1H22 revenue slightly exceeded our expectations.
The company announced 1H22 results: operating income was 95.763 million yuan, an increase of 639.0% over the same period last year, and revenue slightly exceeded our expectations, mainly because the commercialization of Nellick slightly exceeded our expectations; the net loss was 407 million yuan, an increase of 8.0% over the same period last year, and the loss was in line with our expectations.
Trend of development
The commercialization of Nerlick is progressing smoothly, and the NPP program has been launched to accelerate the meeting of global clinical needs. Nellick was approved to be listed by NMPA in November 2021, and by the end of June 2022, the cumulative tax sales of the product was 95.93 million yuan (including VAT). In July this year, Nellick filed an application for new indications for the treatment of first-generation / second-generation drug-resistant and / or intolerant patients with chronic myeloid leukemia, helping to support its full approval. In addition, the company has joined hands with Tanner Pharma to launch the designated patient Drug use Program (NPP,Named PatientProgram), which is similar to Hainan's Boao model and plans to cover more than 130 countries and regions to accelerate meeting the needs of clinically urgent patients around the world.
The domestic registration of Bcl-2 inhibitor APG-2575 has progressed smoothly. The key registered phase II clinical study of APG-2575 in the treatment of relapsed / refractory chronic lymphoblastic leukemia / small lymphocytic lymphoma (CLL/SLL) was approved by the New Drug Review Center (CDE) at the end of 2021, and the first patient administration was completed in March 2022, making it the second selective Bcl-2 inhibitor in the world to enter the registered clinical phase. The company expects to complete clinical enrollment in 1H23. We believe that Bcl-2 inhibitors are expected to become the cornerstone products of hematology and oncology, and the market space is large, and we are optimistic about the market potential of APG-2575.
Innovation investment continues to increase, pay attention to the progress of pipeline products. The company's innovation investment continues to increase, and 1H22 R & D expenditure is about 341 million yuan, an increase of 7.5% over the same period last year. The company's early pipeline products have also made a number of advances. MDM2-p53 inhibitor APG-115 combined with PD-1 further validates anti-tumor efficacy in melanoma patients, and EED inhibitor APG-5918 has been approved by the U.S. Food and Drug Administration (FDA) for clinical trials. The company has built a highly differentiated clinical pipeline.
Profit forecast and valuation
Due to the slightly higher commercialization of 1H22 Nellick than we expected, we have raised 2022max's 2023 revenue from 270,000,000 yuan to 195.301m. Due to the continued investment in sales and R & D expenses, we have reduced the 2023 net profit from-714 Universe 688 million to-768 Universe 750 million in 2023.
We use the DCF valuation method to value the company to maintain an outperform industry rating, taking into account the speed of commercialization of the company's products and the rapid expansion of products in the next few years, we maintain the target price of HK $23.44, which is 42.2% higher than the current share price.
Risk
The launch of new products, clinical trial data and sales are lower than expected; competition intensifies; the company's continued losses may affect product research and development and promotion.