Increase investment in R&D and proceed in an orderly manner in the research pipeline. The company's adjusted loss in 2023 was 223 million yuan, compared to a loss of 152 million yuan in the same period last year. Among them, R&D expenses for the full year of 2023 were 173 million yuan (+88.9% YoY), mainly due to carrying out LZ901 Ph3 clinical trials in China; administrative expenses were 86 million yuan (+1.4% year over year), mainly due to increased employee costs, depreciation and other expenses, partially offset by a decrease in amortization of equity incentives.
LZ901 (recombinant herpes zoster vaccine): A multicenter, randomized, double-blind, placebo-controlled Ph3 clinical study of LZ901 was initiated in China in September 2023, and a total of 26,000 healthy subjects aged 40 and above were enrolled in the four provinces of Jiangsu, Shandong, Hubei and Shanxi in January 2024. It is expected that BLA applications will be submitted in 2024Q4, and the product will be commercialized in 2025Q4.
K3 (an adalimumab biosimilar): It is planned to launch Ph3 clinical trials of K3 in China in 2024H2. It is expected that Ph3 clinical research will be completed in 2025, and the product will be commercialized in 2026.
K193 (CD19xCD3 bispecific antibody): Domestic Ph1 clinical trial was initiated in December 2019, and it is expected that 2024H2 will complete Ph1 clinical trials.
Other pre-clinical research pipeline: As of December 31, 2023, the company has 4 pre-clinical products under development, namely recombinant chickenpox vaccine, recombinant RSV vaccine (suspending recombinant rabies vaccine and reallocating resources to RSV vaccine development), K333 bispecific antibody for myeloid leukemia, and K1932 bispecific antibody for lymphoma treatment.
Investment proposal: The company's core product, the recombinant shingles vaccine LZ901, uses an innovative antigen design to induce a high level of humoral and cellular immune response while having good safety; LZ901 completed the enrollment of 26,000 domestic Ph3 clinical trial subjects in January 2024. It is expected that BLA applications will be submitted in 2024Q4, and the product will be commercialized in 2025Q4. Currently, only 2 shingles vaccine products are on the market in the domestic market. The competitive pattern is good. The varieties marketed in China use the previous generation of live attenuated vaccine technology, and the company LZ901 is leading the way in the domestic recombinant shingles pipeline. According to the company's annual report and updates on the progress of the research pipeline, we adjusted the company's net profit forecast for 2024-2025, which are estimated to be -3.00/ -356 million yuan, respectively (previous value was -3.47/- 424 million yuan), and an additional 2026 net profit forecast was -341 million yuan. Maintain an “Overweight” rating.
Risk warning: Risks such as failure in research and pipeline, loss of key technical talents, and increased market competition.