Performance review
1H23's performance met our expectations
The company announced 1H23 results: revenue was 42 million yuan, up 106.6% year on year, and 51.3% month on month; net profit for return - 125 million yuan, 1H23 performance was in line with our expectations.
Development trends
Contezolid sales are growing steadily, and the number of admissions continues to rise. According to the company's announcement, 2Q23 contiazolid achieved sales revenue of 25 million yuan, an increase of 44% over the previous quarter in 1Q23. As of 1H23, the company's commercialization team had 92 people, and contezolamide had covered 404 hospitals nationwide. Of these, more than 110 hospitals had been officially admitted and mass procurement had been completed. Hospital channel sales accounted for about 66%, and pharmacy channel sales accounted for about 34%. The coverage of contezolid in departments such as hematology, tuberculosis medication, infectious diseases, respiratory medicine, orthopedics, and ICU continues to expand. We recommend that we pay attention to the dosage trend of contezolid sales in the future.
Clinical trials are progressing in an orderly manner, and overseas clinical trials have begun to accelerate this year. The company is carrying out a phase 3 clinical study of contizolid prodrug MRX-4 for skin and soft tissue infections in China. According to the company announcement, the company expects the MRX-4 clinical trial to be completed in 2024. Furthermore, according to the company announcement, the global international multi-center phase 3 clinical trial of MRX-4 sequential contezolamide for skin and soft tissue infections and diabetic foot infections is progressing in an orderly manner. Beginning in '23, the enrollment of patients from Europe and Latin America began to accelerate, and the recruitment of patients in the US is also being carried out simultaneously. We believe we will continue to pay attention to the pace of progress of the company's subsequent overseas clinical trials.
The financial situation on the reporting side is stable, and the early research project focuses on peptide-coupled drugs. As of 1H23, the company's disposable capital was about RMB 1.1 billion (including cash deposits and financial products). 1H23's R&D expenses and sales expenses increased 47% and 43% compared to 1H22, respectively. The company's expenses structure is reasonable; in addition to contezolamide, MRX-1 for multi-drug-resistant gram-negative bacterial infections and MRX-5 for non-tuberculous mycobacteria are in the clinical stage. Furthermore, the company has laid out various polypeptide conjugated drugs for pre-clinical research with its advantages in small-molecule drug development.
Profit forecasting and valuation
We maintained our 23/24 revenue forecast of 103/166 million yuan. Since the company's 1H23 R&D expenses were slightly lower than our expectations, we raised our 23/24 gross profit forecast from -573/-520 million yuan to -388/-418 million yuan, respectively. We used the DCF valuation method to maintain our outperforming industry ratings and maintain a target price of RMB 11.0 unchanged. There is 76.0% upside compared to the current stock price.
risks
New product launches, clinical trial data and sales fell short of expectations; competition intensified.