Incidents:
The company released its 2023 annual report, with revenue of 17.423 billion yuan, a year-on-year increase of 82.13%; net profit to mother - 6.716 billion yuan, a year-on-year decrease of 50.77%; net profit not attributable to mother - 9.682 billion yuan, a year-on-year decrease of 29.97%. The company released its report for the first quarter of 2024, with revenue of 5.359 billion yuan, a year-on-year increase of 74.78%; net profit to mother - 1,908 billion yuan, a year-on-year decrease of 22.01%; net profit without return to mother - 2,047 billion yuan, a year-on-year decrease of 21.70%.
Sales of the company's first “blockbuster product” zebutinib continued to grow rapidly. The total global revenue of zebutinib for the full year of 2023 was US$1.29 billion, up 129% year on year; revenue in the US region was 945 million yuan, up 142.63% year on year; and revenue in Europe was 122 million yuan, up 722.31% year on year. 2024Q1's total global revenue was 489 million yuan, up 131.11% year on year; US revenue was 351 million US dollars, up 153% year on year; European revenue was 67 million US dollars in 2024 Q1, up 243% year on year. Recently, zebutinib was approved for listing in the US with an additional FL indication, and the performance is expected to increase further.
With the rapid increase in revenue volume and the slowdown in cost growth, it is expected that losses will gradually narrow, and the company's operating efficiency will continue to improve, sales and management expenses will drop sharply, and the company's profitability will continue to improve. In 2023, the company's sales expenses ratio was 41.92%, a year-on-year decrease of 20.8pt; the management expenses ratio was 19.93%, a year-on-year decrease of 8.3 points. 2024Q1, the company's sales expenses ratio was 36.91%, a year-on-year decrease of 11.8pt; the management expenses ratio was 19.78%, a year-on-year decrease of 6.8pt.
The R&D cost rate also dropped sharply. The 2023 R&D cost rate was 73.54%, a decrease of 43 points over the previous year.
2024Q1, as product revenue increased, phase III clinical trials were carried out, and the R&D cost rate also dropped sharply. The R&D cost rate was 62.1%, a decrease of 29.8 pt over the previous year.
BCL-2 inhibitors and BTK CDAC have several potential/registered clinical trials in progress, all of which are potentially major products
The BCL-2 inhibitor Sonrotoclax is undergoing multiple potential/registered clinical trials with indications including R/RMCL, WM, and TN CLL. Currently, 850 patients have been enrolled in the entire project.
BTK CDAC (BGB-16673) is an investigational drug targeting the PROTAC technology pathway to degrade BTK. BTKCDAC (BGB-16673) has published POC clinical data at the 2023 ASH annual meeting, showing significant clinical remission and tolerable safety characteristics. Phase III clinical trials of R/R CLL are expected to be initiated by the end of 2024 and entered the registered clinical phase. Furthermore, in the first quarter of 2024, potential registered clinical trials for R/R MCL and clinical trials for R/R CLL have been initiated, and more than 220 patients have been enrolled.
Tirelizumab has been approved for multiple indications in many regions around the world. In 2023, tiliserizumab achieved revenue of US$537 million, an increase of 27% over the previous year; in Q1 2024, the drug achieved revenue of US$145 million, an increase of 26% over the previous year. The drug has recently been approved by the European Union for first-line and second-line treatment of three NSCLC indications, and was approved by the UK MHRA for second-line treatment of advanced ESCC indications. In addition, it has also been approved by the FDA for second-line ESCC treatment after previous chemotherapy; its new indications for first-line treatment of gastric or gastroesophageal adenocarcinoma have also been accepted by the FDA; marketing applications for advanced or metastatic ESCC first-line treatment are being reviewed by the FDA, and the target decision time is expected to be July 2024.
Profit Forecasts and Investment Ratings
We expect revenue for 2024-2026 to be 226.52, 28.963 billion yuan, 34.049 billion yuan, and net profit to mother of -32.22, -3.09, and 1,195 billion yuan. Maintain a “buy” rating.
Risk warning: Clinical trial progress falls short of expectations, drug efficacy under development falls short of expectations, sales volume of marketed products falls short of expectations