2023 results slightly above our expectations
The company announced 23-year results: revenue of $838 million, up 96.5% year over year, including cancer immunization business revenue of $529 million, up 322.7% year over year; net profit to mother of $101 million; significant revenue growth was mainly driven by the Takeda Pharmaceutical cooperative down payment, and 23-year results were slightly higher than our expectations.
Development trends
Three innovative oncology products have been marketed and continue to be sold under medical insurance, and sales of furoquintinib in the US contribute a share of revenue. In 2023, sales of the three drugs furoquintinib, surufatinib, and sevotinib in the domestic market were US$1075,439,4.61 million, respectively. According to the cooperation agreement signed between the company and the partner 1, the company will collect sales share revenue from the sales of furoquintinib and sevotinib. The two product companies include revenue of US$832 and US$2.89 million, respectively. The first prescription for fruquintinib was quickly implemented after approval in the US in November 2023. In 2023, US sales were US$15.1 million, and product sharing and production reimbursement revenue was US$7.2 million. For the first time, the company provided 2024 oncology immunization business revenue guidance of US$3-4 billion, mainly due to 30-50% revenue growth targets for oncology products already on the market.
The core pipeline is progressing smoothly at home and abroad, which is expected to bring a high growth rate to the company's future sales. Fruquintinib in combination with paclitaxel has submitted a new CDE supplement application for 2L gastric cancer. Overseas marketing applications for later-line colorectal cancer have been submitted in the EU and Japan. We expect that successful approval in the future will lead to a rapid increase in overseas revenue for furoquintinib. According to the company announcement, the combination of cevotinib and ositinib for 2/3L osimitinib refractory MET+ NSCLC is expected to seek accelerated approval after reading out the data by the end of 2024. The domestic marketing application for solepinib against 2L immune thrombocytopenia was accepted by the CDE in January '24, and the company is expected to start contributing sales revenue in '25.
The financial situation is stable and the cash flow is abundant, and we expect the company to achieve long-term stable profits within the next two years. The company's revenue and profit increased in 23 due to Takeda Pharmaceuticals' down payment/milestone payment revenue and reduced R&D, sales, and administrative expenses. The company expects 24-year expenses to stabilize at the 23-year level. By the end of 23, the company had cash of 886 million US dollars, and various businesses developed steadily.
Profit forecasting and valuation
Since fruquintinib authorized down payments recognized revenue on an annual basis in 23-26 years, the amount of confirmed revenue in 2023 was slightly higher than our previous expectations, and the company expected to confirm revenue for 24 was slightly lower than our previous expectations. Therefore, we lowered our 2024 revenue forecast by 5.8% to US$681 million, lowered our 2024 net profit forecast from -0.05 billion US dollars to -109 million dollars, and first introduced 2025 revenue and net profit forecasts of US$863 million and net profit to mother of US$08 billion. Since the reduction in profit forecasts is only an annual impact of down payment confirmation, the company's products will enter a stable profit period in the next few years. We use the DCF valuation method to maintain the outperforming industry rating and target price of HK$38.25 unchanged (58.1% upside).
risks
New products launched; clinical trial data and sales fell short of expectations; competition intensified.