On December 8th, Yisheng Biotechnology announced that the company's independently developed new immune anti-tumor drug YS-ON-001 has completed Phase I clinical research at Tianjin Cancer Hospital. The research results showed that the drug has good safety and tolerability (no dose limiting toxicity), and can effectively induce tumor immune response. Preliminary results showed that YS-ON-001 has anti-tumor effects.
Not long ago, the company announced on October 24th that it had received a written notice from a staff member of the Nasdaq Stock Listing Qualification Department that the closing price of the company's common stock had been below $1.00 per share for the past 31 consecutive working days. Although this would not lead to an immediate delisting of the company, it also planted a hidden bomb for the company's development.
Good news and bad news almost simultaneously arrived at this Chinese concept stock company with an estimated market value of about 47.76 million US dollars, and did not cause too much flooding in the market. However, a few years ago, EB, which was in possession of the recombinant protein COVID-19 vaccine for pickup trucks, was highly sought after by capital, and successfully landed on NASDAQ in March this year to complete a financing of 36 million dollars. Nowadays, the domestically produced vaccine adjuvants, which were once favored by primary market investors, have arrived at the final testing ground, but it coincides with a capital cold winter.
Recently, Zhang Yi, the chairman of the board of directors of Bionics and a veteran of the domestic vaccine industry, received an exclusive interview from the reporter of the Daily Economic News. This vaccine "veteran" with a strong Henan accent walked from Kaifeng to Beijing, realizing the company's dream of listing at the end of the popularity of COVID-19 vaccine, and must also look for a way to break the situation in the chill of the industry.
After experiencing the shutdown crisis, the company made a comeback and went public, resulting in an increase in net losses
As a veteran vaccine company established for 21 years, Yisheng Biotechnology went public on March 17 this year by ringing the bell across the ocean. It is the first Chinese concept stock Biotech (a biotechnology company) to land on NASDAQ through SPAC (overseas shell listing), with investors including more than ten international medical professional investment institutions such as Haisong Capital, Aobo Capital, and Hillhouse Capital.
Unlike several vaccine companies that have gone public in China in recent years, the entrepreneurial story of Zhang Yi, as the founder, is not about a young scientist returning to China to start his own business, but rather about starting from a local epidemic prevention station and starting from "surrounding the city from the countryside" at the age of 46. He even self mocks himself as having "shallow education and knowledge". But in 2002, Zhang Yi successfully developed the rabies immunoglobulin "Yisheng Bao'er" through technical cooperation and went public. The following year, he participated in the development of the first domestically produced freeze-dried and purified rabies vaccine "Yisheng Jun'an" without aluminum adjuvants. From 2020 to 2023, Yisheng Biotech's operating revenue was 184 million yuan, 502 million yuan, and 687 million yuan, almost all of which came from this only listed product.
The commercialization path of this product has been quite tortuous - from 2005 to 2013, Yisheng Biotech produced and commercialized "Yisheng Junan" at its previous production facilities, but stopped production due to the expiration of the five-year GMP certification. In July 2019, the company built a new production facility in Shenyang and obtained GMP certification. Production of "Yisheng Junan" resumed in February 2020 and sales and marketing began in October 2020.
The five-year shutdown has had a significant impact on Yisheng Biotechnology. On the one hand, the company's fundamentals have suffered setbacks and the funding chain is facing challenges. According to the prospectus (referring to Hong Kong stock documents, the same below), the company had previously failed to pay taxes and corresponding late fees of 125.6 million yuan, mainly due to the suspension of after-sales service for Yisheng Junan. The company prioritized investing limited operating funds into the research and development of candidate self-developed products; For example, as of March 31, 2020, the company's payable salary amount reached 118 million yuan.
On the other hand, the relationship between companies and regulatory authorities has become delicate. In 2014, there was a disagreement between the company and the China Food and Drug Control Research Institute regarding the timing of issuing certificates of conformity for several batches of "Yisheng Jun'an" rabies vaccines. The company also filed an administrative lawsuit against the institute for refusing to issue certificates and failing to provide testing results within the statutory deadline. The lawsuit was ultimately dismissed due to a lack of judicial jurisdiction. In the prospectus, Yisheng Biotech also mentioned its ability to maintain good relationships with regulatory agencies when explaining its ability to produce commercial products for listing and future approved candidate products under research.
From the performance of Yisheng Biotechnology in recent years, the company's net loss has been continuously expanding, with a total of 39 million yuan, 106 million yuan, and 145 million yuan in the fiscal years 2020 to 2023, respectively. As of the end of fiscal year 2023, the cash on the books of Yisheng Biotechnology was only 370 million yuan, but the company's sales expenses reached 272 million yuan and research and development expenses reached 318 million yuan.
