2023 results are in line with our expectations
The company announced 2023 results: revenue of US$2.46 billion (+74% YoY), with product revenue of US$2.19 billion and net loss to mother of US$882 million. The results are in line with our expectations.
Development trends
Zebutinib's share continued to rise, driving product revenue slightly above expectations. 1-4Q23's product revenue was US$4.10/5.53/5.95/632 million, with a month-on-month growth rate of 21%/35%/8%/6.2%. Among them, strong overseas sales of zebutinib slightly exceeded our expectations. 1-4Q23 sales were US$211/3.08/308.413 million, respectively, with a month-on-month growth rate of 20%/46%/16%/15%, including US sales of US$946 million in 2023 and US$122 million in Europe. Driven by new 1L CLL patients, the US market share of 2L CLL is the same as acatinib, and key EU countries entering medical insurance reimbursement, we expect zebutinib's market share to continue to increase, and global sales will maintain a high growth rate in 24 years.
Tirelizumab is progressing smoothly, and attention is being paid to the progress of the core pipeline and early solid tumor pipeline. In 2023, tirelizumab sales were $537 million (YoY +27%). In 24 years, tirelizumab was included in Chinese health insurance for 1L gastric cancer and esophageal squamous cell carcinoma, which is expected to lead to sales growth. On February 26, 2014, tirelizumab received positive opinions from the European Medicines Agency's Human Medicines Committee for the treatment of three NSCLC indications. We expect the product to be approved for the three NSCLC indications in the European Union in 2024. Tirelizumab 1L ESCC US FDA's PDUFA date is July '24. The company has built a Btki+Bcl2i+BTK CDAC product portfolio in the field of hematoma, which can cover the front-line to late-line treatment needs of patients with B-cell tumors. Solid tumors focus on breast cancer and lung cancer, including CDK4i, CDK2i, pan KRAS, EGFR CDAC, etc. The company expects to begin early clinical exploration in '24.
Losses have narrowed year over year, and improvements on the cost side are expected to bring about long-term steady development. Thanks to strict management of operating expenses, operating losses decreased by 18% and 33% year-on-year in 4Q23 and 2023, respectively. Due to the increase in the share of overseas sales and the lower cost of self-developed products, the company's gross margin on the product side improved in 23 compared to 2022. Sales management expenses are due to continued YoY +18% investment in global commercialization of zebutinib, and R&D expenses due to YoY +8% in early R&D and global clinical investment. We expect to achieve profits over the next few years as the company controls the cost side and increases revenue margin.
Profit forecasting and valuation
Since overseas sales of zebutinib slightly exceeded our expectations in '23, we expect zebutinib to continue to be sold overseas in '24, so we raised our 24-year revenue forecast by 14.5% to $3,031 million. In addition, with the overseas launch of new products and early pipeline development in '24, we expect a slight increase in three-fee expenses in 24. We lowered our 24-year net profit forecast from -964 million US dollars to -1,255 million US dollars. For the first time, we introduced 25-year revenue and net profit forecasts of US$3,895 million and -US$720 million.
Maintain the outperforming industry rating and maintain the A/H/US target price of 185 yuan/184 HKD/308 US dollars (44%/76.4%/71.4% upside) according to the DCF model.
risks
Risk of continued loss; risk of new drug development; risk of falling short of expectations in pricing and commercialization of products after launch.