Four innovative drugs entered medical insurance. The 5th innovative drug was approved for marketing in June of this year, 3 innovative drugs, diazepam injection, and methotrexate injection - psoriasis, all included in the national medical insurance catalogue. The fourth innovative drug sucrose hydroxide iron oxide chewable (Viverui) was authorized in February '24. It is the first iron-based non-calcium-phosphorus conjugate in China to control serum phosphorus levels in patients with chronic kidney disease undergoing dialysis. The four new drugs are conservatively estimated to contribute 4-5 billion yuan in revenue in 2024. The 5th innovative drug methylene blue enteric sustained-release tablets were approved for marketing in June of this year to enhance visualization of colorectal disease in adult patients screened or monitored by colonoscopy, making it the first oral methylene blue enteric sustained-release tablet in China. In the past year, the company has launched 5 innovative drugs, which fully reflect the high efficiency of the company's research and development. These innovative drugs are expected to drive rapid growth in performance.
Innovative drug pipelines are abundant, rucotinib is progressing rapidly, and the market space is large:
The company has deployed 30 innovative pipelines around the world, mainly FIC and BIC. Methotrexate injections have been accepted for RA treatment; more than 10 registered clinical trials are being carried out in an orderly manner. Lucotinib cream has begun to be used in Boao and approved for marketing in Macau. The company is collaborating with Boao Super Hospital to promote real-world research (RWS) of the product. The RWS study results will be used as supporting evidence for the product's registration and listing in mainland China. This will greatly accelerate the marketing of lucotinib. It is expected that an NDA will be submitted in the second half of the year, and the marketing progress is expected to be faster than market expectations. The market for treating vitiligo is vast, with 14 million patients in China and 6.5 million patients in Southeast Asia. The Chinese phase III bridging trial of lucotinib for the treatment of atopic dermatitis (AD) has completed its first patient administration. China has about 26 million AD patients, of which about 23 million are mild to moderate. Topical medication is the most basic treatment for AD. Traditional topical drugs, such as topical glucocorticoids and topical calcineurase inhibitors, have adverse effects or limited curative effects, and there is an urgent need for new clinical treatments.
The dermatology and aesthetic ophthalmology business is expected to grow rapidly:
Currently, Kangzhe Beauty's product line continues to expand. Rucotinib cream was introduced in 2022. The products also include dermatology skin care products, hyaluronic acid, and botulinum toxin products. The ophthalmology team consists of more than 350 people, strengthening pharmaceutical device layout and commercialization capabilities, and promoting rapid growth in performance.
Maintaining a buy rating, target price of HK$10.38:
The company's performance declined briefly, and in the future, at least 3 new drugs will be approved for marketing every year. In the future, as innovative drugs continue to be launched, the performance will return to double digit growth in 2025, and the company's product structure has been greatly optimized, mainly innovative drugs. We expect the company's revenue for 2024-2026 to be RMB 7.925 billion, 8.949 billion yuan, and 10.885 billion yuan for EPS, respectively, with a target price of HK$10.38, corresponding to PE of 12.0 times in 2025. There is room for a 60% increase compared to the current price, giving it a “buy” rating.