"Single shot" rabies vaccine, making money while spending money
Zhang Yi has his own understanding of the problem of companies not being able to make money as quickly as they spend money. He believes that "a good enterprise must never have enough money to spend. If there is a place to invest, the development speed will be fast." Currently, the rabies vaccine is the "intersection" of making money and spending money for Yisheng Biotechnology: it is not only the company's only source of income, but also the fastest progressing and currently the most expensive clinical project.
Zhang Yi said that the reason why he chose this track at the beginning of his entrepreneurship was because he had worked in the epidemic prevention station to prevent and control rabies. He knew that the incidence and mortality rate of rabies was almost 100%, and prevention would be a long-term need. The rabies vaccine is the earliest commercialized vaccine in China. The company's "Yisheng Junan" can reduce the time for complete antibody production from 42 days to 14 days, with the highest single variety market share in the early stage. In recent years, "Yisheng Junan" has gradually expanded production and has been in short supply, with a market share of over 10% and is expected to increase to 25% to 30% next year.
However, it cannot be ignored that the rabies vaccine track is already very crowded. As of the end of 2022, there were a total of 9 domestic vaccine companies producing rabies vaccines for human use. Chengda Biotechnology, with the highest market share, stated in its 2022 annual report that "the pattern of market supply shortage has changed since the second half of 2018, and the market competition situation is obvious.".
Prospectus for listed human rabies vaccines using Vero cell technology in the 2020 China batch issuance results
Zhang Yi believes that new opportunities lie in the immunization program, that is, "how many shots" and "how long" - currently, the immunization program for rabies vaccines on the market is mostly completed within three or four weeks, and compliance is still poor, with a lot of room for optimization. The company's pickup truck technology is expected to shorten the immunization program for rabies vaccines to seven days.
On October 31st, Yisheng Biotechnology announced that all participants in the Phase III clinical trial of its independently developed pickup truck (PIKA) rabies vaccine had completed enrollment. This randomized, double-blind, positive controlled multicenter clinical study is mainly used to evaluate the immunogenicity, safety, and inter batch consistency of the vaccine in the prevention of adult rabies after exposure. This clinical trial was conducted in multiple countries and centers, including Pakistan and the Philippines, with a total of 4500 participants enrolled.
According to Zhang Yi, this human pickup truck rabies vaccine is the world's first therapeutic pickup truck rabies vaccine that induces both humoral and cellular immunity with a pickup truck adjuvant. Previously, the official document of the WHO (World Health Organization) Vaccine Expert Group evaluated the vaccine as an innovative rabies vaccine; Considering the unique mechanism and efficacy of the vaccine in resisting rabies virus infection, the FDA has granted the vaccine orphan drug qualification for preventing rabies virus infection before and after exposure. At the same time, the National Medical Products Administration has also positioned the vaccine as a therapeutic biological product. However, its domestic clinical trials are still in phase I clinical stage.
The self-developed pickup truck adjuvant platform is the capital for financing
"Thank you very much to the investors for their unique vision and the money they gave us to keep the company alive." When Yisheng Biotechnology was facing a production shutdown crisis, well-known institutions such as Hillhouse Capital, 3W Capital, AIHC, and Haitong International stepped in to help. Zhang Yi was very grateful for this and knew that the reason why the company was able to attract these well-known institutions was because of its self-developed pickup truck adjuvant.
Simply put, vaccine adjuvants are an additive to vaccines that can help boost their immune value. When it is injected into the body before or mixed with antigens, it can enhance the body's immune response to antigens or change the type of immune response. The most widely used adjuvant globally is aluminum adjuvant, which is commonly used in the development of human vaccines.
Zhang Yi stated that aluminum adjuvants can adsorb viruses and slowly release them, continuously stimulating the body to produce antibodies. However, due to the weak ability to induce cellular immunity caused by injection site reactions, aluminum adjuvants are not suitable for emergency diseases such as rabies. The company's pickup truck adjuvant (PIKA) is an adjuvant targeting TLR3, RIG-I, and MDA5 receptors, which can simultaneously promote cellular and humoral immune responses (i.e. the two systems of the human immune system), obtaining stronger immune responses, especially in enhancing non-specific cellular immune levels. It is worth mentioning that the most crucial aspect of rabies prevention and treatment is non-specific cellular immune response.
"In addition to killing viruses, cellular immunity also has various effects such as killing tumor cells, so pickup adjuvants have the potential to expand into a major technological platform, including therapeutic vaccines, which can be used for both prevention in healthy populations and treatment for patients."
At present, Yisheng Biotechnology combines pickup truck adjuvants with mature vaccine mechanisms (such as the mechanisms of action of rabies and hepatitis B virus vaccines) to develop innovative vaccine product lines for specific viral infections. It currently has three candidate products under development in different clinical trial stages in China or Singapore, including pickup truck rabies vaccine, pickup truck YS-ON-001, and pickup truck YS-HBV-001; And four preclinical stage candidate products under development for COVID-19, HBV (Hepatitis B Virus), influenza, and cancer with significant medical demand.
