Incident: Junshi Biotech announced its 2023 performance forecast. It is expected to achieve operating income of about 1,541 billion yuan in 2023, an increase of 6.02% over the previous year; achieve net profit of -2250 billion yuan, a year-on-year decrease of 5.78%; and R&D expenses of 1,964 billion yuan, a year-on-year decrease of 17.63%.
Comment: 1) The large indicative volume of the core product Trepri boosts domestic revenue growth, and overseas approvals and authorizations have led to increased sales. The company's revenue in 2022 was 1,453 billion yuan, with a year-on-year increase of about 6.02% in 2023, mainly due to the increase in sales revenue of the core product Tripley. Among them, Trepri (Toix?) Approved in the US in 2023, it received a milestone payment from Coherus. Overseas licensing revenue mainly comes from Dr Reddy and Comunida Biotech; domestically, compared to 2022, Trepley's sales growth in 2023 was mainly due to revenue from large indications of combined chemotherapy for first-line treatment of non-squamous non-small cell lung cancer; People Dewei? With Jun Maikang? Revenue is relatively stable.
2) The reduction in the company's net profit loss to mother in 2023 is mainly due to the company strengthening the control of various expenses, optimizing resource allocation, and focusing on a more promising R&D pipeline. In 2023, the company achieved a 5.78% year-on-year reduction in net profit loss to mother, and the company's R&D expenses are expected to decrease 17.63% year-on-year. While controlling R&D expenses, the company maintained the efficient advancement of the core pipeline, and made many advances.
3) Benefit? The pace of large-scale release of large indications and marketing of exclusive indications is gradually being launched domestically, and it is expected that there will be a major breakthrough in sales revenue from 2024-2025. As the accessibility of approved products and indications increases after they are included in the national medical insurance catalogue, and more products and indications are approved one after another in the future, the company's commercialization capabilities will continue to increase. Takuyi? Three new indications were added to the national medical insurance catalogue, and the new perioperative indications for patients with non-small cell lung cancer were marketed domestically; and the marketing application for the three additional indications was accepted by the State Drug Administration. Phase III clinical research on first-line treatment of melanoma reached the main research end; people are well. Adult patients used to treat mild to moderate COVID-19 have been conditionally approved for listing by the State Drug Administration; Junmaikang? The 8 approved indications continue to be included in the national health insurance catalogue. The phase III clinical study of BTLA monoclonal antibody combined with triplil to treat limited-stage small cell lung cancer has completed the world's first enrolment and first administration. The phase III clinical study for the treatment of classic Hodgkin lymphoma has been officially launched; the marketing application for PCSK9 monoclonal antibodies has been accepted by the National Drug Administration; and the IL-17A monoclonal antibody has entered phase III registered clinical research. In addition, clinical research on a number of early-developed products is progressing in an orderly manner.
Profit forecast: We expect the company's revenue to be 15.41, 25.00, and 4.250 billion yuan respectively, with year-on-year growth rates of 6.02%, 62.23%, and 70.00%, respectively, and net profit to mother of -22.50, -7.58, and -044 billion yuan, respectively. The year-on-year growth rates are 5.78%, 66.32%, and 94.21%, respectively, maintaining the “Highly Recommended” rating.
Risk warning: risk of clinical failure, risk of increased competition, risk of product sales falling short of expectations, policy risk.