Incidents:

On January 30, 2024, Eddy Pharmaceuticals announced its 2023 annual results forecast. The company expects revenue for the full year of 2023 to be about 417 million yuan (up 70.58% year on year), of which revenue from innovative anti-HIV drugs is estimated to be 73.5788 million yuan (+119.67%), and revenue from crude human protein products is estimated to be 262 million yuan (+82.82%); estimated net profit reduced by 27.54% to 49.28% year on year; estimated net profit -0.77~- 104 million yuan (year-on-year loss reduction of 32.20% to 49.80%).

Comment:

Sales improved significantly from quarter to quarter, and losses continued to decrease throughout the year

Based on the median calculation, 23FY is expected to have revenue of 417 million yuan (+70.58%), net profit to mother of -0.76 million yuan (year-on-year loss reduction of 38.71%), after deducting non-net profit of -90 million yuan (year-on-year loss reduction of 41.18%).

Among them, 23Q4 revenue was 115 million yuan (+4.54%), net profit attributable to mother was -44 million yuan (year-on-year loss reduction of 6.38%), and non-net profit of -44 million yuan (year-on-year loss reduction of 22.81%). In 23Q4, revenue from innovative HIV drugs in a single quarter was 27.922 million yuan (up 80% year-on-year and 98.33% month-on-month), with significant quarterly improvements.

The company's new team structure, direct management+investment model expands market penetration. The company began gradually adjusting the commercialization model and sales strategy of innovative drugs in 23Q2, giving full play to the driving role of the “medicine, marketing, and sales” troika, strengthening the functions of the marketing department, using academic promotion and multi-model coverage as the guide, using academic promotion and multi-model coverage to effectively combine direct management and investment business models; it is divided into core hospitals and primary hospitals, focusing on key core hospitals, while focusing on improving the scope of drugs and the scope of drugs. The business sank and gradually expanded to third- and fourth-tier cities and primary hospitals.

The company's operations are booming. The new operation team has driven the troika since the second half of 2023. The company has appointed a new company president, who also serves as the company's CEO to manage the company's operations, and has successively introduced senior vice presidents, marketing directors, financial directors, and HR directors in charge of commercializing innovative HIV drugs. In addition to the adjustment of the new management team, the company initiated the expansion of marketing team professionals one after another, laying the foundation for accelerated commercialization in 2024.

The new HIV drug business opened a new chapter, making every effort to attack the health insurance market. In 2023, the company successfully promoted the successful inclusion and renewal of the two innovative drugs in the national health insurance catalogue, and the scope of payment was adjusted to “limit HIV infection”. Among them, the medical insurance payment price for enomil tablets was 724 yuan, and the original payment standard for enovirin tablets was maintained at 515 yuan. Entering the medical insurance catalogue will further improve the accessibility of clinically advanced drugs and reduce patients' medication burden. In the new year, the company will focus on promoting the entry of drugs into large-scale infectious disease hospitals and increasing the proportion of drugs. Currently, the coverage of hospitals, DTP pharmacies, etc. continues to expand steadily.

Investment advice: Maintaining a “buy” rating

The company's core products, enovirin (ACC007) and enomitib (ACC008), are the first domestically produced third-generation new oral HIV drug and the first oral triple compound monoclonal tablet. We are optimistic about the market scarcity and dosage capacity of the core products, as well as the company's leading edge in the field of AIDS and its comprehensive product layout.

We expect the company's revenue from 2023 to 2025 to be 417 million yuan, 560 million yuan, and 850 million yuan, respectively, up 70.7%, 34.4%, and 46.4% year on year; net profit to mother is estimated to be -071 million yuan, -05 billion yuan, and 122 million yuan, respectively, up 42.8%, 93.5%, and 2752.5% year-on-year respectively, corresponding PE being loss, loss, and 43X. Maintain a “buy” rating.

Risk warning

The risk of fluctuating sales of enovelin and enomide; the risk that orders for human protein will not continue to meet expectations; the risk of uncertainty about health insurance policies, etc.