Core views
The company's revenue for the full year of 2023 was 386 million yuan, a year-on-year steady increase of 27.83%. Revenue for the first quarter of 2024 was 108 million yuan, maintaining year-on-year and month-on-month growth. Overall, the company's core product, donafenib, is in a stable dosage stage, and subsequent commercialization of thrombin, jacktinib, and recombinant human thyroid-stimulating hormone can be expected. At the same time, the company's early pipeline products such as ZG005, ZG006, and ZGGS18 continue to advance, and they will all disclose solid tumor data in 2024. We believe that the overall operation of the company is steady, that subsequent innovative pipeline product data is worth looking forward to, and that future development can be expected.
occurrences
The company released its 2023 annual report
In 2023, the company achieved operating income of 386 million yuan, an increase of 27.83% over the previous year, while the company achieved a net loss of 279 million yuan to mother.
The company released its report for the first quarter of 2024
In the first quarter of 2024, the company achieved revenue of 108 million yuan, an increase of 0.12% over the previous year, while the company achieved a net loss of 39 million yuan to mother.
Brief review
Revenue grew steadily in 2023&2024Q1. In 2023, the company achieved revenue of 386 million yuan, an increase of 27.83% over the previous year.
The steady increase in the company's revenue is mainly due to the steady commercialization of the company's core product, donafenib, which is progressing steadily. Market coverage will expand further in 2023, and sales volume will increase. At the same time, the company's net loss to mother in 2023 was 279 million yuan, a decrease of 179 million yuan compared to 2022. The main reason for the sharp loss reduction was due to the company's increased operating income, rational planning of R&D expenses, and better, lean and efficient operations.
In the first quarter of 2024, the company achieved revenue of 108 million yuan, an increase of 0.12% over the previous year. Overall revenue growth has maintained an upward trend. As of March 2024, the company's commercialization team has entered more than 1,000 hospitals across the country, covering more than 1,700 hospitals and more than 900 pharmacies nationwide. Overall, the company's core product, donafinil, is in the stage of continuous commercialization, and will maintain stable quantities in the future. At the same time, the company's recombinant human thrombin will begin commercialization, bringing more revenue and cash revenue to the company. Meanwhile, as the company's jacketinib and recombinant human thyroid-stimulating hormone will be approved in 2024-2025, the company's commercial pipeline products are expected to be further added, and subsequent commercial sales can be expected.
Commercial products continue to advance, and future innovative drugs are worth looking forward to
Recombinant human thrombin: During the reporting period, the company's recombinant human thrombin was approved for listing by CDE. At the same time, the company signed a cooperation agreement with Yuanda Life Science, a wholly-owned subsidiary of Yuanda Life Sciences Group Co., Ltd., and received a down payment of 260 million yuan in March 2024. We believe that recombinant human thrombin is effective and safe and can fill the gap in the domestic market for intraoperative ischemia. With the active development of provincial and municipal networks, hospital admission, and academic promotion, subsequent commercialization of the product can be expected.
Jacketinib: The company's Jacketinib has submitted a listing application to the CDE, and the product is expected to be approved for listing in the first half of 2024. According to company data, it is estimated that there will be 63,000 new cases of myelofibrosis in China every year by 2030, and the number of patients in stock is estimated to be about 300,000. According to jacketinib's previous friendship effects on myelofibrosis patients in phase III clinical trials, the product is expected to become a BIC drug for this indication. Commercialization can be expected after subsequent listing.
Injectable recombinant human thyroid-stimulating hormone: The product has reached an end in phase III clinical trials for adjuvant diagnostic indications after surgery and will soon be submitted for marketing. The incidence rate of thyroid cancer patients in China has increased markedly in recent years. In 2022, there were about 4661 thousand new cases of thyroid cancer in China. It is currently the third most common malignant tumor in China. The company's injectable recombinant human thyroid-stimulating hormone can fill gaps in thyroid diagnosis and treatment, improve patient survival rate and survival time, and is expected to provide more help to patients with thyroid cancer.
In the follow-up pipeline, the company's drugs such as ZG005 (PD-1/TIGIT), ZG006 (CD3/DLL3), and ZGGGS18 (VEGF/TGF-beta) are all in continuous clinical promotion, and the subsequent clinical results of the products are worth looking forward to.
2024 has many catalysts
Overall, the company has many catalysts for 2024. ① Jacketinib is expected to be approved for marketing in the first half of 2024. ② Solid tumor data on ZG005 is expected to be disclosed in the first half of 2024. ③ Solid tumor data for ZGGS18 is expected to be disclosed in the first half of 2024 ④ Early solid tumor data for ZG006 is expected to be disclosed in the second half of 2024.
Financial analysis: The company's revenue continued to grow in 2023. The operation was steady in 2023, and the company achieved revenue of 386 million yuan, an increase of 27.83% over the previous year. The steady increase in the company's revenue is mainly due to the steady commercialization of the company's core product, donafenib, which is progressing steadily. Market coverage will expand further in 2023, and sales volume will increase. At the same time, the company's net loss to mother in 2023 was 279 million yuan, a decrease of 179 million yuan compared to 2022. The main reason for the sharp loss reduction was due to the company's increased operating income, rational planning of R&D expenses, and better, lean and efficient operations.
In 2023, the company's sales expenses were 250 million yuan, up 9.65% year-on-year from 228 million yuan in 2022. The increase in sales expenses was mainly due to the increase in the company's product sales; the company's management expenses in 2023 were 0.17 million yuan, a decrease of 69 million yuan from 86 million yuan in 2022, mainly due to the recovery of share payments calculated earlier based on the assessment results of the restricted equity incentive plan; the company's R&D expenses in 2023 were 496 million yuan, compared with 498 million yuan in 2022 It is basically the same; the company's financial expenses in 2023 were -015 million yuan, which is basically the same as -014 million yuan in 2022.
As of the first quarter of 2024, the company had monetary capital of 1,989 billion yuan, sufficient cash on its accounts, and steady operations.
Profit Forecasts and Investment Ratings
The company's product pipelines in many different treatment fields have entered or are about to enter the commercialization stage. At the same time, the subsequent pipeline continues to advance, and the overall development is steady.
We estimate that in 2024-2026, the company's revenue will be 623 million yuan, 1,541 million yuan, and 2,381 billion yuan, respectively. According to the DCF model, we expect the company to have a reasonable market value of 17 billion yuan, a target price of 64.07 yuan, and a “buy” rating.
Risk analysis
The risk of uncertainty in the development of new drugs. As a technological innovation, new drug research and development has the characteristics of a long R&D cycle, high investment, high risk, and low success rate. From laboratory research to approval of a new drug for marketing, it has to go through many complex steps such as pre-clinical research, clinical trials, new drug registration and marketing, and after-sales supervision. Every step may face the risk of failure. There is also a risk that existing products or treatments will be replaced by new treatments and technologies.
Commercialization risks. Health insurance fee controls have exceeded expectations, causing the pricing of innovative drugs to fall short of expectations; although the company has exclusive varieties in the release stage, competition in the self-exempt drug market is fierce. At the same time, thrombin sales are in the early stages of climbing, so there may be a risk that sales share will fall short of expectations or sales expenses will be higher than expected.