RemeGen reported 2023 revenue of Rmb1.08bn (+40% YoY) and net losses of Rm1.51bn (vs -Rmb999m in 2022), in line with our expectation. The revenue growth is mainly driven by the sales ramp up of RC18 (telitacicept) and RC48 (disitamab vedotin). Its R&D expenses reached Rmb1.31bn (+33% YoY) and its selling expenses reached Rmb775m (+76% YoY) in 2023. Considering the sales ramp up of core products and R&D investments of innovative pipelines, we lower our EPS forecast of from -Rmb0.79 to -Rmb2.02 in 24E, from Rmb0.30 to -Rmb1.09 in 25E, and forecast Rmb0.21 in 26E. We lower our target price from HK$59 to HK$47. With 72% upside, we maintain our BUY rating.
Expecting new indications of RC18 to be launched. With a sales team of c.700 people for RC18, RC18 has been listed in over 800 hospitals. As for the SLE in China, the company received the full approval by the NMPA in November 2023. In addition, RemeGen has submitted the NDA of RC18 for the treatment of RA to the NMPA in August 2023, which is expected to receive the approval in 2024E. In addition, RC18 is under phase III trial for MG in China with the patient enrollment completed in end-2023. RC18 is also under phase III clinical trials in China for pSS and IgAN, with the enrollment expected to be completed in 2024E. In terms of the development in overseas market, RC18 is now under a global multi-center phase III trial for SLE in the US. In addition, FDA has approved the phase III trial of RC18 for MG, with the fast-track designation in 2023.
Multiple studies of RC48 under development. In 2023, RC48 has been listed in over 650 hospitals, with a sales team of over 600 people. In terms of RC48's clinical trials in China, the company is carrying out earlier line treatments including first line, neoadjuvant and NMIBC for UC. Now, RC48's combo with PD-1 for 1L UC is under phase III clinical trial with patient enrollment ongoing. In addition, RC48's combo with toripalimab is under phase II trial for perioperative MIBC. As for the GC, the company plans the earlier line treatment studies. RC48's combo with PD-1 and chemotherapy or with PD-1 and Herceptin for 1L HER2- expressing GC is under phase II trial. As for the BC, the company focuses on earlier line treatment and HER2-low expressing trails. In addition, as for the RC48's global development by Pfizer/Seagen, RC48 is under phase III trial of RC48's combo with Keytruda for 1L UC, with patient enrolment ongoing. RC48's monotherapy for 2L UC is under pivotal phase II trial.
Active development of other ADC pipelines. The company has received the IND approval from NMPA for phase I/II trail of RC88 (mesothelin ADC)'s combo with sintilimab for advanced solid tumors in 2023, with the enrolment of first patient. In addition, the company has received the IND approval from FDA for a phase II trial of RC88 for gynecologic cancers. In addition, RC118 (Claudin18.2 ADC) is now under Phase I clinical trial in patients with Claudin18.2-positive locally advanced unresectable or metastatic malignant solid tumors in China. Meanwhile, RC248 (DR5 ADC) is under phase I dosage escalation stage for various tumors, with the enrolment of first patient.
Maintain BUY. Considering the sales ramp up of core products and R&D investments of innovative pipelines, we lower our EPS forecast of from -Rmb0.79 to -Rmb2.02 in 24E, from Rmb0.30 to -Rmb1.09 in 25E, and forecast Rmb0.21 in 26E. We lower our target price from HK$59 to HK$47. With 72% upside, we maintain our BUY rating.
Risks: R&D failure of key pipeline; rising competitions of key pipeline; lower-than-expected sales ramp-up.