Revenue is growing rapidly, and expenses are improving quarter by quarter. Rongchang Biotech achieved revenue of 769 million yuan (+35.1%) in the first three quarters and 347 million yuan (+58.3%) in the third quarter alone. The revenue growth rate increased quarter by quarter; the company's net loss for the first three quarters was 1.03 billion yuan. R&D expenses for the first three quarters were 858 million yuan (+29.5%), R&D expenses for the third quarter were 318 million yuan (+49.2%); sales expenses for the first three quarters were 540 million yuan (+94.4%); sales expenses for the first three quarters were 540 million yuan (+94.4%); the sales expenses for the single quarter were 1.58/1.92/190 million yuan, respectively. The sales expense ratio for the single quarter was 93.8%/75.7%/54.6%, respectively, and the sales expenses rate declined quarterly. Q1-Q3 Management expenses for the first three quarters were 243 million yuan (+51.2%), while management expenses for the third quarter alone were 79 million yuan (+39.2%).
The company's two core products, tetacip and vidicetumab, both achieved rapid growth in the third quarter, boosting sales growth and improving cost levels quarter by quarter.
Multiple indications of tetaxib have been promoted clinically in China and the US. The registered clinical trials of tetamicep in China continue to advance. Applications for full approval of SLE indications are in the approval stage, and patients with indications such as pediatric SLE and lupus nephritis are being enrolled in the group. The RA indication has been submitted for marketing this year, and may become the second approved indication for tetacept. Indications such as MG, PSS, and IgAN are all in the stage of enrolment of stage 3 patients.
Overseas, phase 3 clinical trials for SLE indications are also progressing smoothly. MG is starting phase 3 clinical trials, and PSS and IgAN indications are also expected to submit phase 3 clinical IND applications in the near future.
Verdicetumab focuses on the expansion of advanced first-line and perioperative indications. In China, indications for first-line treatment of UC with vidicetumab in combination with PD1 monoclonal antibody are in phase 3 clinical stage, and indications for perioperative treatment of bladder cancer are also being explored in phase 2. Clinical trials of combined drug use are also ongoing for GC and BC indications. Overseas, vidicetumab is undergoing phase 2 critical clinical trials of single-drug second-line treatment of UC, and phase 3 clinical trials of first-line treatment of UC with K drugs. Vidicetumab has safety advantages and differentiated efficacy advantages, and is expected to occupy an advantageous position in front-line treatment for segmented indications.
Investment advice: Maintain profit forecasts and maintain “increase holdings” ratings.
The company's sales grew rapidly in the third quarter. We maintain our profit forecast. We expect the company's revenue for 2023-2025 to be 11.95/18.37/2,810 billion yuan, up 54.8%/53.7%/52.9% year on year; net profit is -10.65/-609/148 million yuan. The company's domestic sales continued to grow, and overseas clinical trials progressed smoothly. The two core products, tetacip and vidicetumab, both have differentiated competitive advantages and maintain “accumulation” ratings.
Risk warning: Innovative drug research and development has failed or is progressing less than expected; sales of innovative drugs have fallen short of expectations.