In the first three quarters of 2022, the company achieved operating income of 518 million yuan, + 6.12% compared with the same period last year, and realized net profit and non-net profit of 54 million yuan and 19 million yuan, respectively, compared with the same period last year. Compared with the same period last year, the operating income of 2022Q3 was 217 million yuan, up 14.81% from the previous year. The sales of Vumetinib increased quarter by quarter in the first three quarters, and the first-line indications are expected to be included in the accelerated price-for-volume of health insurance. The clinical progress of Fumetinib exon20ins is leading in China, and the KRAS G12D project is expected to be submitted to IND next year. The rate of various expenses has been well controlled and the operating expenditure has increased.
The company's results in the first three quarters of 2022 are in line with expectations. In the first three quarters of 2022, the company achieved operating income of 518 million yuan, + 6.12% compared with the same period last year. Despite the macro environmental challenges such as repeated local epidemics, the company's products still achieved volume growth in sales revenue. Achieve home net profit, home deduction non-net profit of 54 million, 19 million yuan, year-on-year-60.02%,-75.64%. The company's 2022Q3 operating income was 217 million yuan, year-on-year-40.68%, month-on-month + 14.81%; net profit and non-net profit from home deduction were 27 million yuan and 15 million yuan, respectively, compared with the same period last year,-87.26% and-92.45%, respectively. The decrease in revenue and profit over the same period last year was mainly due to the fact that 2021Q3 recognized a large amount of revenue related to overseas licensing of Fumetinib. The company's overall performance is in line with expectations.
The sales of Vumetinib increased quarter by quarter in the first three quarters, and the first-line indications are expected to be included in the accelerated price-for-volume of health insurance.
At the end of 2021, the second-line indications of vermetini for the treatment of NSCLC were incorporated into the national health insurance to achieve rapid volume. 2022Q1 income is about 110 million yuan, Q2 about 190 million yuan, Q3 nearly 220 million yuan, each quarter income has achieved month-on-month growth; first-line indications were approved in June this year, we expect the annual sales of vermetini 2022 to exceed 800 million yuan. The company is actively preparing for health insurance negotiations for first-line indications at the end of the year, and has passed a preliminary review, considering that the number of first-line patients far exceeds that of second-line patients, and the smooth inclusion of first-line indications into health insurance will accelerate the process of price-for-quantity of vermetini. In addition, the CNS subgroup data of the III phase FURLONG study of first-line indications for vermetini were published in Journal of Thoracic Oncology (CNS PFS,20.8 comparison 9.8 months, risk ratio 0.40 [95%CI 0.23-0.71], paired 0.0011), providing a solid evidence-based medicine basis for first-line treatment of patients with CNS metastasis.
The clinical progress of Fumetinib exon20ins is leading in China, and the KRAS G12D project is expected to be submitted to IND next year.
The company invested 137 million yuan in R & D in the first three quarters of 2022,-15.96% compared with the same period last year, accounting for 26.52% of operating income, compared with the same period last year. The decline was mainly due to the large amount of R & D expenditure due to the fact that the second-line clinical indication of vermetini was in the final stage in the same period last year. The company continued to promote the expansion of indications, and in August 2022, the NSCLC II phase of the Vumetinib exon20ins mutation was approved domestically, and was previously included into the breakthrough therapy by CDE based on excellent Ib phase data (ORR 60% assessed by IRC and 70% assessed by researchers). The indication is in phase I clinical practice in the United States; adjuvant treatment indications are currently in phase III clinical trials. In addition, the new drug projects such as KRAS G12C inhibitors, KRAS G12D inhibitors, fourth-generation EGFR-TKI, RET inhibitors and SOS1 inhibitors independently developed by the company are all in the preclinical stage, and the KRAS G12D project is expected to submit IND applications in 2023.
The rate of various expenses has been well controlled and the operating expenditure has increased. The company's financial, sales and management expenses in the first three quarters of 2022 were-34 million, 299 million and 72 million yuan respectively, and the sales and management expense rates were + 21.93pcts and-1.12pcts respectively compared with the same period last year. The net cash flow generated by the company's operating activities in the first three quarters of 2022 was 34 million yuan,-62.20% compared with the same period last year, mainly due to the increase in related operating expenses such as taxes and fees and employee compensation this year.
Risk factors: the risk of failure or progress of the company's new drug research and development; the risk that the company's technology upgrading and product iteration are not as expected; the risk that the commercialization of the company's products is not up to expectations; the risk that the company's products fail to enter the national health insurance catalogue.
Profit forecast, valuation and rating: the company's first product, the third generation EGFR-TKI, has broad market space, leading domestic R & D progress and good competition pattern. Combined with the results in the first three quarters of 2022, the company's net profit for 2022 is forecast to be 84 million / 182 million yuan / 401 million yuan (the original forecast is 49 million / 181 million yuan / 400 million yuan). According to the DCF valuation method, we believe that the reasonable valuation of the company is about 12.9 billion yuan, corresponding to the target price of 29 yuan, maintaining the "buy" rating.