Incident: Goli Pharmaceuticals announced its 2023 results: revenue increased 4.6% year on year and losses narrowed 54% year on year; several R&D pipelines made significant progress: ASC41-NASH, ASC40-NASHASC40 - Excellent clinical data on acne was highly recognized by the market; partner and invested company Sagimet successfully landed in US stocks and achieved investment income of more than 60 million yuan; the company bought back and cancelled nearly 75 million shares in 2023. By the end of last year, the company held about 2.3 billion yuan in cash, which is enough to support development in the next five years .
Comment:
1) The 23-year performance grew steadily, lean operations, and losses narrowed sharply, focusing on efficient R&D: the company's revenue in 2023 was 56.6 million yuan, up 4.6% year on year; total operating expenses decreased by 92.37 million yuan; loss was about 145 million yuan, a sharp drop of 54% year on year; investment company Sagimet successfully listed in the US in July 2023, with book income of 6OOO+ 10,000 yuan; financial management continued to be steady, with cash in hand of 2,225 million yuan; capital market boosted investor confidence: As of March 25, cumulative repurchases were close to 75 million shares, costing nearly HK$130 million; Hong Kong stock 18A is the most powerful biotechnology company to repurchase & cancel shares; the R&D expenses in 2023 were about 220 million yuan, with high efficiency and high output, obtained 6 clinical approvals, 4 phase II/III clinical projects were promoted at an accelerated pace, 3 phase II studies were completed, and 1 phase III study was initiated.
2) Focus on differentiated pipeline innovation, focusing on MASH and acne: ASC41 data was published during the 12 phase II clinical cycle of MASH treatment: 93.3% of patients had a relative reduction in liver fat content of 30% or more compared to the baseline, and performed well in similar THR-beta data. After using ASC41 from Culley Pharmaceuticals, MRI-PDFF declined the most, at -68.2%, and has the potential to be “best-in-class.” Currently, patients in phase II clinical trials are being enrolled at an accelerated pace. Phase II clinical data for ASC40 treatment of acne reached the main and secondary efficacy endpoints, and phase III clinical enrollment was accelerated; more than 120 patients were enrolled in phase III clinical trials for glioma; phase Ib clinical liver biopsy data for the treatment of MASH indications reached dual endpoints. ASC22 in terms of functional curative indications for hepatitis B: the final data of the phase I clinical 1.0 mg/kg control placebo cohort was released in 2023. The enrollment of 50 HBsAg <100 lu/ml subjects in the phase Ib expansion cohort was completed, and mid-phase analysis data was released; ASC61 solid tumors, ASC61 (a potent and highly selective oral PD-L1 small molecule inhibitor), currently undergoing phase I clinical trials.
Profit forecast: We expect the company's revenue for 2024-2026 to be 0, 0, 30 million yuan, and net profit of -182, -312, and -400 million yuan respectively, with year-on-year growth rates of -25.86%, -71.56%, and -28.14%, respectively. Corresponding to the current stock price PE, -7.84, -4.57, and -3.57 times, respectively, the first coverage was given a “recommended” rating.
Risk warning: R&D and clinical progress falls short of expectations, increased market competition, industry policy changes, market expansion falls short of expectations, changes in the overseas environment, etc.