Incident: Junshi Biotech released its first quarter report, with operating income of 380 million yuan, a year-on-year increase of 49.24%, net loss of 283 million yuan, net loss of 307 million yuan after deducting non-net loss of 307 million yuan, and basic earnings per share of -0.29 yuan.
Comment: The company's Q1 performance in '24 exceeded expectations, mainly due to revenue generation from the core product Tripley, and the results of the company's “improving quality, reducing costs and increasing efficiency”.
1) Tripley's revenue exceeded expectations, and domestic sales accelerated. The increase in the company's revenue in Q1 in '24 was mainly due to an increase in sales revenue of commercial pharmaceuticals. Among them, the core product treprilizumab injection achieved sales revenue of about 307 million yuan in the domestic market, an increase of about 56.82% over the previous year. The increase in sales of treipril in Q1 in '24 stemmed from, first, “3 new indications added to the new national health insurance catalogue; second, the continued dosage of large indications: 1) income from large indications for first-line treatment of non-squamous non-small cell lung cancer (NSCLC) with combined chemotherapy; 2) revenue from perioperative treatment for resectable stage IIIA-IIB non-small cell lung cancer (NSCLC) indications. The third is the increase in the number of dominant indications: Trepril has a clear advantage in the field of urological oncology.
2) The company's losses continue to shrink, and “improving quality, reducing costs and increasing efficiency” has shown results. The company's strategic goals for 2024 are: improving quality, reducing costs and increasing efficiency, improving the quality of innovative drug research and development, company management, operational quality and efficiency, strengthening the control of various expenses, fully optimizing resource allocation, and how to further reduce losses are very important goals for 2024. Judging from Q1 results in '24, results have been seen. Net profit loss attributable to owners of the parent company in the first quarter was 283 million yuan, and the net loss for the same period last year was 543 million yuan. Losses narrowed; while product sales increased, R&D investment decreased by 134.25 percentage points.
3) In the future, I am optimistic about the continued release of Trepri globally and domestically, and the marketing progress and clinical progress of other products. Trepril will launch an exclusive high-indication dosage rhythm this year. Exclusive 1L kidney cancer was approved for marketing this year, and 1L triple-negative breast cancer and 1L extensive small-cell lung cancer are all expected to be marketed this year. Another room for revenue growth of treprapril is in combination with other products and the progress of subcutaneous injections. Trepril subcutaneous injections are expected to be enrolled in Phase III key registration clinical trials in the 3rd quarter of '24. Also, after being approved by the FDA in '23, Trepri began global commercialization expansion. Currently, four indications of PCSK9 monoclonal antibodies have been applied for marketing. Two of these indications are expected to be approved for marketing in the third quarter of '24; BTLA expects to be listed for marketing in 2025 for the treatment of Hodgkin's lymphoma.
New developments are expected for IL-17A inhibitors in Phase III clinical trials. The lines to enter clinical phase I/II include:
Small nucleic acid drugs ANGPT3, PI3K-α inhibitors, CD3/CD20 double antibodies, etc. The company accelerates the further improvement of the product matrix and the development of domestic and foreign markets.
Profit forecast: We expect the company's 2024-2026 revenue 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 1880.33%, 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.