The innovative drug maker said its revenue soared more than 850% last year to between 124 million yuan and 126 million yuan
- Everest Medicines’ revenue soared nine-fold last year, powered by rapid gains for its two recently approved star products, as it gets set to introduce more drugs this year
- Ten of the drug maker’s existing twelve drugs were acquired through licensing agreements, and it pocketed $300 million by returning some rights to a drug developed by Gilead Sciences
By Molly Wen
Licensing drugs from other companies is always a risky business, as there’s no telling whether such drugs can ultimately be brought to market. China is full of such companies that want to bring drugs developed elsewhere to the vast Chinese market. A fast-emerging winner in that space is Everest Medicines Ltd. (1952.HK), which is showing it has what it takes to bring such products through the long phase of clinical trials before they can be sold in its home market.
That prowess was on display in a results forecast released by Everest last week, where it said it expects to report revenue of 124 million yuan ($17.5 million) to 126 million yuan for all of last year, up 868% to 884% from a relatively small base of just 12.8 million yuan in 2022. Its shares jumped 8.4% in the three days after the announcement, indicating investors are confident in its long-term prospects.
The strong growth was mainly driven by the launch of Everest’s potent innovative antimicrobial drug Xerava, which was approved by China’s drug regulator in March and has gone on sale since then. Xerava is commonly known as a “super antibiotic,” defined as a novel, fully synthetic, broad-spectrum antibacterial drug for the treatment of multi-drug-resistant (MDR) bacterial infections.
Nefecon, the world’s first targeted drug for IgA nephropathy, was Everest’s other major revenue contributor, after being approved by the drug regulator in November last year, and being launched in Macau and China a month later at the end of the year. China has the world’s highest incidence of primary glomerular diseases, which reduce the ability of kidneys to maintain the necessary balance of certain substances in the bloodstream. China has about 5 million patients with IgA nephropathy, a common primary glomerular disease that accounts for about 35% to 50% of all cases, mostly in younger people.
Previously in China, there was no targeted therapy to treat the disease’s progression at the source. Instead, there was only systemic glucocorticosteroids and immunosuppressants, which could cause serious infections and other side effects.
By targeting the intestinal tract, Nefecon, a mucosal immunomodulator, provides the first therapeutic solution targeting the source of IgA nephropathy. A Phase 3 study of the drug in China showed it can reduce renal function decline by up to 66% after nine months of treatment and 15 months of post-treatment observation, and can delay progression to renal failure by 12.8 years.
The drug was approved for use in the Bo’ao Lecheng International Medical Tourism Pilot Zone in South China’s Hainan province in April last year for small-scale clinical use. More than 1,000 patients had applied for the program as of December the same year, demonstrating great potential for commercialization, said Everest CEO Luo Yongqing. The drug is expected to be commercially available in the rest of China in the current quarter, Luo added.
The company’s interim financial report from last year showed several of its new drugs are expected to hit markets in Greater China and countries such as South Korea and Singapore in 2024. Last April, Everest said the Health Sciences Authority of Singapore accepted its application to sell Nefecon in the country. Etrasimod, a new drug to treat ulcerative colitis, and Taniborbactam, an antibiotic cefepime for urinary tract infections, are also expected to be approved this year, the company said.
With several new drugs poised to get the green light to start sales, Everest has begun building up its team to commercialize those products, focusing primarily on anti-infection and nephrology. That team had about 138 members specializing in sales, marketing, market access and medical affairs at the middle of last year. The company has also established partnerships with some of China’s leading pharmaceutical supply chain service providers, including China National Pharmaceutical Group, Guangzhou Pharmaceutical Holdings, Chongqing Pharmaceutical and Shanghai Pharmaceuticals Holding.
Dependence on licensing
Everest’s early success owes in no small part to strong support from venture capital firm CBC Group, which helped to fund deals for 10 of the company’s 12 drugs obtained through licensing. To minimize the risk of ending up with lemons, Everest carefully studied all of those drugs at their early stages of development, and later picked the best candidates that were at later clinical stages in Europe and the U.S.
Everest received its rights to Nefecon through a licensing agreement with Calliditas Therapeutics (CALTX.STO) in 2019. The agreement gives Everest rights to develop and commercialize the drug in Greater China and Singapore for a down payment of $15 million plus milestone payments of $106 million. Calliditas brought the drug to the U.S. market in December 2021, and obtained approval to sell it in the EU in July 2022.
Everest acquired Greater China and South Korean rights to Etrasimod in 2017 for a down payment of $12 million. Global rights for the drug in all other markets are held by multinational giant Pfizer (PFE.US), which obtained U.S. Food and Drug Administration (FDA) approval for Etrasimod in October last year. The drug was ranked as one of the top 10 star new drugs for 2023 by market researcher Evaluate.
In addition, Everest also returned some rights for Trodelvy, a drug it originally licensed from Gilead Sciences (GILD.US), back to Gilead in 2022. Everest made a $65 million down payment in the initial licensing agreement, but pocketed more than $300 million in differences when sold some of those rights back to Gilead. The deal, which closed in the first quarter of last year, brought a combined $314 million to Everest, leaving the company in better financial position with 2.54 billion yuan in cash reserves at the middle of last year.
Based on its expected revenue for last year, Everest’s price-to-sales (P/S) ratio stands at a mountain-high 42.5 times, much higher than the 8.7 times of counterpart Zai Lab (ZLAB.US; 9688.HK). It seems investors are more bullish on Everest, though clearly they are expecting big growth from the company this year.
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