2021 has been a year full of diverse challenges. Our part of the world has been affected by extended lockdowns and border closures under COVID zero regime, even as other regions begun to reopen.
Despite yet another difficult year inflicted by the pandemic of COVID-19 on us all, the tenacity, drive and leadership in our DNA was able to deliver greater stakeholder value.
For the year ended 31 December 2021, the Group achieved an increase of 67.4% in the consolidated turnover to approximately HK$1,637.7 million as compared to approximately HK$978.1 million in 2020, indicating a strong recovery to the pre-COVID-19 operating level.
The Group’s turnover is primarily made up from the segments of Ophthalmology and Surgical (wound care and healing). The core products that are of current growth driver under each segment are:
- Ophthalmology – Beifushu series (Beifushu eye drops, Beifushu eye gel and Beifushu unit-dose eye drops), Tobramycin Eye Drops, Levofloxacin Eye Drops, Sodium Hyaluronate Eye Drops and 適麗順® (Iodized Lecithin Capsules*); and
- Surgical (Wound care and healing) – Beifuji series (Beifuji spray, Beifuji lyophilised powder and Beifuxin gel), Carisolv® dental caries removal gel, 伢典醫生 (Dr. YaDian) mouth wash and 伊血安顆粒 (Yi Xue An Granules*).
The sectoral turnover of Ophthalmology and Surgical is approximately 41.1% and 58.9% of the Group’s turnover, respectively. The combined turnover of the Group’s flagship biologics, Beifushu series and Beifuji series, the basic fibroblast growth factor (bFGF) based biologic drugs, represented about 84.3% of the Group’s total turnover, of which Beifushu series and Beifuji series accounted for 26.1% and 58.2% of the Group’s turnover, respectively. The remaining 15.7% of the Group’s turnover is mainly contributed from sales of Tobramycin Eye Drops, Levofloxacin Eye Drops, Sodium Hyaluronate Eye Drops, 適麗順® (Iodized Lecithin Capsules*), Carisolv® dental caries removal gel, 伢典醫生 (Dr. YaDian) mouth wash and 伊血安顆粒 (Yi Xue An Granules*), collectively.
Ophthalmology segment contributed approximately HK$673.3 million to the Group’s turnover for the year ended 31 December 2021, representing an increase of 60.6% as compared to approximately HK$419.2 million in 2020. Surgical segment recorded a total turnover of approximately HK$964.4 million for the year ended 31 December 2021, representing an increase of 72.6% as compared to approximately HK$558.9 million in 2020. The increase was attributable to the resumption of clinical operations in hospitals to normalcy in the PRC and the expansion of sales.
The selling of Xalatan® Eye Drops and Xalacom® Eye Drops, which contributed approximately 2% to the Group’s gross profit for the year ended 31 December 2021, would be discontinued in 2022.
During the year under review, the Group achieved an increase of 58.0% in after-tax profit to approximately HK$346.0 million as compared to approximately HK$218.9 million in 2020. The increase was in tandem with the increase of 67.4% in the Group’s turnover to approximately HK$1,637.7 million.
The after-tax profit could have been higher if not for the decrease in fair value of the investment in 成都上工醫信科技有限公司 (Chengdu Shanggong Medical Technology Co., Ltd.*) by approximately HK$31.4 million in
As at 31 December 2021, the Group had cash and cash equivalents of approximately HK$671.3 million (31 December 2020: approximately HK$599.8 million).
SIGNIFICANT BUSINESS DEVELOPMENT ACTIVITIES
We are committed to pragmatically investing in new products and technologies to strengthen the Group’s product and research and development (“R&D”) pipeline as near to mid-term growth driver in ophthalmology and long-term plan for new therapeutics in oncology. Major investments in ophthalmic products are outlined as follows:
Investments in Ophthalmology
In 2018, the Group entered into a co-development agreement with Mitotech S.A. (“Mitotech”) and Mitotech LLC for the United States Food and Drug Administration (the “US FDA”) phase 3 clinical trial of an ophthalmic solution containing SkQ1 for dry eye disease. As disclosed in the announcement of the Company dated 24 February 2021, positive outcome was achieved during second phase 3 clinical trial (VISTA-2). The clinical trial study repeated statistically significant positive results on key predefined secondary end-point (Central Corneal Fluorescein Staining). The Board is enthusiastic about the read-out of clearing of central staining of the cornea (defined as zero staining in central cornea), which reveals the potential of SkQ1 in addressing oxidative stress in dry eye diseases. Following the positive trial outcome of VISTA-2, Mitotech has planned a pivotal trial (VISTA-3), which will commence once Mitotech’s management team has fully assessed there is no potential disruption to trial centres and patient recruitment during the ongoing COVID-19 pandemic. However, recent developments in Ukraine have led to governments and industries reacting to business relationships with Russia in a way that could potentially induce delays in Mitotech’s VISTA clinical trial programme.
