Handa Pharmaceuticals faced a setback in May when its application to go public hit an unexpected snag. However, on the 20th, the company held its first investor conference since the incident. CEO Toshiyo Chen stated that revenue for the April-June period had stabilized after an earlier correction. The adjustment was mainly due to competition from a new player affecting sales of HND-002, a generic drug for gastroesophageal reflux disease (GERD). Handa's partner's projected sales figures had significantly diverged from actual sales, necessitating the correction. With HND-002 sales stabilizing and their new orally disintegrating tablet for multiple sclerosis, TASCENSO, entering a breakthrough growth phase, Handa expects stronger performance in the second half of the year. Additionally, the company anticipates receiving FDA approval for HND-032, a generic smoking cessation aid, and HND-033, a new salt formulation for treating blood cancer, by 2025.
Handa operates with a dual-engine strategy focused on high-barrier generic drugs and 505(b)(2) new drugs. According to Chen, generic drugs allow for quick profitability, bolstering the company's cash flow. For instance, only a few companies can manufacture HND-002, with the market currently consisting of three players: TWi Biotechnology, Handa, and Mylan. New drugs, on the other hand, contribute to stable revenue growth. Internally, the company aims to file for approval or launch one product per year, though the approval timelines for HND-032 and HND-033 are likely to be pushed to next year.
For the first half of the year, Handa reported revenue of NT$433 million, a 24% year-on-year decline, with a gross margin of 100%. Operating expenses increased by 21% to NT$200 million, mainly due to higher R&D costs, resulting in an operating profit margin of 54%. The company also reported other losses of NT$14.76 million, which includes settlement amounts with three insurance companies. The net profit after tax was NT$219 million, with an EPS of NT$1.56.
The decline in first-half performance was primarily due to the impact of competition from Mylan on HND-002 sales in the U.S. The 60 mg dosage, which dominates the market at approximately 85%, saw a 13% decline in shipments in Q1, though this rebounded by 1% in Q2. However, pricing dropped by 18% and 17% in the respective quarters, leading to a 31% and 24% decline in profit-sharing. Meanwhile, TASCENSO saw significant growth, with shipments increasing by 33% in Q1 and 64% in Q2, and profit-sharing up by 42% and 113% in the respective quarters.
Chen noted that Mylan entered the market in February, with the most significant impact felt during the April-June period, especially on pricing. While profit-sharing was reduced by about 30% in Q1, market competition has since stabilized, barring the introduction of another competing product. The performance of TASCENSO is on an upward trajectory, with sales contributions increasing to 17% in the first half of the year. However, the product may not yet reach the sales milestone required for milestone payments, which would require around 850 patients. Overall, Chen expects Handa’s performance in the second half of the year to surpass that of the first half.
Regarding the revenue correction announced in July, Chen explained that it primarily stemmed from the GERD drug HND-002, where the monthly and final quarterly sales data varied significantly due to competition. The company has since communicated with its partners to ensure more detailed reporting on sales volume and pricing, allowing for better internal validation and reducing the likelihood of future adjustments.
On the progress of HND-032 and HND-033's FDA applications, Chen reported that the high-fat bioequivalence (BE) study for HND-033 has passed, but a low-fat study has shown one parameter exceeding the standard. The company plans to compile literature and pharmacokinetic (PK) data to demonstrate that the deviation poses no safety concerns and will request a meeting with the FDA for discussion. In parallel, they are preparing a Complete Response Letter (CRL) response to the FDA. Once the FDA’s position is clear, and if no additional information is required, Handa can quickly resubmit the application. As for HND-032, the FDA’s latest response indicated that if a facility inspection is required, the goal date for review is May next year; if not, the review could be completed by March. Since the FDA has already inspected the manufacturing facility, a second inspection is considered unlikely. The company currently targets 2025 for obtaining approval for both drugs.
Regarding the much-anticipated IPO, Chen stated that the company will choose the right time to proceed with the application, exploring both the Taipei Exchange and the Taiwan Stock Exchange. Although the company's technology business unit will have been operational for a year by the end of this year, if Handa continues to be profitable, unlike previous applications that focused on a few products within the technology business unit, the IPO is unlikely to be contingent on the filing for HND-033.
Resource (mandarin): 漢達多發硬化症新藥進入突破成長期，下半年營運看增，將重啟IPO計畫
