1H23 performance is in line with our expectations
The company announced 1H23 results: revenue of 143 million yuan, an increase of 49% over the same period last year, of which Nellick 1H23 achieved a sales revenue of 108 million yuan, an increase of 37% over the same period last year. 1H23 homing net profit-402 million yuan, the performance is in line with our expectations.
Trend of development
After Nellick was included in the health insurance, the commercial sales increased steadily, and the clinical registration of new indications made steady progress. The company's core listed product Nellick (Orebatini) has seen a steady increase in sales since it was included in the health insurance catalogue in March 23, with an increase of 153% in 2Q23 and 560% in sales compared with the same period last year. In addition, Nerlick is expected to receive approval for third-generation TKI-resistant CML patients in 2H23, which will further boost product sales. In July 23, Nerick was approved by CDE to conduct a critical phase 3 registration study of 1L Ph+ ALL compared with imatinib combined chemotherapy, and is conducting global phase 1b trials for CML and Ph+ ALL patients at the same time. We believe that as the product accumulates more effectiveness and safety data, the clinical thinking of the company's follow-up registration is gradually clear.
APG-2575 is expected to be approved for listing in China in 2025, and the global registration of phase 3 clinical trials will be carried out smoothly.
APG-2575 is currently conducting phase 2 single-arm registered clinical trials in China for the treatment of relapsed and refractory CLL. The company expects to complete patient enrollment by the end of 23 and declare NDA in 1H24 in China. We expect the product to be approved for market before 2025. In addition, in August 23, the company announced that FDA approved a Phase 3 registered clinical trial of APG-2575 combined with BTK inhibitors in the treatment of relapsed and refractory CLL patients. APG-2575 is the world's leading Bcl-2 inhibitor, which shows higher safety than competitive products. We believe that if APG-2575 is approved for listing, it is expected to contribute considerable sales revenue to the company.
The paper cash flow is abundant, which can effectively support the future capital investment of the company. According to the company announcement, the company completed HK $550 million in financing in January 23, and its cash flow continued to improve. As of June 30, 2023, the monetary fund balance was 1.58 billion yuan. We believe that with the expansion of Orebatinib's indications in the next few years, the company will achieve more sales revenue, and we believe that the company's funds will be able to support R & D investment in the next few years.
Profit forecast and valuation
In addition to the core products, the company also has revenue from other products and license fees. We keep the revenue forecast and profit forecast for 2023 unchanged, slightly increase the revenue forecast for other products and license fees in 2024, raise the revenue forecast for 2024 by 4% to 455 million RMB, and keep the net profit forecast for 2024 unchanged.
As we raised our 2024 earnings forecast, we slightly raised our target price by 2.9% to HK $30.85, using the DCF valuation method, which has 31.3% upside from the current share price.
Risk
New products are on the market; clinical trial data and sales are not as expected; competition is intensified.