AS the development of vaccines for Covid-19 accelerates, the glove sector seems to be losing its shine, with a few research houses downgrading it to “neutral”. All eyes are now on the potential beneficiaries of the supply of vaccines.
Locally, three listed companies have announced plans for the distribution and marketing of vaccines. They are Solution Group Bhd, Bintai Kinden Corp Bhd and Ho Wah Genting Bhd (HWGB).
While Pharmaniaga Bhd and Duopharma Biotech Bhd are poised to be beneficiaries as they have been identified by the government to undertake the fill and finish processes for the Covid-19 vaccine once it is found, they have not announced any partnership plans yet.
Other pharmaceutical players — Kotra Industries Bhd, Apex Healthcare Bhd and YSP Southeast Asia Holding Bhd — have also been on investors’ radar recently.
It is interesting to see if more companies are looking to jump on the vaccine bandwagon, but it should be noted that vaccine distribution is still subject to the completion of clinical tests, along with the required approvals from the authorities.
Nonetheless, Solution Group believes it is now the frontrunner in the vaccine race.
“We are the closest to the commercialisation of vaccines than anyone else,” says Solution Group managing director Barry Lim in an interview with The Edge.
The company is finalising a collaborative agreement with China’s vaccine specialist CanSino Biologics. The parties signed a memorandum of understanding (MoU) on Aug 3.
Under the deal, Solution Group will undertake the fill and finish process for a Covid-19 vaccine supplied by CanSino. The potential vaccine, which is in Phase 3 trials, is being co-developed by CanSino and the Beijing Institute of Biotechnology in the Academy of Military Medical Sciences.
On Aug 17, CanSino won a patent approval from Beijing for its Covid-19 vaccine candidate Ad5-nCOV. It is the first Covid-19 vaccine patent granted by China. CanSino has established a pipeline of 16 vaccines preventing 13 diseases.
Back in June, China’s military was also given the green light to use a Covid-19 vaccine candidate developed by its research unit and CanSino, as clinical trials proved it was safe and showed some efficacy. Reports say it will be available to the public in China by March.
“Fortunately, we know the executives at CanSino, so we have the network and have built the business relationship with them,” says Lim when asked how the partnership came about.
CanSino is listed in Hong Kong and undertook its secondary listing in Shanghai on Aug 13. The Tianjin-based pharmaceutical producer’s share price nearly doubled on the Star Market debut.
Lim sees the vaccine foray as a natural progression for Solution Group, which is involved in the biotechnology engineering business. Moreover, the company’s deputy managing director, Datuk Mohd Nazlee Kamal, was CEO of Bioeconomy Corp (formerly known as BiotechCorp) from 2011 to 2016.
“We have the expertise and we do the biotech engineering equipment. It’s very natural for us to understand the whole thing,” Lim adds.
Solution Group is preparing for the submission of relevant documents to the National Pharmaceutical Regulatory Agency for pre-registration. This, Lim says, will accelerate the registration process — which typically takes about 120 days — once the vaccine is available.
“If the clinical test is completed by year-end, then we can expect the distribution of vaccines in Malaysia in the first half of next year, with a production capacity of about one million doses per month, which could be expanded depending on demand.”
With the vaccine venture, the company has set aside RM30 million for working capital and RM6 million to RM8 million for capital expenditure. Part of its head office in Bukit Jalil in Kuala Lumpur will be converted into the vaccine facility, which can be completed in three to four months.
To fulfil the funding requirement, Solution is planning for a private placement exercise. As at June 30, it had RM7.29 million cash at hand.
While it is too early to set a profit margin target, Lim indicates that the pricing from CanSino is “quite good and affordable to the public”.
Nazlee says that the company has had talks with representatives from the Ministry of Health and the feedback has been encouraging.
Solution Group reported a net loss of RM332,000 for the six months ended June 30, 2020, mainly due to the Movement Control Order, which affected project deliveries. It was in the red in 2018 and 2019, which Lim says was due to the slowdown in the equipment engineering business as a result of the weak economy.
