Core views:

On March 28, 2024, 3D Medicines announced its 2023 results, with operating revenue of RMB 635 million, up 11.91% year on year; gross profit of RMB 586 million, up 11.6% year on year, and gross margin of 92.3%: net profit loss narrowed sharply, net loss of RMB 563 million, down 46.5% year on year. At the same time, significant progress has been made in the R&D pipeline. Enveda

Lung cancer adjuvant/neoadjuvant has successfully initiated phase III key experiments. The company is accelerating the development of the next-generation tumor immune checkpoint inhibitor 3D057 and the next-generation tumor vaccine 3D124. Key points for future investments include:

1) Revenue continued to grow, net profit losses narrowed sharply, and cash reserves were abundant; 2) The commercialization of the core product Enveda went smoothly, and further clinical milestones were reached; 3) Clinical trials of other drugs progressed as scheduled;

4) Proactively lay out mRNA cancer vaccines and accelerate development.

Conclusions:

As the pharmaceutical industry environment improves, Enveda is expected to return to rapid growth in 2024, and Enveda's annual sales are expected to exceed 1 billion yuan in 2026. From 2024 to 2026, the company's revenue is expected to be 794 million, 992 million yuan, and 1.24 billion yuan, respectively. The corresponding PS is 1.81 times, 1.45 times, and 1.16 times (as of April 22, 2024, exchange rate: HKD/RMB exchange rate = 0.9244, company market value: HK$1,436 billion), which is far below the industry average. The company's valuation is seriously undervalued, and the target price is HK$13. Furthermore, as international multi-center clinical progress continues to advance, the value of pipelines will also soar.

Risk warning

Risk of clinical trial failure. Clinical drug development is a lengthy and expensive process, with uncertain results; there is a risk that the pipeline will not progress as expected. The clinical progress of the product is slower than expected; the risk of commercialization falling short of expectations. Sales of marketed drugs may be affected by multiple price control policies and may fall short of expectations;

The risk of increased competition in the industry. In the future, new competitors may enter this market and seize market share.