INNOVENT BIO released the 2022 mid-year report. In the first half of 2022, the company achieved operating income of 2.24 billion yuan, an increase of 15.3% over the same period last year, of which product sales revenue was 2.041 billion yuan, an increase of 10.0% over the same period last year. The loss was 1.085 billion yuan, compared with 677 million yuan in the same period in 2021.
Viewpoint: health insurance price reduction, epidemic restrictions on product sales, global cooperation to promote the overall growth of biopharma in the first half of 2022 income is in line with expectations. Product sales are affected by the price reduction of the main product Dabeshu new health insurance and the epidemic situation in many places, but the overall sales volume is still growing rapidly and the contribution of new product revenue is increasing. The expansion of losses mainly comes from strong investment in research and development, which promotes the process of innovative drug research and development, and is expected to continue to realize value in the future.
From a product-by-product point of view, partner Eli Lilly and Co reported that the sales of Xindili monoclonal antibody in the first half of the year were US $159 million, equivalent to RMB 1.1 billion, down 26% from the same period last year. The sales of Q2 were down by US $73.6 million, equivalent to RMB 500 million, and slightly lower than Q1 by 14%. Mainly due to repeated epidemics in many places and the implementation of epidemic prevention measures, product sales are limited.
Despite a 62% drop in the price of new health insurance, sales of Cindilizumab continue to rise rapidly. Among other products, we estimate that the total sales of bevacizu, rituximab and adamumab bioanalogues are more than 500 million yuan, and the combined income of Orebatinib and pemitinib is 50-100 million yuan. We believe that the impact of the epidemic and the short-term impact of price reduction is temporary. In the second half of the year, on the basis of the stable and controllable domestic epidemic, the benefits of the company's commercial management will be gradually released, and the annual performance will maintain the momentum of growth.
In terms of commercialization, the gross profit margin on product sales was 78.6%, a decrease of 11.2pp compared with the same period in 2021. This is mainly due to a sharp reduction in the price of Cindilizumab, a low gross profit margin at the initial stage of commercialization of new cooperative products, and an increase in the proportion of sales of biomimetic drugs with low gross margin. Since the beginning of the year, the company has set up a fine commercial framework and set up six BU divisions. Accurate sales management is expected to give full play to the commercialization ability of the company, maximize the commercial value of products, and enter the second stage of commercialization.
The product has been approved frequently, and the commercial echelon is becoming more and more abundant. In the first half of 2022, one new listed product ramoximab was used in 2L gastric cancer; two products were expanded and commercialized: 1) pemitinib was approved to be listed in Hong Kong and Chinese mainland, China; 2) bevacizumab was approved in Indonesia; 3 products were expanded: 1) 1L esophageal cancer and 1L gastric cancer were approved by Cindilizumab; 2) bevacizumab was approved for ovarian and cervical cancer treatment. 3) Adamumab was approved for the treatment of Crohn's disease in adults and children. In addition, applications for listing of 5 products were accepted, important data of a number of products were read out, and important progress was made in clinical research and development.
Overseas clinic continues to advance, and cooperation leads the development of globalization. Carry out or plan to carry out clinical research in the United States, Australia and other places to deeply tap the potential of product globalization. The company reached important cooperation with Eli Lilly and Co in March 2022 and Sanofi in August 2022 respectively. Expand the scope of long-term cooperation with Eli Lilly and Co, introduce the rights and interests of blockbuster products VEGFR2 McAb and RET inhibitors in China, and obtain the development and commercialization rights and equity investment of 300 million euros of two tumor products in China. The cooperation with multinational pharmaceutical companies not only further enriches the product pipeline, but also shows the recognition of the comprehensive platform ability of R & D and commercialization of multinational pharmaceutical companies.
Profit forecast and investment advice. The company is a domestic scarce Biotech with international vision and innovative drug integration platform, profound R & D echelon has been formed, and future growth is expected. It is estimated that the company's revenue from 2022 to 2024 will be 5.411 billion yuan, 7.047 billion yuan and 9.145 billion yuan respectively, an increase of 26.7%, 30.2% and 29.8% over the same period last year. We are optimistic about the international development of the company and maintain its "buy" rating.
Risk tips: the risk of R & D failure; the risk of product price reduction; the risk that product sales are not as expected.