In 2020, the Group entered into a co-development and exclusive license agreement with Shanghai Henlius Biotech, Inc. to co-develop a pharmaceutical product that contains an anti-vascular endothelial growth factor (“anti-VEGF”) as a drug substance, which is intended for the treatment of exudative (wet) age-related macular degeneration (“wet-AMD”). As at the date of this report, the recombinant anti-VEGF humanised monoclonal antibody injection HLX04-O (“HLX04-O”) for the treatment of wet-AMD has been approved to commence the phase 3 clinical trial in Australia, the United States, Singapore, Russia, Serbia and European Union countries such as Hungary, Spain, Latvia, the Czech Republic and Poland. Also, the first patient has been dosed in a phase 3 clinical study for HLX04-O for the treatment of wet-AMD in the PRC.
On 9 June 2021, the Group entered into a product interests transfer agreement with 西藏林芝百盛藥業有限公司 (Tibet Linzhi Parkson Pharmaceutical Co., Ltd.*) in relation to the acquisition of intellectual property rights relating to technologies and process of product R&D, production and right of Marketing Authorisation Holder of 適麗順® (Iodized Lecithin Capsules*) and other medicinal products in different forms in which iodized lecithin serves as an active pharmaceutical ingredient. The consideration of the acquisition is RMB97.0 million (equivalent to approximately HK$118.9 million). The transaction was completed on 8 March 2022. It is expected that the acquisition will enable the Group to strengthen its ophthalmology business.
Over the years, the Group has been relentlessly investing in establishing and strengthening its market access capability. As at 31 December 2021, the Group maintains a network of 43 regional sales offices in the PRC and a total number of about 1,265 sales and marketing representatives, out of which 64% are full-time employees and 36% are on contract basis or from appointed agents. The Group expanded its presence in Singapore in 2020 as a base for market access expansion into Southeast Asian countries.
During the year under review, the Group’s therapeutic products are being prescribed in more than 10,500 hospitals and medical providers, coupled with approximately 2,110 pharmaceutical stores, which are mainly located in the major cities, provinces and county cities in the PRC.
For achieving a sustainable traction on growth for currently marketed products as well as for near-term to mid-term new products being commercialised, the Group initiated investments to improve its competitiveness and widen its customer base under the following plans:
- Investing in clinical observation programmes for affirming additional clinical indications of its commercialised products;
- Reaching out to market in lower-tier cities;
- Cultivating pharmaceutical stores, where possible, as complementary sales channel; and
- Building on-line platform for medical consultation and e-prescription for patients with chronic diseases under its healthtech initiative.
RESEARCH AND DEVELOPMENT
The Group renewed its R&D’s vision in 2020, emphasising the dedication to science and innovation, with a mission to develop therapeutics that would meet unmet clinical and/or commercial needs. The Group concurrently kick-started a 5-year (2021 to 2025) R&D’s development plan to further strengthen its R&D capability and its position in ophthalmology.
The Group’s key R&D initiatives comprise of growth factor, antibody (i.e. mAb, bsAb, sdAb, scFv, ADC/ FDC, etc.), drug formulation know-how and Blow-Fill-Seal (“BFS”) platform. Growth factor, antibody and drug formulation know-how are used for the development of therapeutic drugs in ophthalmology, surgical (wound care and healing) and oncology, whereas BFS platform is a state-of-the-art manufacturing facility for producing preservative-free unit-dose drugs, in particular for ophthalmic drugs.
As at 31 December 2021, there are 15 R&D programmes in the pre-clinical to clinical stage, out of which 3 ophthalmology programmes are in clinical stage. The 3 ophthalmology programmes listed below are targeted as mid-term growth driver.
- EB11-18136P: SkQ1 eye drops, second phase 3 clinical trial (US FDA) (VISTA-2) topline data released on 24 February 2021
- EB11-15120P: Azithromycin eye drops, ongoing review by external key opinion leaders (National Medical Products Administration (“NMPA”) in the PRC)
- EB12-20145P: Bevacizumab intravitreal injection for wet-AMD, phase 3 clinical trial (US FDA, European Medicines Agency, Therapeutic Goods Administration and NMPA in the PRC)
As at the date of this report, the Group has obtained a total of 44 patent certificates or authorisation letters:35 發明專利 (invention patents), 4 實用新型專利 (utility model patents) and 5 外觀專利 (design patents).
The Group currently has diversified its R&D resources to multiple research sites in Zhuhai (PRC), Boston (United States), London (United Kingdom) and Singapore which support not only our pursuit for new therapeutics but also our acquisition of global talent.
COVID-19 remains a major concern in 2022 globally. We continue to monitor the situation and will take appropriate actions to overcome any unforeseen challenges. Barring the unforeseen circumstance, the Group remains focus on executing its plans and delivering progressive results.
To reward our valued shareholders, the Board is pleased to propose a final dividend of HK$0.055 (2020: HK$0.05) per ordinary share to be approved at the upcoming annual general meeting of the Company. Together with the interim dividend of HK$0.04 per ordinary share which was paid on 14 September 2021, the total dividend for 2021 would be HK$0.095 (2020: HK$0.05) per ordinary share.
I would like to take this opportunity to express my sincere gratitude to all stakeholders, business associates and valued customers for the trust, support and cooperation accorded to us, and each and every member of the Group for their relentless efforts rendered in shaping the Group into being a progressive and promising pharmaceutical player.
Ngiam Mia Je Patrick
22 March 2022