Comments and opinions:
Revenue for the full year of 2022 was $554.1 million. The loss of hepatitis C products affected the profit company's total revenue from 76.9 million yuan in 2021 to 504.1 million yuan in 2022, a decrease of 29.6% over the previous year. The main reason was the termination of the provision of Paroxin's promotional services to Roche Pharmaceuticals China. The annual R&D investment was 270 million yuan, an increase of 25.4% over the previous year. With no significant change in the three expenses, the company generated gross losses of 25 million yuan and net losses of 315 million yuan. Although revenue from hepatitis C products increased dramatically in 2022, based on expectations of market contraction and price declines, the company heavily depreciated the hepatitis C product inventory, which was the main reason for the company's gross loss and net loss. If the impact of this part of the impairment is not taken into account, the company can achieve gross profit of 23.9 million yuan and reduce net loss to 212 million yuan.
Chronic hepatitis C and ritonavir income growth
Revenue from chronic hepatitis C products increased from 33,000 yuan in 2021 to 8.798 million yuan in 2022. In terms of COVID-19 specific drugs, the company signed commercial supply agreements for ritonavir with Pfizer China, Xiansheng Pharmaceutical, etc. In 2022, the company's ritonavir production capacity reached 530 million tablets/year, achieving a total revenue of 4,826 million yuan. Due to increased uncertainty about the COVID-19 pandemic, it will actively track the sustainability of ritonavir revenue. As the company terminated the provision of Paroxin's promotional services to Roche Pharmaceuticals in 2022, this portion of revenue fell 43% year over year, from RMB 70.92 million in 2021 to RMB 40.44 million.
Multiple pipelines are progressing smoothly, and the multi-dimensional indication product line company continues to invest in research and development of key pipelines, including 6 phase II or phase III clinical pipelines in various fields of acne/hepatitis B/NASH/glioma/RSV. Among them, ASC40 (acne) completed the enrollment of 180 patients in phase II. ASC40 (FASN) treatment was confirmed by biopsy after biopsy to confirm that NASH patients had phase IIb clinical analysis during the 2022 American Liver Conference. At the same time, ASC40 (glioma) also completed the enrollment of 80% of patients in phase III clinical trials. ASC22 (PD-L1) has achieved a negative surface antigen conversion rate of 42.9% in the current IIb expansion cohort progression, which has significant advantages over other drugs under development for the functional cure of hepatitis B. The company has global interests in ASC41NASH and has multiple layers of patent protection, and has now completed the first patient administration of phase II clinical trials. ASC10 has submitted a phase IIa clinical trial application for the treatment of respiratory syncytial virus infection. The company will also actively explore international BD project cooperation, which is expected to achieve results this year.
Our point of view:
The company is an innovative R&D-driven biotechnology company. 13 new INDs were approved throughout the year, 2 new pipelines entered Phase II clinical trials, 23 new patent applications were added, and the number of R&D personnel increased 42% over the same period last year. The ASC40 product is progressing smoothly in the development of pipelines for acne/NASH/glioma. It is expected that in 2023, phase III clinical initiation and phase IIb clinical publication of liver puncture data for inflammation and fibrosis improvement after 52 weeks of treatment/phase III clinical enrollment of 120 patients will be completed, respectively.
ASC22 will also publish mid-term analysis data for some patients in the phase IIb expansion cohort in the second half of 2023. The company will actively promote global cooperation around non-alcoholic steatohepatitis, moderate to severe acne, hepatitis B functional treatment, and COVID-19 oral medicine, achieve commercial expansion through “overseas sales and domestic retention of rights”, and continue to invest more in first-class drug research and development. The company has a cash reserve of 2.47 billion yuan, which is sufficient to cover R&D investment needs for more than 5 years. Active attention is recommended.