Incident: Junshi released its annual report for the year 23, with total revenue of 1,503 billion yuan, up 3.38% year on year; the core product Tripley's revenue was 919 million yuan, up 24.93% year on year; R&D investment decreased 105 million yuan, operating costs fell 7.09%, and net profit loss to mother decreased 4.40% year on year.
Comment: The company's “cost reduction, quality and efficiency” has achieved results. The trend of performance growth is obvious, the pace of product launch is accelerating, and the potential for cutting-edge pipelines is huge.
1) Focus on the overseas commercialization layout of the core product Tripley: Tripley was approved for sale in the US on October 26, 2023, and sales of Coherus began in December. It is expected that the peak sales of Trepril in nasopharyngeal cancer single indications will reach 200 million US dollars; overseas listing applications have been accepted by the European Union, the United Kingdom, Australia, and Singapore, and all listing applications have been submitted in India, South Africa, Chile, and Jordan, and commercial cooperation has been reached with multiple partners in more than 50 countries. We expect Tripli to have overseas sales starting in 2024 Significant sales revenue.
2) It is expected that starting this year, the amount of treprel for major domestic indications will begin to grow. The perioperative treatment of non-small cell lung cancer was approved for marketing in China in '23 (first in China). This year, the pace of exclusive high-indication doses will begin. Exclusive marketing applications for 1L kidney cancer, 1L triple-negative breast cancer, and 1L broad-stage small cell lung cancer have all been accepted, and all are expected to be marketed this year.
3) In 24-26, a second-tier product with competitive advantages will be launched: PCSK9 monoclonal antibodies have two indications: primary hypercholesterolemia (including heterozygous familial and non-familial) and mixed dyslipidemia; homozygous familial hypercholesterolemia for adults or adolescents aged 12 years or older has applied for listing and is expected to be approved for listing in the third quarter of '24. It is marketed by Shien Biotech: BTLA will be listed for listing in 2025 for treatment of Hodgkin lymphoma. PD-1 subcutaneous injections are expected to begin enrollment in phase III key registration clinical trials in the 3rd quarter of '24. New developments are expected for IL-17A inhibitors in Phase III clinical trials.
4) Focus on the truly innovative frontier potential pipelines: The pipelines entering clinical phase I/II include:
Small nucleic acid drugs ANGPT3, Claudin18.2-ADC, PI3K-alpha inhibitors, CD3/CD20 dual antibodies.
Additionally, 3-5 ADC products are expected to be clinically declared within the next year.
Profit forecast: We expect the company's revenue for 2024-2026 to be 17, 32, and 4.25 billion yuan, respectively, with year-on-year growth rates of 13.14%, 88.24%, and 32.81%, respectively, and net profit to mother of -18.42, 0.41, and 805 million yuan, respectively. The year-on-year growth rates are 19.34%, 102.21%, and 1878.12%, respectively, maintaining the “Highly Recommended” rating.
Risk warning: risk of clinical failure, risk of increased competition, risk of product sales falling short of expectations, policy risk.