Incidents:
The company announced its 2023 results. Revenue for 2023 increased 4.6% to RMB 56.6 million. As revenue from ritonavir products increased by about RMB 49.4 million, losses narrowed sharply from RMB 315 million in '22 to RMB 145 million. Cash reserves were RMB 2,275 million, which was sufficient cash to support R&D in 2028.
Comments and opinions:
Innovative drug research and development has achieved excellent milestones
The company focuses on key pipeline research and development, including 6 phase II or phase III clinical lines in various disease areas of acne/hepatitis B/NASH/glioma/RSV. Among them, ASC40 (acne) has completed phase II clinical trials and reached the main and secondary clinical endpoints. In the phase III clinical trial, phase IIb clinical liver biopsy data for NASH patients with ASC40 have reached double endpoints, and ASC40 (glioma) has also completed the enrollment of 120 patients in phase III clinical trials. ASC22 (PD-L1) is currently progressing in the IIb expansion cohort. 50 patients have been enrolled, and interim data have been released. Phase II interim analysis data of ASC41 NASH significantly reduced liver fat and inflammation during 12 weeks of treatment. The company will also actively explore international BD project cooperation, especially the ASC40 (acne) project, which has a broad market space.
Revenue for the full year of 2023 was 56.6 million yuan, and losses narrowed sharply
Revenue in 2023 increased 4.6% to RMB 56.6 million, and losses narrowed sharply, mainly due to increased product sales revenue; lower sales costs due to improved inventory management; and other revenue and revenue increases, mainly due to bank interest income and diluted equity income from Sagimet Biosciences' initial public offering on the NASDAQ stock market in 2023.
ASC40 treatment for acne, the space is vast
Phase II clinical data for ASC40 was announced in May 23: the 25 mg group reduced total skin damage by 53.1%, the 50 mg group decreased by 61.3%, the 75 mg group decreased by 53.1%, and placebo decreased by 34.2%. The efficacy was accurate and statistically significant. The safety is good. Acne is the eighth most common disease in the world, affecting more than 640 million people worldwide. Currently, there is a lack of suitable treatments. ASC40 is expected to become the first of its kind, once-a-day oral acne medication with high patient adherence. Phase III clinical trials began in December '23 and are currently enrolled, and the market space for ASC40 is broad.
Our point of view:
The company is an innovative research and development-driven biotechnology company. ASC40 products are progressing smoothly in pipeline development for acne/NASH/glioma. The company will actively promote global cooperation around non-alcoholic steatohepatitis, moderate to severe acne, functional treatment of hepatitis B, and oral COVID-19 medicines. The company's cash reserve is 2,275 billion yuan, which is sufficient to guarantee R&D investment requirements for more than 5 years. Currently, the market value is only HK$1.5 billion, and the company focuses on investor returns. It has repurchased and cancelled HK$130 million of shares. The value of the company is seriously undervalued, so it is recommended to pay active attention.