Maintain an “Overweight” rating. The company achieved revenue of $838 million (+97%) in 2023, of which $312 million was Takeda's down payment and milestone fund, net income turned a loss into profit of $101 million, and sufficient cash on hand reached $886 million. Considering that fruquintinib is in the US, the revised 2024-2025 revenue forecast was US$701/954 million (previously US$760/993 million), and the 2026 revenue forecast was added to US$1,146 million, maintaining the “gain” rating.
Comprehensive income from tumor/immunity is close to the upper limit of the guideline, and fruquintinib is quickly released overseas. In 2023, the combined revenue from oncology/immunity was $529 million, close to the 2023 guideline limit ($4.5-550 million). Product sales reached USD 214 million (+28%), and domestic sales of furoquintinib reached USD 108 million (+15%), mainly driven by excellent efficacy and increased market share. Fruquintinib has been listed in the US for less than 2 months, and overseas sales are expected to accelerate this year; sales of sevotinib were US$46 million (+12%), mainly affected by channel fluctuations before the 23Q1 medical insurance catalogue came into effect; surufatinib sold US$44 million (+36%), benefiting from a continuous increase in market share after entering health insurance, which increased 30% year-on-year in the third quarter of 2023. The company provides guidance for 2024 that the comprehensive revenue for oncology/self-immunity is US$3-4 billion, of which sales and royalties for oncology products that have already been marketed are expected to increase by 30-50%.
Fruquintinib is expected to be marketed in Europe and Japan for colorectal cancer this year, and sevolitinib is expected to be listed in the US within this year. Fruquintinib treatment with 2L gastric cancer data showed that mPFs reached the end point (5.6 months vs. 2.7 months, HR = 0.57), and MoS did not reach the main end point, but the subsequent untreated population reached a statistical difference (6.9 months vs. 4.8 months, HR = 0.72). The clinical benefits were remarkable, and it is expected that 2024H2 will be approved for marketing. Fruquintinib submitted NDAs in Europe and Japan in June and September 23, respectively, and is expected to be approved for marketing in 2024, further opening up the sales ceiling.
SAVANNAH has completed clinical enrollment and is expected to submit a US marketing application by the end of 2024. The market space for EGFR resistant NSCLC is broad.
Catalysts: Fruquintinib 2L gastric cancer is expected to be approved domestically in 24Q4; fruquintinib is expected to be approved in Europe and Japan in 24; sevotinib EGFR resistant NSCLC is expected to be submitted in the US by the end of 24; solepinib is expected to be approved domestically in 24 years.
Risk warning: risk of R&D failure; risk of partner commercialization falling short of expectations;