Innocare will use less than 3 billion yuan of idle self-owned funds for cash management, mainly affected by the decline in bank deposit interest rates, and this will not affect the progress of R&D pipeline. Obritinib is the core source of income for Innocare, but its product revenue is much lower than other BTK inhibitors. The company expects sales growth to reach 30% this year.
On June 26th, the "New Star Market Daily" (Reporter Zheng Bingxun) reported that Innocare (688428.SH, 9969.HK) made another big move on the purchase of investment financial products. On the evening of the 25th, it announced that it will use unused funds of up to 3 billion yuan to purchase low-risk investment products with high safety and good liquidity, setting the highest limit for authorized cash management in recent years.
Prior to this, Innocare had authorized the use of idle fund-raising for cash management from 2022 to 2024, but the amount was generally between 800 million and 1 billion yuan.
As an investor, the "New Star Market Daily" reporter learned from Innocare employees that the substantial increase in the amount was mainly affected by changes in bank interest rates and that this move will not affect the promotion of research and development pipelines.
The other party explained, "The bank's fixed deposit interest rate was high before, and the company deposited the relevant funds in a bank account and could also obtain good returns. But this month, the bank lowered the interest rate. It is not cost-effective for the company to continue to deposit funds in the bank. That's why more idle funds were used for low-risk bank wealth management."
Innocare's previous financial report showed that in 2022, the total investment income gained from temporarily idle fund-raising for cash management and investment income obtained through notice deposits and agreed deposits was 7.6079 million yuan, and the investment income for this item in 2023 was 37.1333 million yuan.
As an innovative pharmaceutical company, Innocare focuses on the fields of oncology and self-immune diseases. Currently, although Innocare has more than 20 R&D pipelines for different indications, excluding Tafasitamab approved in Hong Kong, Innocare mainly relies on the core product, BTK inhibitor, Ibrutinib to contribute to income.
Ibrutinib was approved for the first time at the end of 2020 for the treatment of relapsed or refractory CLL/SLL (chronic lymphocytic leukemia/small lymphocytic lymphoma) and relapsed or refractory MCL (mantle cell lymphoma). In April 2023, it was further approved by NMPA for the treatment of relapsed or refractory MZL (marginal zone lymphoma).
In 2022, Innocare achieved revenue of 625 million yuan, of which the product income from Ibrutinib was 566 million yuan, accounting for 90.49%. In 2023, it achieved revenue of 739 million yuan, and the product income from Ibrutinib was 671 million yuan, accounting for 90.82%.
However, as a BTK inhibitor, the sales of Ibrutinib are not high. In contrast, Beigene's Zanubrutinib achieved global sales of $1.3 billion in 2023, becoming the first domestically produced new drug with annual sales exceeding $1 billion. The global sales of the first-generation BTK inhibitor, Ibrutinib, exceeded $8.3 billion in 2022, and the sales of its original research product "Imbruvica" in public medical institutions in China reached 760 million yuan.
Innocare employees stated that "After Ibrutinib was approved for listing at the end of 2020 and included in medical insurance at the end of the following year, which was a year later than Zanubrutinib, the time for product release was relatively short, but the growth rate of the product was relatively fast. It is expected that the annual growth rate in 2024 will exceed 30%. Additionally, after Ibrutinib and Zanubrutinib were approved in China, they accelerated their competition with Ibrutinib and the market share of domestic BTKs will further increase in the future."
The reporter of the "New Star Market Daily" further asked whether Innocare would consider increasing its R&D investment to promote the development and launch of R&D products. The company replied that it has always strived to promote its R&D pipelines; "For example, the progress of Ibrutinib in the research on systemic lupus erythematosus and primary immune thrombocytopenia is unmatched by other BTKs. The TYK2 inhibitor ICP-332 is targeting a new point. The company's CD3xCD20 bispecific antibody product is among the fastest in progress worldwide."
Innocare's R&D expenses in 2023 totaled 757 million yuan, an increase of 16.73% year-on-year, and R&D expenses for the first quarter of 2024 were 178 million yuan, a year-on-year increase of 26.09%.
Regarding some of the latest R&D progress, Innocare's Ibrutinib has completed patient enrollment for the registration-phase III clinical trial for first-line treatment of CLL/SLL in the first half of 2023 and is expected to submit a new drug application (NDA) in the second half of 2024. Tafasitamab for the treatment of relapsed or refractory DLBCL (diffuse large B-cell lymphoma) is undergoing a phase II bridging registration clinical trial in China, and is expected to submit an NDA to CDE in Q2 2024 and be approved in the first half of 2025.