“That’s why we are looking at other areas to grow the business, and 2021 will be a better year.”
Shares of Solution Group shot up to a 52-week high of 87 sen last Tuesday from just 29 sen on Aug 19.
Mechanical and electrical engineering works specialist Bintai Kinden has seen its share price rise more than fourfold, after it signed an MoU with vaccine research firm NuGenerex Immuno-Oncology (Generex) to fund and manage a synthetic peptide vaccine for Covid-19. Generex is principally involved in robust research and development into the creation of on-demand peptide vaccines to control pandemic viruses.
Meanwhile, HWGB is investing US$1 million (RM4.2 million) in a joint venture with US-based E-MO Biology Inc (EBI) that entitles it to 40% of profit from a commercialised vaccine.
On Aug 14, the wire and cable manufacturer told Bursa Malaysia that it will have exclusive rights for the production, distribution and sale of the repurposed vaccine, based on the polio vaccine, for use in preventing Covid-19 infections in Southeast Asian countries.
HWGB’s share price has risen 50% since early this month.
Last week, Pharmaniaga said its sterile liquid injectable plant, which is suitable for the fill and finish process of a Covid-19 vaccine, can produce around 10 million doses per month. A minimal investment cost of less than RM2 million is required.
The race for Covid-19 vaccines
There are hundreds of vaccines in various stages of development across the globe in the fight against the Covid-19 pandemic, which has taken a toll on human lives and ravaged economies.
Regionally, China is leading the vaccine race, with CanSino, state-owned China National Pharmaceutical Group Co (Sinopharma) and private firm Sinovac Biotech Ltd seen as strong contenders.
Indonesia, which has the second highest number of coronavirus infections in Southeast Asia, has booked 50 million vaccine doses from Sinovac. Reports say Pakistan, Saudi Arabia and Russia have agreed to conduct Phase 3 trials of CanSino’s candidate while Indonesia and Brazil are helping with Phase 3 trials of Sinovac’s CoronaVac.
Meanwhile, the big names in the West include AstraZeneca, Moderna Inc, Johnson & Johnson and Pfizer Inc, which are still testing their experimental vaccines.
Russia is preparing to approve a second vaccine in late September or early October after it became the first country to grant regulatory approval to the “Sputnik V” vaccine after less than two months of human testing, prompting experts to caution against its use.
In the latest development, Reuters reported that the European Commission (EU) has made a down payment of €336 million (RM1.67 billion) to AstraZeneca to secure at least 300 million doses of its potential Covid-19 vaccine. Earlier, the EU was said to have concluded exploratory talks with Johnson & Johnson to buy 200 million doses of its potential vaccine.
Last Thursday, Reuters reported that German drug developer BioNTech SE had announced a potential deal with Shanghai Fosun Pharmaceutical (Group) Co Ltd to supply 10 million doses of its vaccine candidate to Hong Kong and Macau.
JF Apex Securities says in an Aug 27 note that it expects vaccines to be distributed globally in 1Q2021 as two vaccines developed by CanSino and Russia’s The Gamaleya Research Institute are being approved with early or limited usage. “Moreover, there are eight vaccines that are running the last phase of the clinical trial, whereby scientists gave the vaccines to thousands of people and are monitoring the infection rate closely, compared with volunteers who received a placebo. Notably, the vaccine would be considered effective if it can protect at least 50% of vaccinated people, according to the US Food and Drug Administration (FDA).”
The FDA has issued emergency use authorisations for many Covid-19 tests and for a few treatments.
RHB Research’s base case is for at least one Phase 3 successful result to be available in 1Q2021 and general emergency use authorisation to be granted for the general public in 1H2021. “However, it is impossible to determine if any of the vaccine candidates currently in trial will work as even the most promising Phase 2 results can still fail in Phase 3, as reported by the FDA,” it says in a research note.
Compared with its peers, AstraZeneca has the earliest target to roll out its vaccine in September.
http://www.theedgemarkets.com/article/vaccine-ventures-pique-investor-interest
