What's new
　　On June 21, 2022, Ocumension Therapeutics announced that its core product OT-401 (YUTIQ) has been approved by the National Medical Products Administration for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye (chronic NIU-PS).
　　Comments
　　According to the company’s announcement, OT-401 (YUTIQ) is the first and only uveitis treatment designed to deliver fluocinolone for up to 36 months that has been approved by the US Food and Drug Administration (FDA). Licensed-in from EyePoint, it is a sustained-release micro intravitreal steroid implant. According to Ocumension Therapeutics, NIU-PS is the second most common blind eye disease in China, and its patients’ average age is 33. Frost & Sullivan data shows that China will likely have 1.6mn NIU-PS patients in 2025. We believe that with the approval of OT-401, the company should open a new chapter of commercialized products.
　　Pipeline continues to benefit from promotion agreements with Viatris. As of June 2022, Ocumension Therapeutics has over 20 drug assets in the portfolio. It has announced promotion agreements with Viatris China, pursuant to which the company became the exclusive promoter and marketer in hospitals nationwide in China of three Viatris drugs: Xalatan, Xalacom and AZEP. The company announced in March 2022 that primary clinical endpoint has been achieved in the Phase III clinical trial of OT-1001. In June, Ocumension Therapeutics received the approval for Phase III clinical trial of OT-703 in China.
　　Enriched pipeline leads to progress in sales. Ocumension Therapeutics stated in its 2021 annual report that its products were placed in 1,024 hospitals in China (including 59 Grade III hospitals). In our view, promotion with Viatris may further help the company rapidly broaden sales channels to public hospitals and Grade III hospitals. Ocumension Therapeutics announced the new Suzhou factory was inaugurated in October 2021 and has commenced trial production, with production capacity expected to reach 455mn doses per year.
　　Financials and valuation
　　Considering the effect of COVID-19, we lower our revenue forecast for 2022e by 24.1% to Rmb130mn, and for 2023e by 11.7% to Rmb350mn. However, as expenses may decline with the effects of scale, we keep our forecast for net losses at Rmb181mn in 2022e and Rmb135mn in 2023e. We maintain an OUTPERFORM rating and our DCF-based TP of HK$16.60, offering 40.7% upside from the current price.
　　Risks
　　New launch disappoints; sales of drug candidates disappoint.