The company's revenue increased in the first three quarters of 2022, and the expense rate remained stable. In the first three quarters of 2022, the company had revenue of 520 million yuan (year-on-year + 6.1%), net profit of 54 million yuan (year-on-year-60.0%), and non-net profit of 19 million yuan (- 75.6%). In the third quarter, the company achieved revenue of 220 million yuan (year-on-year-40.7%), net profit of 27 million yuan (year-on-year-87.3%) and non-net profit of 15 million yuan (year-on-year-92.5%). The decline in revenue and profit in the third quarter was mainly due to the recognition of $40 million in revenue related to overseas licensing of Fumetinib in the third quarter of 2021. The company's sales expenses in the first three quarters were 299 million yuan (year-on-year + 71.0%), management expenses 72 million yuan (year-on-year-1.8%), financial expenses-34 million yuan (- 8 million yuan in the same period in 2021), research and development expenses 137 million yuan (year-on-year-16.0%), cash and cash equivalents at the end of the third quarterly report in 2022 1 billion yuan (year-on-year + 3.9%).
The inclusion of Fumetinib second-line indications into health insurance promoted revenue growth in the first three quarters, and first-line treatment indications actively participated in health insurance negotiations. The second-line indications for the treatment of NSCLC, the main product, were included in the national health insurance catalogue at the end of 2021, and the first-line indications for the treatment of NSCLC were approved to be listed in June 2022, driving the company's sales growth. In 2022, the revenue of Q1, Q2, Q3 increased by 163.1%, 70.2%, 14.9%, respectively, month-on-month. At present, the company is actively preparing the work related to the negotiation of the national health insurance catalogue for the indication of first-line treatment of Fumetinib.
The clinical research of vermetini has been promoted in an orderly manner, and the scope of indications has been continuously broadened. In August 2022, the II phase clinical trial was approved for the indication of fumetinib for non-small cell lung cancer with insertion mutation in exon 20. According to the approval of the State Drug Administration, it is feasible to use a single-arm design study to support conditional approval for listing; the Ib phase data of the indication are excellent: the ORR evaluated by the researchers is 70% and DCR is 100%.
III phase FURLONG study of first-line indications for vermetini full-text publication of Journalof Thoracic Oncology data of CNS subgroup provides a solid evidence-based medicine basis for the first-line treatment of EGFR mutation with CNS metastasis NSCLC patients. The adjuvant therapy indications of vermetini have now entered the phase III clinical trial. Pipeline RET inhibitors, KRAS G12C inhibitors, KRASG12D, SOS1 inhibitors and the fourth generation EGFR inhibitors are all in the preclinical stage.
Profit forecast and valuation. We estimate that the net profit of homing in 2022-24 is 65 million yuan, 182 million yuan and 380 million yuan respectively, with year-on-year increases of 253.7%, 181.1% and 109.2% respectively. Considering the excellent curative effect, good competition pattern and broad market space of the third-generation EGFR-TKI, we give it 50-55 times PE in 2023, corresponding to the reasonable value range of 20.19-22.21 yuan, with a rating of "better than the market".
Risk hints: new drug research and development risk, new drug approval risk, new drug listing risk, technology iteration risk and so on.