Incident: The company released its 2024 mid-year report. 24H1 achieved operating income of 0.015 billion yuan (-81.41% year over year), net profit to mother of 0.214 billion yuan, after deducting net profit not to mother of 0.215 billion yuan. The obvious decline in revenue was mainly due to the large revenue base of R&D milestones confirmed in the same period last year. There was a decrease on the cost side: management expenses were 0.024 billion yuan (-4.12% YoY), R&D expenses were 0.209 billion yuan (-11.93% YoY);
Gesulexib is about to be marketed, and many indications continue to progress. The company's KRAS G12C inhibitor Gesulexib submitted an NDA in December 2023. According to the NMPA review mission announcement, Gesulexib is in the review phase of supplementary data and is expected to be approved for listing by the end of this year or the beginning of next year. At that time, the company will receive R&D milestone payment from Chia Tai Tianqing. In addition, the indications for pancreatic ductal adenocarcinoma and colorectal cancer of 24H1 gesulexib were newly included in the CDE procedure, and clinical trials of other indications are progressing in an orderly manner: the phase III clinical trial of single-agent treatment of second-line KRAS G12C mutation NSCLC has completed the enrollment of the first patient, and the clinical trial application for treating advanced solid tumors with KRASG12C mutations with SHP2 inhibitors passed the CDE review;
Other pipelines are progressing in an orderly manner, and phased results are expected to be reaped in the second half of the year. Clinical trials of other pipelines are being carried out in an orderly manner. According to the progress of each trial, tests that are expected to read phased data in the second half of the year include: 1) phase IIb clinical trial of D-0120 (URAT1 inhibitor) to treat essential hyperuricemia; 2) phase II clinical trial of D-2570 (TYK2 inhibitor) to treat psoriasis.
According to the company's 24-26 mid-year report, we lowered the company's 24-26 revenue and expense forecast, predicting the company's 24-26 net profit of -0.345/ -0.235/-0.354 billion yuan (the 24-26 forecast was -0.31/-0.226/ -0.337 billion yuan), making an absolute valuation of the company's free cash flow, predicting that the company's reasonable market value is 5.029 billion yuan, and the corresponding target price is 8.72 yuan, maintaining the “buy” rating.
Risk warning
Innovative drug development progress falls short of expectations, increased product competition causes sales to fall short of expectations, and the risk that the company's medium- to long-term profitability will decline.