NEW YORK, Jan. 24, 2024 (GLOBE NEWSWIRE) -- Diamond Equity Research, a leading equity research firm with a focus on small capitalization public companies, has released an update note on YS Biopharma Co., Ltd. (NASDAQ: YS). The update note includes information on YS Biopharma's financial results, management commentary, recent developments, outlook, risks, and our revised valuation estimates.
The update note is available here. Highlights from the note include:
- First Half FY 2024 Financial Result Update - In the first half of the fiscal year 2024, total revenue amounted to RMB 273.1 million compared to RMB 399.5 million in the same period of the previous year, recording a year-over-year decline of 31.6%. This significant reduction in topline is predominantly attributed to the impact of COVID-related disruptions leading to significant supply chain challenges and inventory issues at its YSJA rabies vaccine manufacturing facilities. Despite these challenges, the company maintained a robust gross profit margin profile, with margins expanding to 80.9% compared to 76.5% in the first half of the previous year. The period was also marked by escalated operating expenses, with total operating expenses recording a year-over-year increase of 24.9% to RMB 404.2 million, thus contributing to expansion in net losses. This was driven by increased spending in selling and marketing for YSJA vaccine promotion, higher general and administrative costs due to public listing expenses and salaries, and intensified research and development efforts for its vaccine pipeline. The total operating cash burn for the first half of fiscal year 2024 amounted to RMB 145.83 million, while the end of the period cash reserves were reported at RMB 259.9 million. Despite these external headwinds, the management outlook for the second half of the year remains optimistic, underpinned by various operational enhancements in production and supply chain processes, particularly for the YSJA rabies vaccine. The company has effectively overcome the inventory issues caused by earlier COVID-19-related disruptions and has streamlined operations. The operational turnaround is expected to yield a 50% increase in YSJA rabies vaccine revenues in Q3 2024 compared to Q2 2024.
- PIKA Rabies Vaccine Development Update - YS Biopharma Co., Ltd has successfully completed the enrollment for its Phase 3 clinical trial (NCT05667974) of the PIKA Rabies Vaccine, marking a significant milestone in the development of this innovative candidate. With 4,500 subjects enrolled across multiple countries, this trial is pivotal in evaluating the vaccine’s effectiveness, safety, and consistency. The PIKA Rabies Vaccine, leveraging YS Biopharma’s proprietary PIKA adjuvant technology, promises a potentially more rapid and robust immune response compared to traditional vaccines, potentially setting a new standard in rabies prevention. Early phase trials in China and Singapore showed promising results, and this large-scale study aims to validate these findings and demonstrate the vaccine’s superiority to existing options. This advancement aligns with the WHO’s goal for shorter vaccine regimens and represents a significant stride in YS Biopharma's commitment to addressing global health challenges. The success of this trial could position the company favorably in the market, offering a potentially novel solution in the fight against a fatal disease with a worldwide impact.
- Valuation - The reported decrease in revenue, in our view, appears transient and may not be indicative of the company’s long-term performance potential. Despite the first-half results mirroring short-lived historical challenges, the company’s strategic responses, promising clinical pipeline and a stable financial position provide a solid foundation for its future growth and profitability. We have updated our valuation model, incorporating the latest financial results while re-assessing the comparable company analysis. Rolling over the valuation model, we reiterate our valuation of $5.10 per share, contingent on successful execution by the company.
About YS Biopharma Co., Ltd.
YS Biopharma Co., Ltd. is a Beijing-based biopharmaceutical company founded in 2002. Specializing in vaccines and therapeutic biologics, it targets diseases such as Rabies, Coronavirus, Hepatitis B, Influenza and Shingles via a proprietary PIKA® immunomodulating technology platform. The firm operates in various regions including China, the U.S., and Southeast Asian Countries.
For more information, visit https://www.ysbiopharm.com/
About Diamond Equity Research
Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on major institutional investor platforms.
For more information, visit https://www.diamondequityresearch.com.
Disclosures:
Diamond Equity Research LLC is being compensated by YS Biopharma Co., Ltd. for producing research materials regarding YS Biopharma Co., Ltd. and its securities, which is meant to subsidize the high cost of creating the report and monitoring the security, however the views in the report reflect that of Diamond Equity Research. All payments are received upfront and are billed for an annual or semi-annual research engagement. As of 01/24/24 the issuer had paid us $40,000 for our company sponsored research services, which commenced 07/01/23 and is billed annually, consisting of $20,000 for an initiation and update note and $20,000 for a minimum of two follow on notes, due upfront in each period for respective services as part of a $40,000 annual research term fee. Diamond Equity Research LLC may be compensated for non-research related services, including presenting at Diamond Equity Research investment conferences, press releases and other additional services. The non-research related service cost is dependent on the company, but usually do not exceed $5,000. The issuer has paid us for non-research related services as of 01/24/24 consisting of $3,000 for a virtual investment conference. Issuers are not required to engage us for these additional services. Additional fees may have accrued since then. Although Diamond Equity Research company sponsored reports are based on publicly available information and although no investment recommendations are made within our company sponsored research reports, given the small capitalization nature of the companies we cover we have adopted an internal trading procedure around the public companies by whom we are engaged, with investors able to find such policy on our website public disclosures page. This report and press release do not consider individual circumstances and does not take into consideration individual investor preferences. Statements within this report may constitute forward-looking statements, these statements involve many risk factors and general uncertainties around the business, industry, and macroeconomic environment. Investors need to be aware of the high degree of risk in small capitalization equities, including the complete loss of their investment. Investors can find various risk factors in the initiation report and in the respective financial filings for YS Biopharma Co., Ltd. should consult the update note for full disclosures.
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