2023 revenue is in line with our expectations
The company announced 2023 results: revenue of 246 million yuan, up 55.0% year on year; net loss to mother of 380 million yuan, narrower than last year, in line with our expectations.
Development trends
The product layout is becoming more and more perfect, and recent commercialization and R&D milestones are abundant. As of December 2023, the company has 25 ophthalmic drug combinations and established a comprehensive ophthalmic drug pipeline, including 5 clinical phase III pipelines. According to the company's disclosure, 1) after OT-401 (You Shiying) entered medical insurance, as of the announcement date in 2024, the number of hospital-side injections has exceeded the full year of 2023, and the company expects rapid growth in 2024; 2) OT-101 (0.01% atropine sulfate eye drops) has completed global enrollment, and the company expects to continue phase III clinical trials in 2024; 3) OT-1001 (0.24% cetirizine eye drops) NDA has been included in the priority review process, and the company is expected to be approved for listing in the near future; 4) OT-702 ( (Abacept biosimilar) and OT-502 (dexamethasone implant) have completed phase III enrollment, and the company plans to submit an NDA this year; 4) OT-703 (fluoroclide vitreous implant) has been approved for marketing in Hong Kong and is currently in phase III clinical and real-world research in the Mainland; 5) OT-202 (tyrosine kinase inhibitor) has completed phase II clinical trials. The company is expected to enter phase III clinical trials in the near future.
Pipeline layout upgraded, channel coverage increased. In 2023, the company's revenue from sales of ophthalmic products reached 205 million yuan, an increase of 88.1% over the previous year, and revenue from pharmaceutical product promotion services reached 38.347 million yuan, an increase of 69.3% over the previous year. As of December 2023, the company covered 10,120 hospital terminals, of which 1,558 were level-III hospitals, and the number of commercial teams exceeded 230. We believe that in the future, the company can continue to expand hospital coverage, speed up product admission, and further explore the vitality and commercial potential of the company's commercialized products.
The company's consolidated gross margin reached 58.6% in 2023, a year-on-year decrease of 6.1 percentage points. According to the company announcement, the company achieved gross profit of 144 million yuan in 2023, +40.3% over the same period. According to the company announcement, the decline in its comprehensive gross margin was mainly due to 1) an increase in the cost of selling ophthalmic products and franchise amortization; 2) the business models of Dilida and Fulica changed during the reporting period, from providing promotional services to direct sales. The focus of the Suzhou plant in 2023 was mainly on pilot testing and verification batch production of products, and continued production of products transferred from other factories to the Suzhou factory.
Profit forecasting and valuation
Considering the price adjustments of the company's OT-401 (You Shiying) after entering health insurance, we lowered our 2024/2025 revenue forecast by 18.4%/5.2% to 458 million yuan/853 million yuan, and lowered net profit to mother from -197 million yuan to -237 million yuan in 2024. We maintain our 2025 net profit forecast. We maintain our outperforming industry rating. Considering the company's continuous launch and release of new products in the future, we maintain a target price of HK$7.00 based on DCF, with 16.1% upside compared to the current stock price.
risks
The progress of approval and marketing of new products fell short of expectations; profits of drug candidates fell short of expectations.