2023 and 1Q24 results are in line with our expectations
The company announced 2023 and 1Q24 results: 2023 revenue of 91.289 million yuan, net profit to mother of 1.11 billion yuan, in line with our expectations. The company also announced 1Q24 results, with revenue of 81.319 million yuan and net profit of 220 million yuan to mother, which is in line with our expectations.
Development trends
Suvortinib (trade name: Schwarzhe) has been approved for marketing in China, and commercialization is rapid. Schwarzhe was approved by the NMPA for listing on August 22, 2023. It is currently the only level 1 recommendation for use in locally advanced or metastatic non-small cell lung cancer (NSCLC) where the disease progresses during or after platinum-containing chemotherapy, or is intolerant to platinum-containing chemotherapy, EGFR exon20Ins mutations, and has obtained the 2024 CSCO guideline level 1 recommendation for this indication. 3Q23-1Q24 Schwarzer's sales revenue was 4010.2/5118.6/81.319 million yuan, up 27.6%/58.9% from quarter to quarter. Sales growth was strong. The company guided Schwarzer to sell 3-5 billion yuan for the full year of 24, reflecting strong sales execution.
Overseas clinical trials of suvortinib are progressing smoothly. The company plans to orally report some data on the global registered clinical Goku 1B at the ASCO conference in '23. We expect 2H24 to submit an overseas marketing application for sulvortinib.
Golixitinib is about to be approved domestically, and we are watching the progress of domestic commercialization and overseas submission. The domestic marketing application for golisitinib for r/r PTCL was accepted by the CDE in September '23, and the company expects to be approved domestically in '24. The 24-year CSCO lymphoma diagnosis and treatment guidelines included golisitinib as a recommendation for the first time, laying the foundation for subsequent academic promotion. Globally registered clinical data on golisitinib has been published in the journal “Lancet Oncology”, and data such as MoS (19.4 months) were orally reported at ASH in '23.
Currently, the company is discussing a globally validated phase III clinical plan.
Early hematoma pipeline data is impressive. The company independently developed a novel non-covalent LYN/BTK dual-target inhibitor DZD8586 that can penetrate the blood-brain barrier. We believe it can overcome BTK pathway-dependent drug resistance and non-BTK-dependent BCR signaling pathway activation resistance, and can target the two major hematoma indications of DLBCL and CLL. Data disclosed by ASH in '23 showed an ORR of 64.7% in patients with late-line B-NHL, of which 83.3% in the DLBCL subgroup and 50% in BTK-resistant patients. The company plans to conduct clinical phase IB/IIa clinical exploration RP2D in 24 years to determine the registered clinical pathway.
Profit forecasting and valuation
Due to Schwarzer's rapid sales growth, golixitinib is expected to be approved domestically by the end of 24. We raised our 24-year revenue forecast by 8.5% to 351 million yuan. Since the company's product launch required commercial management and sales team expansion and capital investment, we lowered net profit to mother from -855 million yuan to -1.16 billion yuan for the first time, introducing 25 million yuan in revenue and net profit to mother of 750 million yuan. We used the DCF valuation method to maintain an outperforming industry rating. Due to the smooth clinical progress of many assets in the company pipeline and the increase in pipeline value, we raised our target price by 7.3% to RMB 54, which has 19.9% upside compared to the current stock price.
risks
New product launches, clinical trial data and sales fell short of expectations; competition intensified.