Event: The company released its three-quarter report for 2023. The company achieved revenue of 68.27 million yuan (+95.9%), net profit of -240 million yuan, net profit of -240 million yuan, and net profit of non-treasury net profit of -270 million yuan.

Revenue growth is in line with expectations. On a quarterly basis, Q1/Q2/Q3 achieved revenue of 1728/2483/26.16 million yuan respectively, +61.7%/+156.1%/+80.8% over the same period last year. Revenue for the first three quarters showed a quarterly upward trend, in line with previous expectations. The company's gross profit margin for the first three quarters was 81.7%, -0.3pp, and the gross margin remained stable. On the cost side, in the first three quarters, the company's R&D expenses were 200 million yuan, sales expenses were 69.16 million yuan, and management expenses were 43.34 million yuan. As of the end of June 2023, the company's monetary capital and transactional financial assets totaled $1.06 billion.

MRX-5 has been approved for clinical trials in Australia. The company announced in October 2023 that MRX-5 has received an ethical license from the Australian Human Research Ethics Committee (HREC) to conduct phase I clinical trials, and has passed the Australian Medicines Agency (TGA) clinical trial registration. According to Australian drug registration laws and regulations, after the clinical trial is registered, the company obtained permission to conduct phase I clinical trials of this product. MRX-5 is a novel benzoborazole antibiotic used to treat mycobacteria of the genus Mycobacteria, particularly infections caused by non-tuberculous mycobacteria (NTM). The incidence and prevalence of NTM disease continues to increase, and drug treatment has a long course of treatment, many adverse effects, and poor efficacy and prognosis. In particular, the treatment of drug-resistant patients faces challenges, and there is an urgent need for new drugs that can improve the success rate of treatment.

The development of MRX-5 will provide a potential new option for the treatment of NTM diseases.

Profit forecasts and investment advice. The 2023-2025 EPS is expected to be -0.56 yuan, -0.85 yuan, and -0.56 yuan respectively. Considering the outstanding clinical value of contezolamide and its potential to go overseas, the “buy” rating is maintained.

Risk warning: risk of falling product prices, development pipeline progress or failure to meet market expectations, market competition risk.