The company's 1H21 revenue increased 78% year-on-year to 23.13 million yuan, and Guimu's net loss was reduced from 130 million yuan in the same period last year to 120 million yuan. The company's two products (temozolomide capsules and medigestrel acetate suspension) were approved for marketing by NMPA in May 2021. We maintain our buy rating and target price of HK$9.5.
2020 results and outlook. 1H21's revenue increased 78% year over year to RMB 23.13 million, and Guimu's net loss was reduced from RMB 130 million in the same period last year to RMB 120 million. Revenue growth was mainly due to the company's expansion of CDMO/CMO business, and sector revenue growth was strong. R&D expenses fell 11% year-on-year to 88.75 million yuan, mainly due to the end of TOZ309 R&D, the reduction in related R&D consumables expenses, and the completion of clinical phase III of TAB008.
The growth rate of the CDMO business is impressive, and the ADC drug CDMO is the focus of subsequent development. The company's 1H21CDMO business revenue increased 330% year-on-year to RMB 11.67 million, and its share of revenue increased from 21% of 1H20 to 50% of 1H21. The amount of new CDMO orders signed on 1H21 is close to 100 million yuan. Looking at molecular types, ADC, monoclonal antibody, and chemical drug projects currently account for 39%, 34%, and 27% of the CDMO orders signed by Dongyao, respectively. ADC CDMO will be the company's key development direction in the future. Currently, there are not many domestic service providers that can provide ADC CDMO. The company has advantages in technology, production capacity, and production experience. It is expected that in the future, the ADC CDMO business will become the main contributor to the company's revenue in addition to core drug sales.
TAB008 is expected to be marketed on 3Q/4Q21, and clinical phase III of TAA013 is progressing according to plan. The company's two core products, Park Hin-ting (TAB008) and TAA013, are advancing as expected. The listing application for the biosimilar bevacizumab paruxintin (TAB008) was accepted by NMPA in September last year, and pre-marketing drug registration checks were completed in January 2021. The company expects to be approved for listing during the 3Q21-4Q21 period. The anti-HER2 ADC product TAA013 completed the first phase III participant enrollment in July 2020. Currently, the enrollment rate is proceeding as scheduled. More than 70 clinical research centers have been launched across the country, and the company maintains the decision to be approved for marketing in 2023.
Temozolid capsules and medigestrel acetate suspension were marketed in May. The company's two products, temozolomide capsules (metazolamide) and medeprogesterone acetate suspension (methicia), were approved for listing in May. Among them, metazepam plans to participate in the 2021 collection, and the company hopes that the drug will cover more than 80% of provinces in 2021, and 1Q22 will complete 100% provincial coverage. Metsiah sells products on behalf of the company. It is also the first approved high-concentration megalestrel acetate suspension in China and the first nano-oral suspension to be marketed in the world. The novel formulation can improve patient compliance and improve human absorption, and is expected to fill the gap in the market for this dosage form of medigestrel acetate.
Reiterate the buying rating and maintain the target price of HK$9.5. We used RnPV to value the company. The company's RnPV was valued at HK$5.37 billion, corresponding to a value of HK$9.5 per share.
Investment risks: Drug development was delayed, clinical trials failed; collection price reductions exceeded expectations; drug sales fell short of expectations.
