Walvax Biotech Optimizes Vaccine Innovation Portfolio and Restructures Organizational Framework

Jun 27, 2024 00:01 CST Updated 00:01

Walvax

Human Vaccine Research and Development, Manufacturer

Abogen

Nucleic Acid Drug Developer

Based on the optimization of the vaccine technology innovation landscape, on the evening of June 25, Walvax Biotechnology Co., Ltd. announced that it had decided to terminate the technical development cooperation with Abogen Biosciences regarding the COVID-19 mRNA vaccine and the shingles mRNA vaccine.

The announcement stated that the decision to terminate the project would not affect the company’s ongoing strategic layout of mRNA vaccine technology, nor would it impact the research and development work of other projects in progress. The company will continue to advance the research, development, and industrialization of other mRNA vaccine products currently under development, including mRNA vaccines for COVID-19 variants, respiratory syncytial virus mRNA vaccines, and influenza virus mRNA vaccines.

Walvax's announcement shows that, based on the global mutation of the novel coronavirus, the evolution of the epidemic, and the usage of vaccines, the company will fully focus on the iterative upgrade and industrialization of vaccines for mutated strains of the novel coronavirus. At the same time, considering the overall business development plans of all parties, and after friendly consultations, it has been decided to terminate the technical development cooperation for the mRNA vaccine of the novel coronavirus and the mRNA vaccine for shingles.

The announcement stated that the above decision to terminate was a prudent decision made after comprehensively considering the company's overall business development plan and current operating status, and aligns with the company’s overall development strategy. It will not have a significant impact on the company's normal production and operations, nor is it expected to cause any material adverse effect on the company’s current operating performance. There is no circumstance of harming the interests of the company or its shareholders, especially small and medium shareholders.

At the same time, the board of directors of Walvax Biotechnology Co., Ltd. reviewed and approved the company's latest organizational structure. According to the announcement by Walvax, based on the need for the company’s long-term sustainable development and in response to the profound changes in current market demands and competitive landscape, after thorough research and论证, to strengthen organizational capability building, the company has further optimized its organizational structure and system. The aim is to stimulate and enhance organizational vitality and combat effectiveness through reform, using organizational strength to drive strategic transformation and long-term growth.

Clear up legacy issues,Focus on Heavyweight Products

From 2020 to 2022, Walvax Biotechnology Co., Ltd. successively initiated the development of multiple technical routes for COVID-19 vaccines. The mRNA vaccine for the novel coronavirus, which was announced to have its clinical trials terminated in this announcement, received Emergency Use Authorization (EUA) in Indonesia in September 2022. Prior to this, Walvax had already terminated clinical trials for the recombinant COVID-19 vaccine (CHO cell), the recombinant variant strain COVID-19 vaccine (CHO cell), and the recombinant COVID-19 vaccine (chimpanzee adenovirus vector).

From the perspective of capital investment, unlike comparable companies in the past, all of Walvax's terminated COVID-19 vaccine projects are innovative products. The early-stage R&D investments have already been expensed in the current period, and some excess raw materials and consumables have also been gradually written off. Following this termination, the previous concern from the capital market that the termination or failure of related projects might lead to substantial write-off losses for the company’s current performance has now been alleviated. Public information from Walvax indicates that this termination of cooperation will not significantly impact the company's normal production and operations, nor is it expected to cause any material adverse effects on its current operating performance. The resolution of this long-standing "Sword of Damocles" in the market suggests that Walvax has largely cleared historical issues, setting a fresh tone for new business developments.

Walvax stated that through the cooperative development of the COVID-19 vaccine, the company has rapidly built an adenovirus vector vaccine platform and an mRNA vaccine technology platform in a short period of time. The positive results achieved in the adenovirus vector vaccine technology platform and nasal spray as a new vaccine delivery method have laid the foundation for the future development of other adenovirus vector vaccine products and new delivery methods.

Following this termination, Walvax's R&D resources for the COVID-19 vaccine will be fully concentrated on its mRNA vaccine targeting the Omicron XBB.1.5 variant (code name: RQ3033). This product was approved for emergency use in China last December. It is the first Chinese-produced mRNA vaccine against current variants like XBB to be granted emergency use based on complete Phase III safety and efficacy data through immunogenicity bridging clinical trials. Walvax has already submitted an application for the market launch of this vaccine in Indonesia and is also striving for its registration and market approval in China.

