On July 26th this year, Ruike Bio-B (02179) announced that the application for REC610 clinical trials of recombinant herpes zoster vaccine was accepted. However, after a lapse of 3 months, the company is in the acceptance stage of the project. Although the domestic herpes zoster vaccine market is still blue, with the rapid progress of competitive research and development and marketing process, Rico seems to be losing its edge in the project.

On the other hand, at present, the valuation of 18A companies in the Hong Kong stock market pays more and more attention to the company's hematopoietic capacity and cash flow, while the lossmaking Ruike biology seems to be losing the attention of investors and falling into the liquidity trap.

Ruike shares plummeted after hitting an intraday high of HK $24.75 on March 30, until it fell to its lowest level since its listing in September, falling by 59.68 per cent in half a year, Zhitong Financial APP observed. Along with the share price, the company's daily trading volume fell.

On May 22, Ruike Bio's intraday shares fell to HK $11.88, down 15.14% from the previous day's closing price to HK $11.92. The daily trading volume of 1.6255 million shares was the first time this year that the company's trading volume exceeded 1.5 million shares, while in the second half of the year, the company's daily trading volume is often less than 10, 000 shares. From the point of view of trading volume, the lack of biological mobility of Ruike has been very serious.

From the research and development point of view, the main projects of Ruike Biology are HPV nine-valent vaccine and herpes zoster vaccine. however, in these two projects, the company not only needs to compete with competitors, but also with itself, and the market is concerned about whether the company can transition to the commercialization stage under greater cash flow pressure.

Task at this stage: live to 2025

For Rico biology at this stage, commercialization is an unavoidable hurdle. Especially under the background of the poor commercial prospect of the heavily developed COVID-19 recombinant protein vaccine ReCOV, the nine-valent HPV vaccine has become the fastest commercialized product in the Ruike biological pipeline.

At present, the company has planned the time to apply for listing, that is, it is expected to submit an application for the listing of 9-price HPV vaccine to the SFDA in 2025. Therefore, for Ruike Biology, the most important task now is to complete the research and development step by step, at the same time, to ensure its own operation to the REC603 recombinant HPV nine-valent vaccine on the market smoothly.

Due to the previous focus on COVID-19 vaccine, so the company in the nine-valent HPV vaccine on the commercial time has been delayed, "spending money research and development" for Ruike biology has been inevitable.

According to the company's previously disclosed annual report for 2022, the company's R & D costs increased by 51.5% to 716 million yuan in 2022, and the loss attributable to the owner of the parent company was about 723 million yuan, an increase of about 9.91% compared with the same period last year. From the perspective of cash flow, in 2022, the net cash outflow of Ruike biological business activities was 579 million yuan, while the company's cash and cash equivalents were 1.169 billion yuan in the current period.

Compared with its newly released 2023 interim report data, Ruike biological research and development expenses was 249 million yuan, down 30.09% from the same period last year, which led to an overall 24.41% year-on-year reduction in operating expenditure in the first half of 2023 and a loss of 277 million yuan during the period, a year-on-year decrease of 22.4%. In terms of cash flow, in the first half of this year, there was a net cash outflow of 371 million yuan from Ruike's biological business activities, while the company's cash and cash equivalents in the current period were 1.099 billion yuan.

In other words, the company still holds enough money to "burn money to operate" for about two years, indicating that the company's current cash flow is sufficient until its nine-valent HPV vaccine goes public, but it also highlights the urgency of commercialization to a certain extent.

Judging from the current competition pattern of domestic 9-valent HPV vaccine market, there are only Merck & Co Inc with 9-valent HPV vaccine in China, and 9 domestic enterprises with 9-valent HPV vaccine, and 5 domestic enterprises whose products have entered the clinical III phase: Wantai Biology (9-valent), Ruike Bio (9-valent), Bowei Biology (9-valent, 4-valent), Recreation Guardian (9-valent, 3-valent), Chengdu Institute / Beijing Institute (4-valent).

From the time of joining the group, the fastest are Wantai Biology and Bowei Biology, both of which began to enter the III clinical group in September 2020. However, according to the "Technical guidelines for Clinical Trials of Human Papillomavirus Vaccine (trial)" issued by the Drug Review Center of the State Drug Administration, it is required that "randomized, double-blind, placebo-controlled design is currently the best strategy to confirm the protective effectiveness of the first generation vaccine."

