Events:
The company released its semi-annual report for 2022, with an operating income of 2.24 billion yuan, + 15.34% compared with the same period last year, and a loss of 1.085 billion yuan, expanding the range of losses compared with the same period last year.
Comments:
Medical insurance price reduction and epidemic situation affect short-term performance, product sales structure layout is more balanced: 2022H1, the company's product income is 2040.9 million yuan, + 10.0% compared with the same period last year. Although the price of Dabeshu (Xindirizumab injection) has dropped significantly due to its inclusion in the latest national health insurance catalogue, the rapid growth of product sales and the increasing contribution of new products continue to drive the overall growth of product revenue. However, the growth rate of product revenue has been partially affected by repeated COVID-19 outbreaks in several areas of Chinese mainland and the relevant epidemic prevention measures taken by the government. The company's gross profit margin in the first half of the year was 78.6%, a year-on-year decline of 11.2pp, mainly due to a sharp drop in the unit price of Dabeshu (Xindirizumab injection), a low gross profit margin for new cooperative products, and an increase in the proportion of biomimetic products with relatively low gross profit margins. The expenditure on sales and marketing of 2022H1 was 1361.6 million yuan, accounting for 60.8% of total revenue / 66.7% of product revenue, 54.2% of total revenue / 56.7% of product revenue in the same period last year, and 64.2% of total revenue / 69.4% of product revenue in the second half of last year. The increase in sales expenditure was mainly due to the increase in approved products and a wider range of commercial activities. The team expanded from 2117 in 2021H1 to 2745 in 2022H1. The channel covers more than 5000 hospitals and more than 1000 DTP pharmacies across the country.
Continue to invest heavily in research and development, and create a growing product matrix of new drugs: 2022H1, the company spends 1077.7 million yuan on R & D, an increase of 198.1 million yuan over the same period last year. In the first half of the year, the company approved the listing of a number of products:
Cyramza (ramoximab): in March 2022, the State Drug Administration (NMPA) approved for use in patients with advanced second-line or metastatic gastric or gastroesophageal junction adenocarcinoma (GC)
Dabeshu (Cindilizumab injection): approved two indications, including first-line esophageal squamous cell carcinoma (ESCC) and first-line GC, as the first PD-1 inhibitor for five high-incidence cancer species in China, including first-line non-small cell lung cancer (NSCLC), first-line squamous NSCLC, first-line hepatocellular carcinoma (HCC), first-line ESCC and first-line GC.
Dabotan (pemitinib): in January 2022, the Department of Health of the Hong Kong Special Administrative region approved the listing application for adults with disease progression after at least one previous systemic treatment, fibroblast growth factor receptor 2 (FGFR2) fusion or rearrangement, unresectable locally advanced or metastatic cholangiocarcinoma (mCCA); in April 2022, NMPA approved the product to market.
Daioutong (bevacizumab bioanalogue): in March 2022, NMPA approved the fifth and sixth indications for ovarian cancer (OC) and cervical cancer (CC), respectively.
Bevagen (bevacizumab bioanalogue): in June 2022, the Food and Drug Administration of Indonesia approved five indications for the treatment of metastatic colorectal cancer, locally recurrent triple negative breast cancer, advanced or recurrent NSCLC, OC and CC.
Su Lixin (adamumab bioanalogue): in June 2022, NMPA approved the seventh and eighth indications for the treatment of Crohn's disease in adults and children; significant progress was made in the clinical development of the company's pipeline in several later stages, and applications for the marketing of three new products were submitted:
Retsevmo (Septinib, RET inhibitor): the listing application was accepted in August 2021 and is currently under review for the treatment of metastatic RET fusion positive NSCLC adult patients, advanced or metastatic RET mutation positive thyroid medullary carcinoma (MTC) adults and patients over 12 years of age who need systematic treatment, and advanced or metastatic RET mutation positive thyroid cancer adults and patients over 12 years old who need systematic treatment and are refractory to radioiodine.
IBI-306 (Tolesi monoclonal antibody, anti-PCSK9 antibody): market application was accepted in June 2022 for the treatment of primary hypercholesterolemia (including heterozygous familial and non-familial hypercholesterolemia) and mixed dyslipidemia
IBI-326 (BCMA CAR-T): market application was accepted in June 2022 for the treatment of relapsed / refractory multiple myeloma
Other ongoing late-stage assets include IBI-344 (taletrectinib,ROS1/NTRK TKI), IBI-376 (parsaclisib,PI3K δ inhibitor) and IBI-310 (CTLA-4 antibody).
Great progress has been made in internationalization and highly recognized by the global innovative drug platform: in March 2022, the company reached a deepening strategic cooperation with Eli Lilly and Co on the exclusive commercial rights of ramoximab and zeptini in China, as well as the priority negotiation right for the future commercialization of pirtobrutinib in China, further strengthening the high incidence rate. In August 2022, the company reached a strategic cooperation with Sanofi to develop innovative drugs, including clinical III phase SAR408701 (tusamitamab ravtansine, anti-CEACAM5 ADC) and clinical II phase SAR444245 (non-alpha biased IL-2). To explore the clinical study of the two drugs combined with Cindilizumab. In addition to strategic cooperation and licensing agreements, Sanofi has made an initial equity investment of 3 million euros by subscribing for new common shares of the company. The company continues to establish cooperative relations with global pharmaceutical and biotechnology companies and has achieved good results. the ability of an integrated platform for innovative drug research, production and commercialization has been internationally recognized, and will further empower innovative drug research and development through international cooperation in the future. bring significant synergy and potential value for clinical and commercialization, and accelerate the development of the company.
Profit forecast, valuation and rating: in view of the fact that the company's loss in the first half of the year is larger than we had expected, and the investment in R & D will continue to increase in the future, the net profit of 2022-2024 is forecast to be-20.94 million (originally estimated to be-17.65 million, and reduced by 19%, 12% and 8% respectively). According to the latest equity estimate, the EPS is-1.37Universe 0.700.33 yuan. Considering the continuous strength of the company's comprehensive platform for innovative drugs, it has great potential in the future and maintains a "buy" rating.
Risk hints: the risk that the progress of research and development falls short of expectations; the risk that sales do not meet expectations; and the risk that international cooperation does not meet expectations.