Description of the event
On April 27, 2024, Rongchang Biotech released its report for the first quarter of 2024:2024Q1 achieved operating income of 330 million yuan (+96.41% year-on-year) and realized net profit of -349 million yuan (-324 million yuan for the same period last year).
Incident comments
The commercialization process of the two core products, titasip and verdicitol, is progressing smoothly. In 2023, the company achieved revenue of 1,083 billion yuan (+40.26% year over year), mainly due to the company's two core products, Taiai? (Tetracip), Edihi? (verdicitumab) sales revenue and sales volume increased rapidly year over year. In 2024, Q1 achieved revenue of 330 million yuan, an increase of 96.41% over the previous year, once again showing that the commercialization of the two core products is progressing smoothly. As of December 31, 2023, the company's autoimmunity commercialization team has about 750 people, and has completed drug admission for more than 800 hospitals; the company's oncology commercialization team has nearly 600 people, and has completed drug admission for more than 650 hospitals.
The expansion of indications is progressing smoothly, and many phase III clinical trials at home and abroad are progressing steadily. Domestic side: Tetracip has successfully carried out phase III clinical research on systemic lupus erythematosus (SLE), myasthenia gravis (MG), primary dry dry syndrome (PSS), IgA nephropathy, and optic neuromyelitis spectrum disease (NMOSD); rheumatoid arthritis (RA) submitted an NDA application to CDE in August 2023, and its phase III clinical trial results were announced at the ACR conference in November 2023. Overseas: Phase III international multi-center clinical trials for SLE are being carried out, and patients are currently being recruited; phase III clinical trials for MG, PSS, and IgA nephropathy have all been approved by the FDA. In addition, the potential of titacipr for clinical treatment of other spontaneous diseases (such as IgG4 related diseases, antiphospholipid syndrome, membrane nephritis, etc.) is still being explored.
Vedicital: 1) Urothelial cancer (UC): A phase III clinical trial with triplimab and gemcitabine combined with cisplatin/carboplatin to treat locally advanced or metastatic UC with HER2 expression that has not previously received systemic chemotherapy is being recruited; Pfizer/Seagen in the United States is also conducting phase III clinical trials with PD-1 first-line UC treatment. 2) Gastric cancer (GC): Phase II/III clinical trials are being recruited for first-line treatment of patients with locally advanced or metastatic HER2 expression (including gastroesophageal adenocarcinoma) with triplimumab and chemotherapy; 3) Breast cancer (BC): monotherapy for locally advanced or metastatic breast cancer with low HER2 expression is being recruited.
RC28:1) Indications for wet senile macular degeneration (WamD) and diabetic macular edema (DME) will all enter phase III clinical research in 2023, and phase II clinical trials for diabetic retinopathy (DR) are being carried out domestically.
Furthermore, early clinical studies of RC88 (MSLN ADC), RC188 (Claudin18.2 ADC), RC148 (PD-1/VEGF double antibody), RC198 (IL-15/IL-15Rα), and RC248 (DR5 ADC) are progressing smoothly.
Profit forecast and investment advice: The company's net profit for 2024-2026 is estimated to be -1,540 million yuan, -875 million yuan and -190 million yuan respectively, corresponding to EPS of -2.83 yuan, -1.61 yuan and -0.35 yuan, respectively, maintaining a “buy” rating.
Risk warning
1. Commercialization falls short of the expected risk;
2. The R&D progress falls short of the expected risk;
3. Market competition increases risk;
4. Policy risks in the innovative pharmaceutical industry.