Key points of investment
We are optimistic about the company's high performance growth potential driven by both verdicitol and tetracip, and look forward to the progress of overseas clinical trials or cooperation.
Performance: Tetacept and verdicitril continued to be rapidly released. Continued expansion of admission, the company achieved operating income of 1,083 million yuan in 2023, an increase of 40.26% over 772 million yuan in the same period last year, mainly due to the rapid year-on-year increase in sales revenue and sales volume of the two core products, teitacip and verdicitumab in 2023. 2024Q1 achieved revenue of 330 million yuan (YOY 96.41%), and we believe the main driver is still the lower base of tetracip and verdicitol in 2023Q1, and continued release in 2024Q1.
At the end of 2023, the company's autoimmunity commercialization team had about 750 people. The company's autoimmunity commercialization team covered more than 2,200 hospitals, and completed drug admission for more than 800 hospitals. At the end of 2023, the oncology commercialization team had nearly 600 people. The oncology commercialization team covered more than 2,000 hospitals, and completed drug admission for more than 650 hospitals. A mature and sizable commercialization team supported further scale-up of verdicitol and tetracip.
Progress: Clinics of titacept and verdicitol continue to advance, and it is expected that early pipeline data will be read out of tetracip: In 2023, the company conducted a phase III clinical trial study of tetracip myasthenia gravis in China, and completed patient enrollment in 2023. In January, the FDA approved a phase III clinical trial study for the treatment of patients with MG and granted it fast-track eligibility. In April, the first patient enrolled in the phase III clinical trial of taitacip for PSs was completed, and the patient enrollment process is ongoing. August Titacipro Rheumatoid Arthritis Indication NDA In December, titacipr was approved for a phase III clinical trial to treat PSs in the US.
The first patient was enrolled in the 2023Q2 phase III clinical study of IgAN in China.
Verdicital: In 2023ASCO, the latest research results on treating locally advanced or metastatic urothelial cancer (LA/muc) were revealed on ASCO, showing good efficacy and safety. 2023Q3 enrolled the first phase II/III clinical patients who completed verdicitumab plus triplimab and chemotherapy, or patients with first-line HER2 expressing locally advanced or metastatic GC (including gastroesophageal junction adenocarcinoma) treated with first-line HER2 expression (including gastroesophageal junction adenocarcinoma). 2023Q4 verdicitumab combined with triprilizumab combined with or without chemotherapy (capecitabine+oxaliplatin) compared chemotherapy for perioperative treatment of HER2 expression during perioperative treatment of locally advanced gastric cancer/gastroesophageal junction adenocarcinoma phase II clinical enrollment. The first phase II clinical patient with negative HR and low HER2 expression BC was enrolled as a new adjuvant with verdicitumab or in combination with treprilimab or sequential chemotherapy.
In addition, early stage I/II clinical trials such as RC88 (MSLN ADC), RC118 (CLDN18.2 ADC), RC148 (PD-1/VEGF double antibody), RC198 (IL-15/IL-15Rα fusion protein), and RC248 (DR5 ADC) continue to advance. We look forward to continuing to read clinical data from these early products.
Profit forecasting and valuation
Considering that the company's R&D investment is still expected to continue to maintain a high absolute value due to the promotion of more pipelines and international clinical enrollment, we lowered our net profit for 2024-2025. We expect the company's revenue in 2024-2026 to be 16.84, 25.13, and 3.353 billion yuan, respectively. We expect the company to reduce its losses year by year in 2024-2026. Verdicitumab continues to develop many clinical trials in combination with immunotherapy at home and abroad, and it is expected that product performance growth and valuation flexibility will continue to open up. Taytacip is expected to continue to meet a large number of unmet needs in the field of self-immunity. Mature clinical data have been read out one after another, and it is hoped that the company's international position will be further strengthened. We are optimistic about the company's high performance growth potential and the progress of overseas clinical trials or cooperation, driven by both verdicitol and tetracip, and maintain a “buy” rating.
Risk warning
Product development failure/sales falling short of expectations risk, policy risk, calculation risk.