological peaked at more than 140 billion yuan. Since then the stock price has been declining. As of December 4 closing, Watson biological closing price of 45.66 yuan / share, corresponding to the total market value of 70.474 billion yuan.
This means that, in four months, Watson Biological market value has been miserably cut.