In its semi-annual report this year, Ruike said that its nine-valent HPV vaccine phase III clinical program strictly follows the guidelines of regulatory authorities; in addition, the company also has the largest sample size of III phase 9 clinical trials in Henan, Shanxi and Yunnan provinces with high HPV infection rates. The company's core product recombinant nine-valent HPV vaccine REC603 China III clinical trial consists of three parts: the main efficacy test, the young age group immune bridging test, and the Gardasil 9 immunogenicity comparison test. The total sample size of the subjects was 16050.

From the perspective of clinical progress, the main efficacy trial study of Ruike REC603 is conducting regular follow-up work according to the clinical program, and the company has completed its 18th month visit and is conducting the 24th month visit observation. The company will take the pathological end point for interim analysis and submit the BLA application when the conditions are met. On the other hand, the three-dose vaccination of immune bridging and immunogenicity comparison with Gardasil9 in young age group has been completed.

Blistered vaccine cannot be hydrolyzed far away from near thirst

In addition to the 9-valent HPV vaccine, another product of concern in the research pipeline is the new adjuvant recombinant herpes zoster vaccine REC610.

From a technical point of view, genetic engineering vaccine is the future development trend in the field of vaccine. At present, recombinant protein vaccine is the most widely used. There are eight recombinant protein subunit vaccines in the world's top ten best-selling vaccines (excluding COVID-19 vaccine) in 2021. And among all the genetic engineering vaccines, the recombinant protein technology is the most effective, safest and relatively affordable, so it is currently the most widely used. The core of the competition of recombinant protein vaccine is the ability of antigen design and adjuvant, and the effect of adjuvant is greater.

REC610 carries a new adjuvant BFA01 independently developed by Ruike, which can promote the production of high levels of VZV glycoprotein E (gE) specific CD4+T cells and antibodies.

Preclinical studies have shown that REC610 has good immunogenicity and can induce high levels of gE antigen-specific CD4+T cell reaction and IgG antibody, and its immune response is not inferior to that of the control vaccine Shingrix.

According to the China News, the company conducted its first human trial of REC610 with GlaxoSmithKline PLC Shingrix as a positive control in the Philippines in February this year. At present, the study is progressing smoothly, all subjects have completed a 30-day follow-up after two doses of vaccine vaccination, and the safety and tolerance are good. In order to evaluate the safety, tolerance and immunogenicity of REC610, the company plans to use a randomized, double-blind, Shingrix parallel control design to recruit 180 healthy subjects aged 40 and above to carry out phase I clinical trial in China.

Judging from the market conditions targeted by the vaccine, herpes zoster can occur at any age, but its incidence increases significantly with age. In the global general population, the incidence of herpes zoster is about 35 per 1000 people per year, 68 per 1000 per year at the age of 60, and 8-12 per 1000 per year at the age of 80. In China, about 5.65 million people suffer from herpes zoster every year. The middle-aged and elderly people over 40 years old are the target vaccination population, the number of which reaches 694 million, and the potential vaccination population is huge.

From the perspective of market competition, there are three kinds of shingles vaccine on the market all over the world. It is mainly the Zostavax vaccine of Merck & Co Inc Company, the Shingrix vaccine of GlaxoSmithKline PLC Company and the sensitive vitamin vaccine of Baig organism. At present, compared with Zostavax, the protection rate of Shingrix is significantly improved, and it has gradually replaced Zostavax in the international market. By 2022, Shingrix's global sales have exceeded $3.6 billion.

Ganwei vaccine, approved by NMPA in January this year, was used to prevent herpes zoster in people over 40 years old, breaking the monopoly position of foreign companies in the field of herpes zoster vaccine with a price advantage of 1369 yuan per dose, and is expected to maintain its exclusive domestic status in the next 2-3 years.

In addition, in terms of research products, only 2 products have completed the phase II clinic, and most of the products are in the pre-clinical / phase I stage like Ruike biological REC610.

However, according to the R & D schedule of Ruike Biology, even the fastest nine-valent vaccine, REC603, will be approved to go on the market in 2025, and REC610 is far from being able to quench its thirst. Until 2025, Rico Biology is still an unprofitable biotechnology company without commercialization of its products. At a time when the current innovative biotechnology track emphasizes "hematopoiesis" and "cash reserves", it may be difficult for investors to remember the gradual loss of liquidity in the secondary market.