Introduction to this report:
Product volume has been accelerated, and the amount of loss has been drastically reduced. R&D results have been implemented intensively, and the core pipeline has accelerated into the harvest period.
The early pipeline progressed steadily, which is expected to lead to a new round of catalysis. Maintain an “Overweight” rating.
Key points of investment:
Maintain an “Overweight” rating. Considering that the company's core products are entering the harvest period one after another and operating efficiency continues to improve, the 2024-2026 EPS forecast was adjusted to -0.63/0.30/1.49 yuan (originally -0.63/0.24/1.30 yuan). According to the DCF valuation method, the target price was raised to 75.02 yuan/share to maintain the “gain” rating.
Product volume has been accelerated, and the amount of loss has been drastically reduced. 2024H1 achieved revenue of 0.241 billion yuan, or +9.44% year over year; of these, 2024Q2 achieved revenue of 0.132 billion yuan, +18.45% year over year and +22.36% month over month, showing an accelerated volume trend driven by donafenib. The overall operating efficiency of 2024H1 has improved. The sales expense ratio, management fee rate, and R&D expense ratio were 49.94%, 10.98%, and 75.26%, respectively. The sales cost rate decreased compared to -3.56 PCTs, +8.03 PCTs, and -24.92 PCTs. The increase in the management fee rate was mainly due to 23H1 rushing stock payment fees. The decrease in R&D cost rate was mainly due to the completion of a number of registered clinical trials one after another. 2024H1's net loss was 0.067 billion yuan. The loss amount narrowed by 0.048 billion yuan year on year, and the loss amount narrowed sharply, showing a continuous trend of loss reduction.
R&D results have been implemented intensively, and the core pipeline has accelerated into the harvest period. The company's core product, recombinant human thrombin, was newly approved for marketing in January 2024. It has the characteristics of high purity and high hemostatic activity, and is expected to lead clinical drug iterations; the JAK inhibitor jacketinib is currently in the marketing review stage. We expect it to be approved for myelofibrosis in 2024. The indications for many autoimmune diseases will continue to advance. The indications for severe alopecia areata have reached the main therapeutic end point in phase III clinical trials. The indications for atopic dermatitis and ankylosing spondylitis are in phase III clinical stage and are expected to be declared one after another City; injectable recombinant human thyroid promotion The hormone is already in the NDA stage, and the indications for adjuvant radioactive iodine nail removal treatment after surgery are in phase III clinical phase.
The early pipeline progressed steadily, which is expected to lead to a new round of catalysis. The company has an extensive early R&D pipeline. ZG006 (CD3/DLL3/DLL3) is the world's first triple-specific antibody against DLL3. It is in phase I/II clinical stage in China, and has great potential for application in SCLC and other fields, and subsequent data reading is worth looking forward to; ZG005 (PD-1/TIGHT) revealed phase I/II data at the 2024 ASCO annual meeting, including cervical cancer (ORR = 63% in the 20 mg/kg group), and many indication exploration studies have been carried out. The R&D pipeline for many subsequent products has entered the clinical stage one after another, and there is plenty of potential for long-term development.
Risk warning. Clinical trial progress falls short of expectations; risk of failure in drug development; risk of falling short of expectations in marketing and sales