Key points of investment:

After the expansion of production of siglitasone sodium entered a rapid expansion period. On the cost side, 24Q1 achieved revenue of 131 million yuan, +22.6% year-on-year, net profit to mother of -0.18 million yuan. Losses narrowed by 43.63% year-on-year, after deducting non-net profit of -0.2 billion yuan. Losses narrowed by 42.54% year on year.

Sales of siglitazepam continued, and sales increased 665.80% year-on-year in 24Q1. 23Q4 sidabendamide PTCL indications entered the medical insurance catalogue for the fourth time, and the medical insurance payment price was reduced by 6%.

Sales of sidabendamide increased 8% year over year in 24Q1, and sales revenue remained flat year over year.

The 24Q1 cost side of the company reduced costs and increased efficiency, with R&D expenses of 0.53 million yuan, -0.92% year on year, management expenses of 0.19 million yuan, -11.12% year on year, R&D investment of 80 million yuan, accounting for a decrease of 19 pct to 61.41% of revenue. Sales expenses of $56 million, +4.78%.

Significant data on sidabendamide will soon be read by ASCO, opening the second growth curve “Sidabendamide plus R-CHOP for previously untreated MYC and BCL2 diffuse large B-cell lymphoma: Phase III DEB study mid-term analysis” was selected for the 2024 ASCOLBA report. The company expects that 2024 Q2 will be approved for this indication. With the obvious benefits of PFS, we expect sidabendamine to quickly establish a first-line preferred position for dual-expression BLDCL. In addition, sidabendamide has been deeply involved in the field of hematoma for many years. Currently, it covers more than 1,300 prescription hospitals and is sold in 713 pharmacies across the country. We expect dual-expression BLDCL indications to peak rapidly within 5 years after entering medical insurance in 2024.

The company is expected to usher in multiple inflection points in valuation+performance+data in 24. It is optimistic that long-term growth companies will usher in a harvest period in 2024, and clinical trial research on several major indications is progressing steadily.

1) Application for marketing: Sioroni third-line treatment for small cell lung cancer; 2) Clinical declaration: Phase III IND and sidabendamide+tiralizumab first-line treatment of non-small cell lung cancer were officially submitted within 24 years of three-drug treatment; 3) Key clinical developments: sidabonamide combined with tirelizumab, phase II data for first-line non-small cell lung cancer; it is expected that PD/PK data for sidabendamide plus tirelizumab first-line non-small cell lung cancer phase II data can be seen.

Profit forecasting and investment advice

Since sidabendamide has covered more than 1,000 hospitals, we expect the peak time for dual-expression BLDCL indications to be shortened. We raised the company's revenue in 25/26 from 9.38/1,235 million yuan to 1,007/1,342 billion yuan, and expect a year-on-year growth rate of 29%/49%/33% over 24-26.

As 24Q1 cost control exceeded expectations and revenue increased, 24-26 net profit of -1.46/ -0.98/ -0.76 billion yuan was adjusted to -1.07/0.01/0.62 billion yuan, an increase of -221%/101%/4937% year-on-year. According to the DCF valuation model, according to WACC of 8.9% and a sustainable growth rate of 1%, it is estimated that the company's reasonable market value stock price is 34.11 yuan, and the reasonable value is 14 billion yuan, maintaining a “buy” rating.

Risk warning

Risk of product development failure, risk of product sales falling short of expectations, risk of generic drugs appearing when patent rights expire