Prospectus for listed products and candidate products under research of Yisheng Biotechnology
In 2021, when Bionics submitted its prospectus to the Hong Kong Stock Exchange, the most anticipated pickup vaccine was the recombinant COVID-19 pickup vaccine. At that time, this vaccine had been approved by FDA for clinical trials of mRNA and adenovirus vector vaccine booster needle, and it was the first recombinant protein COVID-19 vaccine project developed in China and approved by FDA for clinical trials.
However, this vaccine has not yet been launched in the United States and has not been approved for clinical use domestically. The latest public progress is to complete phase III clinical enrollment for booster shots of inactivated vaccines in the Philippines and the United Arab Emirates ahead of schedule, with the last participant completing enrollment on December 20, 2022.
The heavyweight product missed the best time to launch, and Zhang Yi admitted that it was "a bit awkward", but also believed that there is still reserve value in the future. He admitted that most of the currently under development products are in the early clinical stage, and subsequent clinical trials require new financing to advance. The specific timing depends on the time when the clinical trial results are obtained.
Adjuvants are a bottleneck issue in the industry, and funding is the main issue for going abroad
"Adjuvants are to vaccines, just like chips are to mobile phones." In the saying circulating in the industry, it cannot be seen that vaccine adjuvants play an important role in the vaccine industry, regulating the immune response of vaccines from four dimensions: type, strength, width, and persistence, directly determining the safety and effectiveness of vaccines. In 2022, the national "14th Five Year Plan" for the development of the pharmaceutical industry included new vaccine adjuvants as a key biopharmaceutical technology for development. To date, there has been no second vaccine adjuvant approved for market in China, apart from aluminum adjuvants. As a new type of adjuvant, the pickup truck adjuvant technology independently developed by Yisheng Biotechnology was included in the national major new drug creation project as early as 2018, but so far, no pickup truck adjuvant related vaccine products have been approved. It can be seen that, New adjuvants have become a recognized bottleneck issue in the vaccine industry.
There is a huge gap between this and foreign countries. Zhang Yi stated that adjuvants are generally not approved separately as a drug, but as a component of vaccines that are approved as a whole. At present, FDA has approved six new adjuvants for marketing, including MF59, AS04, AS03, AS01, CpG1018 and Matrix M (COVID-19 for emergency use), all of which are used in human vaccines. However, domestic adjuvant research and development is still in the stage of cooperative introduction or optimization of existing adjuvants, and a systematic research and development system and industrialization capability have not yet been formed.
Behind this gap lies the gap in basic scientific research. In 2007, at an expert meeting held by the World Health Organization, Zhang Yi met many foreign colleagues and had the opportunity to conduct research abroad. When invited to visit NIH (National Institutes of Health in the United States), Zhang Yi found that there were many Chinese people in NIH's laboratory, all of whom graduated with doctoral degrees and worked as experimenters there. Due to the huge income gap between domestic and foreign researchers at that time, Zhang Yi was unable to directly introduce talents from abroad, so he established a company in the United States two years later; In 2010, Yisheng Biotechnology fully acquired NEWBIOMED PIKA PTE. LTD., a Singaporean pickup truck adjuvant technology company, forming the company's layout in China, the United States, and Singapore. Currently, the company has wholly-owned research and development centers in Beijing, Singapore, and Maryland, with many clinical registrations located overseas.
"Now when we develop products, we need to take a global perspective and look at the problems. We cannot only see how Chinese products are updated, but also consider how to catch up with and surpass the world level."
Zhang Yi said that at present, domestic regulators attach great importance to the safety of products, and are more cautious about the approval of innovative products (such as the company's pickup truck recombinant COVID-19 vaccine). Foreign countries pay more attention to the innovation of products, and it is easier to take an accelerated channel. In the future, the company's innovative products may be preferred to be listed in developed countries such as the United States to recover costs, but it must be recognized that, Although the company's overseas clinical projects have not encountered any institutional issues, funding is still a major issue, and I still look forward to further acceleration of domestic innovative drug approval.
In the cold winter of capital, Yisheng Biotechnology also faces the troubles of almost all innovative pharmaceutical companies or biotech companies: due to various reasons such as a single commercial product and generally low valuations of Chinese concept stocks, the company's stock price has been declining since its listing, with only $0.601 as of the time of publication. Faced with a figure already below book value, Zhang Yi bluntly stated that it was "very frustrating", but like many years ago when the company faced a shutdown crisis, he remained optimistic about the company's product pipeline and financing capabilities.
"When there was money everywhere, capital didn't have to be so cautious. Now they are being cautious, but they will always invest in the most promising companies. They are also looking for exports, and when they see good investment projects, they will definitely invest." Zhang Yi said.
