Incident: The company released its 2022 annual report and 2023 quarterly report, achieving revenue of 1.65 million yuan in 2022 (revenue from sales of pharmaceutical intermediates, 0 in 2021); net profit loss of 302 million yuan (loss of 306 million yuan in 2021); net profit of the return mother after deduction was a loss of 341 million yuan (loss of 346 million yuan in 2021). The company spent 251 million yuan on R&D in 2022 (265 million yuan in 2021), and management expenses were 97.03 million yuan (80.28 million yuan in 2021). No sales charges have been incurred. 2023Q1 has not yet generated revenue. The net profit of the mother was a loss of 75.37 million yuan, and the net profit of the mother after deduction was a loss of 82.61 million yuan. R&D expenses were 63.64 million yuan (70.3 million yuan in 2022Q1). Sales expenses were 590,000 yuan.
Comment:
(1) HC-1119 for second-line mCRPC NDA accepted, and first-line therapy is ongoing in multi-center clinical trials around the world
The company is an innovative drug research and development company. The products are still in the R&D stage. Currently, there are 118 R&D personnel, with a master's degree ratio reaching 43%. The Chinese NDA application for deuterium enzalutamide (HC-1119), a new drug for prostate cancer, has been accepted. Four varieties are in different clinical stages of stage I-III, and three varieties have submitted IND applications.
HC-1119: Deuterated enzalutamide, NDA marketing application for second-line metastatic castration-resistant prostate cancer (mCRPC) was accepted by the NMPA in March 2023. The results of the phase III clinical study were selected for the 2023 ASCO Annual Meeting, and the first-line therapy global multi-center phase III clinical trial is ongoing. HP518: To treat prostate cancer with oral PROTAC drugs, phase I clinical trials for the mCRPC indication began in Australia in January 2022, and the extended Ib study for this indication was approved by the FDA in January 2023.
HP501: URAT1 inhibitor, single drug for hyperuricemia/gout is in clinical phase II. IND applications for hyperuricemia/gout combined with xanthine oxidase inhibitors for hyperuricemia/gout and chronic kidney disease were accepted by NMPA and can directly enter phase II after approval.
The IND application for HP530S (FAK inhibitor) for solid tumors was accepted by NMPA in February 2023.
(2) Successfully landed on the Science and Technology Innovation Board, with sufficient cash reserves
In April 2022, the company successfully landed on the Science and Technology Innovation Board. The net capital raised was 995 million yuan. By the end of 2022, the company had a cash reserve of 1,568 million yuan. In January 2023, Mr. Tang Gang, Vice President of Marketing, joined Haichuang Pharmaceutical to set up a marketing team. The R&D and production base located in Tianfu International Biological City is under construction according to plan.
Profit forecast: According to the company's innovative drug research and development progress, we expect the total revenue of 2023-2025 to be 3 million, 63 million, and 367 million, respectively; the net profit of the mother is -395 million, -488 million, and -404 million respectively. First coverage, giving a “Highly Recommended” rating.
Risk warning: risk of increased product competition; risk of R&D progress falling short of expectations and R&D failure; risk of policies such as health insurance negotiations.