Moreover, Walvax stated that the JN.1 variant belongs to the Omicron variant. Previous infections and vaccinations with COVID-19 vaccines targeting the XBB variant provide cross-immune protection against the JN.1 variant. In the future, the company will work with its partners to continuously advance the product's iterative upgrades by methods such as immunogenicity bridging, in line with the mutation of the coronavirus and China’s overall vaccination strategy. The future mRNA combined COVID-19 and influenza vaccine will also be a key focus of its R&D efforts.

With Strategy and Management Transformation,Face External Challenges

The outbreak of the COVID-19 pandemic has increased public awareness of vaccines, giving rise to and accelerating the emergence of a group of China-produced vaccine companies. Numerous pharmaceutical enterprises in China have entered the field of COVID-19 mRNA vaccine research and development. According to incomplete statistics, there are at least 55 companies in China working in this area, making the competition in the innovative vaccine technology sector unprecedentedly fierce.

Currently, Walvax, through joint efforts with its partners, has gradually built an independently controlled and rapidly iterative mRNA technology platform. Meanwhile, the company has established mature and stable bacterial vaccine and recombinant protein vaccine technology platforms, and has collaborated with partners to construct a recombinant adenovirus vaccine technology platform. The vaccine preparation principles and production processes of the four technology platforms are different, and the corresponding standards for the professional background and skill requirements of the R&D personnel vary. There are also differences in R&D focus, production, and quality control.

Public information shows that in Walvax’s organizational structure before the adjustment, the R&D division and the marketing division were independent of each other and not further subdivided. With the increase in the company's R&D projects, the expansion of personnel, and the high demand for comprehensive knowledge across the entire business chain, the centralized and unified "line-staff system" could lead to poor communication between business departments and a decline in work efficiency, restricting the company’s further development.

The recent adjustment to a "Business Unit (BU)" organizational structure has integrated the R&D and marketing sectors into a unified business platform, further dividing the marketing sector into the domestic market and international market. Relevant representatives stated that in recent years, the proportion of Walvax’s international market sales in overall revenue has been continuously increasing. The business models, market environments, and personnel requirements for domestic and international sales vary significantly. Through this internal structural adjustment and segmentation, the company is better positioned to select and appoint professional marketing talents and management for both the international and domestic markets. This allows specialized managers to lead expert teams in precisely targeting market positioning. Additionally, it facilitates the differentiation of performance evaluation goals for internal staff.

At the same time, Walvax innovatively divides the four major technology platforms into independent small business units, granting them full authority under the company’s macro leadership to enhance management efficiency. This approach fully leverages the expertise of professionals in their respective fields, improves work quality, reduces risks and errors, and ensures that each small business unit has complete operational autonomy with independent management and accounting. It breaks down information asymmetry barriers between research and development, production, and sales, achieving integrated management. This allows for a more agile understanding of and response to the market, aligning with the new consumer trend where demand drives supply.In addition, Walvax has matched its business platform with capability and management platforms to alleviate inter-departmental collaboration pressures. Subsequently, it can also address the specific characteristics of each small business unit in a targeted manner.ChinaFormulate a reasonable assessment mechanism.

After this adjustment, Walvax's basic organizational structure will gradually form a two-dimensional structure divided into strategic business units with streamlined and optimized headquarters functions, marking an important step for Walvax to align with China's top enterprises.

According to public information, as ofToBy the end of the first quarter of 2024, Walvax achieved a revenue of 600 million yuan, a year-on-year decrease of 28.02%. The net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, was 84.03 million yuan, a year-on-year decrease of 37.37%. The company's operating performance is under pressure.However, with the gradual resolution of historical legacy issues, the company's R&D expenses in the first quarter have decreased by 91.8876 million yuan compared to the same period last year, and sales expenses have decreased by 94.5787 million yuan. It is expected that subsequent expenses will be further reduced.

On the other hand, Walvax's consolidated balance sheet at the end of the first quarter showed 4.112 billion yuan in cash and cash equivalents, with a debt-to-asset ratio of only 25.69%. With relatively abundant cash reserves and holding the platform for launching three major blockbuster vaccines—PCV13, HPV2, and a COVID-19 variant mRNA vaccine—the company’s market valuation is currently around 18 billion yuan, increasingly highlighting its investment value.

This article is for reference only and does not constitute investment advice.