Key points of investment
The company achieved revenue of 17.599 million yuan in 2022, mainly due to sales revenue of Huatang Nindoglietin since its listing in the fourth quarter; the company's pre-tax loss narrowed to 204 million yuan, a year-on-year decrease of 37.52%. The company's gross profit in 2022 was 7.689 million yuan, with a gross margin of 43.7%. Mainly due to sales volume in the early stages of commercialization, the ratio of unit production cost to fixed cost was high, so gross margin in 2022 was relatively low. As the scale of the company's commercialization expands, gross margin is expected to rise to a more normal level.
The initial commercialization of Huatangning was successful, and follow-up will follow up on the health insurance negotiations. Huatangning is the first novel drug with a new mechanism in the field of diabetes over the past ten years. It is also the first innovative drug for type 2 diabetes launched in China. Huatangning was approved on October 8, 2022, and sales began on October 28, 2022, through hospitals, retail pharmacies and online channels. Since sales until the end of January 2023, approximately 148,000 boxes (28 tablets/box) have been sold (unaudited), generating net sales revenue of approximately RMB 49 million (unaudited), and initial commercialization in China was successful. Due to huge demand and supply restrictions at the beginning of listing, the company voluntarily restricted sales after the first week of listing and resumed normal commercial sales in January 2023. Furthermore, the company will actively prepare for year-end health insurance negotiations to benefit more patients.
Develop second-generation GKA products with a long patent period, with a view to opening up overseas markets. The company continues to advance the development of glucokinase activators (GKA), including the development of fixed-dose combinations for dogleidine and the development of second-generation GKA. The second-generation GKA patent period is longer, only requires one dose per day, and the production process is more efficient, which is expected to help develop European and American markets.
The company acquired Shendrrell to expand the company's product pipeline layout. The company acquired 100% of Schendrell's shares in December 2022. Schendrell is mainly engaged in the development of new drugs for island-related diseases (including congenital hyperinsulinemia and diabetes) based on islet research, suitable for rare disease indications and broader metabolic disorders. The company will continue to develop candidate glucose kinase compounds for the treatment of congenital hyperinsulinemia and expand the company's pipeline layout
[Investment advice]
The company and Bayer are jointly promoting the commercialization of Huatangning in China, and are focusing on advancing medical insurance negotiations for innovative drugs. The release is worth looking forward to. The company is actively expanding pipelines and developing second-generation GKA products and fixed-dose combination products for doglietin. Due to the success of Huatangning's initial commercialization, we have raised our profit forecast. We expect the company to achieve revenue of 325/1361/2,598 million yuan in 2023-2025, achieve net profit of -1.22/0.45/309 million yuan, corresponding EPS is -0.12/0.04/0.29 yuan, and corresponding PE is -25/68/10 times, giving it an “increase in holdings” rating.
[Risk Reminder]
Sales fell short of expectations;
Health insurance negotiations fell short of expectations;