Yifang Biotech Co., Ltd. released its three-quarter report for 2023: the first three quarters of 2023 achieved revenue of 127 million yuan; realized net profit of 241 million yuan; net profit from net income of the mother - 248 million yuan; net profit after deduction of non-return mother - 248 million yuan.

In the third quarter of 2023, it achieved revenue of 47 million yuan in a single quarter; realized net profit of 74 million yuan; net profit of net income from net income of 74 million yuan; net profit after deducting non-net profit of 75 million yuan.

Key points of investment

The commercialization of befortinib contributes to revenue. Health insurance negotiations are imminent, and continued revenue growth can be expected in the future

In the first three quarters of 2023, the company achieved revenue of 127 million yuan, and Q3 achieved revenue of 47 million yuan in a single quarter, mainly due to confirmation of technology licensing and cooperation revenue. Befotinib is a third-generation EGFR-TKI (epidermal growth factor receptor tyrosine kinase inhibitor) independently developed by the company. It was approved by the NMPA (National Drug Administration) in May 2023 for the treatment of patients with locally advanced or metastatic non-small cell lung cancer who had previously been treated with EGFR-TKI and were accompanied by positive EGFR T790M mutations. The first-line treatment for non-small cell lung cancer, befortinib was approved for marketing in October 2023. The company and Betta Pharmaceuticals reached an R&D and commercialization cooperation in December 2018, receiving a $230 million down payment and milestone payment.

As the pace of the 2023 health insurance negotiations approaches, befortinib is about to participate in the 2023 health insurance negotiations. As one of the few types of health insurance discussed for the first time in the current health insurance negotiations, if it is successfully included in the medical insurance catalogue in the future, it is expected that volume will accelerate, and it is expected that it will continue to bring revenue growth to the company.

KRAS G12C inhibitor development progress is leading, clinical results are excellent, and the commercial cooperation of Chia Da Tianqing has been authorized.

Garsorasib is a novel and efficient KRAS G12C inhibitor independently developed by the company. It is used to treat various cancers such as non-small cell lung cancer and colorectal cancer with KRAS G12C mutations. It is also the first KRAS G12C inhibitor independently developed in China and entered the clinical trial stage. In May 2023, Garsorasib completed enrolment of patients in a critical, registrative phase II clinical trial. In October 2023, the company announced early clinical research data of Garsorasib in patients with advanced pancreatic cancer (PCa) with KRASG12C mutations at the annual meeting of the European Society of Oncology (ESMO). The results showed that Garsorasib monotherapy showed good tolerability and clinical activity in PCA patients with KRAS G12C mutations. The confirmed objective remission rate (ORR) was 35.7% (5/14), and the disease control rate (DCR) was 85.7% (12/14), with no median progress The survival time was 8.54 months (95% CI, 2.73, NA). Furthermore, Garsorasib is conducting clinical trials in various regions around the world, such as China and the US, to fully prepare for future trips abroad.

In August 2023, the company reached a licensing cooperation agreement with Garsorasib and Zhengda Tianqing, granting Zhengda Tianqing the exclusive license to develop, register, produce and commercialize the company Garsorasib in mainland China within the period of the agreement. Zhengda Tianqing will make an initial payment and milestone payment of up to RMB 550 million to the company; and pay royalties to the company in tiers based on annual net sales.

Adhere to independent research and development, focus on tumors, metabolism and autoimmune diseases, and the ongoing research pipeline is progressing smoothly

R&D expenses for the first three quarters of 2023 were 349 million yuan, a year-on-year decrease of 7.49%. Currently, all of the company's products are independently developed, and more than 10 projects are in the clinical stage: D-0502 for ER positive and HER2 negative breast cancer is in phase III clinical trials, the TYK2 inhibitor D-1553 used to treat autoimmune diseases such as psoriasis is in phase II clinical trials, D-0120 is in phase IIb clinical trials, and D-2570 has completed phase I clinical trials. Various R&D projects are currently progressing steadily. As products are launched one after another, the company's long-term development prospects are promising.

Profit forecasting

Recommended logic: (1) Currently, we adhere to independent research and development, and the core technology is advanced:

The company chose the most advanced international biological targets for development, and for major indications of drugs that are difficult to develop but are in urgent clinical need; the development progress of many core products such as D-0120 is in the first tier; the existing clinical data is excellent to verify the company's R&D strength; (2) Actively promote the licensing cooperation model to ensure the steady growth of the company's revenue and profit: With the excellent data of befortinib and D-1553, the company actively cooperates with enterprises with rich commercial experience. It can better achieve the commercialization value of R&D products and ensure that the company can achieve revenue growth as soon as possible.

(3) Abundant pipelines, multiple products can be expected to be launched, and we are optimistic about the long-term development of the company.

We forecast the company's revenue for 2023-2025 to be 1.85, 1.98, and 427 million yuan respectively, net profit of -3.72, -3.68, and -323 million yuan respectively, and EPS of -0.65, -0.64, and -0.56 yuan respectively. The current stock price corresponding to PE is -25.3, -25.5, and -29.0 times, respectively, covering the first time, giving it a “buy” investment rating.

Risk warning

Growth hormone sales promotion falls short of expectations; growth hormone competition risk; product development progress falls short of expectations; risk of uncertainty about industry policies, collection, etc.