This article first appeared in The Edge Malaysia Weekly on November 16, 2020 - November 22, 2020
BINTAI Kinden Corp Bhd’s healthcare venture stems from the need to create a new source of income in view of the fluctuation seen in its core mechanical and electrical (M&E) engineering business, which involves project tenders. The right to distribute the Covid-19 vaccine in Southeast Asia is seen as a boost to its profitability.
“Healthcare solution is on the horizon for Bintai Kinden. We hope the new segment can contribute more than 25% to the company’s profits in the future,” Ong Choon Lui, managing director of the M&E specialist, tells The Edge in an interview.
Last month, Bintai Kinden signed a distribution and licensing agreement with US-based Generex Biotechnology Corp and its subsidiary NuGenerex Immuno-Oncology Inc for their Covid-19 vaccine. Under the agreement, the company is granted the exclusive right to distribute, sell and commercialise the vaccine in Southeast Asia. It also has the right of first refusal to commercially exploit the vaccine in New Zealand and Australia as well as the global halal market.
Although the vaccine Generex is developing is still in the pre-clinical trial stage, Ong is not concerned. “This is not a competition. We do not have enough vaccines for the world population. It is not that you can dominate the market if you are fast [in the commercialisation of vaccines],” he points out.
Generex is targeting to get the US Food and Drug Administration’s approval in the first or second quarter of 2021. Once available, Bintai Kinden will import the vaccine directly to Malaysia and other markets in the region in the initial stage before setting up a facility here to undertake the fill-and-finish processes. This will enable the vaccine to be distributed to the market more quickly.
Ong says the company is looking to distribute the vaccine to both private and government hospitals. “We should not be confined to the private sector. We may tender for government contracts. If the vaccine is good, we should make it available to everyone.”
Bintai Kinden has to pay Generex US$2.63 million (RM10.93 million) for the pre-commercialisation stage and US$10 million for the commercialisation stage, in relation to the intellectual property, commercialisation, distribution, licensing and other rights granted. It will use internal funds and bank borrowings to do so. “The licensing cost will be shared with our strategic partners in the other markets,” says Ong.
Last month, the company announced a private placement exercise that is expected to raise RM20.03 million.It is worth noting that its gross borrowings stood at RM158.7 million as at end-June, with a high gearing ratio of 2.06 times.
In September, Bintai Kinden signed a memorandum of understanding with Institut Jantung Negara Sdn Bhd (IJN) to explore a possible collaboration in the commercial development of the Covid-19 vaccine in Malaysia based on its partnership with Generex. Ong says IJN will lead the discussions with the Ministry of Health with regard to the vaccine distribution.
Last Friday, Bintai Kinden appointed Australia-listed International Equities Corp Ltd’s wholly-owned subsidiary IEC Properties Pty Ltd to supply the vaccine in Australia and New Zealand.
Ong does not rule out having more collaborations with Generex in the future if the results are positive.
Another new business that Bintai Kinden is planning to develop is a retirement village in Melaka for senior citizens from Malaysia and abroad. Spanning seven acres and with a gross development value of RM300 million, the project is slated for completion in seven years.
“It has been put on hold for a while because of the pandemic, but we are still doing the planning. We hope to complete the first phase within three years after the pandemic subsides,” says Ong.
After the outbreak, more detailed planning will be required, including the need for an isolation facility, he adds. “Malaysia is a favourite retirement destination. The medical cost in this country is one of the most attractive in the region.
“Within a 10km radius of the retirement village, there are at least seven private hospitals. The retirees will have the flexibility to move in or out from the retirement village. They will also be brought to experience various cultural activities.”
As for its core M&E business, Bintai Kinden has an outstanding order book of RM150 million, which will keep it busy for the next two years. It is hopeful of clinching another RM100 million worth of jobs in the next year.
It is worth noting that Bintai Kinden is heavily dependent on Tenaga Nasional Bhd for jobs, accounting for 70% of its top line. “Electricity is still an essential service and Tenaga remains our main customer,” says Ong.
“We need to be very innovative when going for open tenders. We try our best to be the most competitive. We provide more value-added services for clients and we have streamlined our processes to make more use of technology.”
For the first quarter ended June 30, Bintai Kinden slipped into the red with a net loss of RM1.31 million against a net profit of RM11.22 million a year ago, owing to the impact of the Movement Control Order that started in March.
In the financial year ended March 31 (FY2020), the group recorded a net loss of RM359,000 versus a net profit of RM335,000 a year ago. Its gross profit margin decreased from 15.9% to 12.93%.
“We will try to maintain profitability through cost cutting, including top management pay cuts by up to 40%. We expect 2021 to be a better year after we have gone through the cost-cutting exercise,” says its head of finance and accounts Ku Chong Hong.
Bintai Kinden’s share price has risen 600% since it first announced the vaccine venture in August. The stock closed at 73.5 sen last Thursday, valuing the company at RM257.32 million.
Rising vaccine optimism
According to the latest draft landscape of Covid-19 candidate vaccines issued by the World Health Organization (WHO) on Nov 3, 47 are in the clinical evaluation stage and 155 are in the pre-clinical evaluation stage.
There are four phases of biomedical clinical trials, with phase 4 being the most advanced. It takes place after receiving country approval and there is a need for further testing in a wide population over a longer timeframe.
Currently, vaccine developers such as Sinopharm, Sinovac, Cansino Biological, AstraZeneca, Moderna and Pfizer are in phase 3, whereby studies are conducted on larger populations and in different regions and countries, and is often the step right before a new treatment is approved.
WHO hopes a Covid-19 vaccine will be available by year-end, after Pfizer said its vaccine was more than 90% effective. The main issue, however, is that the vaccine has to be kept at minus 70°C. Also, it has not been tested over a long-enough period and production is limited to 50 million doses in 2020 and 1.3 billion in 2021.
Furthermore, two doses are required per person, which means the 50 million doses that will be produced this year will cover only 25 million people.
At 1.35 billion doses, Pfizer’s vaccine would reach less than 10% of the world’s population.
In Malaysia, the government is in the final stages of negotiations to participate in the Covid-19 Global Vaccine Access (COVAX) facility. The ceiling price set for the Covid-19 vaccine offered to Malaysia is US$21 (RM87.50) each, according to Science, Technology and Innovation Minister Khairy Jamaluddin.
The vaccine is expected to be available in Malaysia in the first quarter of 2021.
The government had earlier increased its allocation for immunisation for 70% of the population to RM3 billion, from RM1 billion.
As for Pharmaniaga Bhd’s memorandum of understanding with Serum Institute of India Pte Ltd, it is not immediately known which vaccine would be supplied to the former, as the latter is partnering the developers of various vaccine candidates, including AstraZeneca/University of Oxford and Novavax Inc.
Meanwhile, Duopharma Biotech Bhd has not announced any partnership for the supply of vaccines.
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