The company's recent situation

According to the company announcement, 1H24 Benodat (rekiolense injection, relma-cel) was successfully commercialized and approved for r/r MCL in China in August. Furthermore, relma-cel previously read the first IIT human data for treating the self-immune disease SLE at the European Congress of Rheumatology (EULAR) in May, showing potential for cure. According to the company's semi-annual report, the company expects that many clinical studies of 4Q24 Benoda for r/r FL, LBCL and other indications are expected to usher in significant progress.

reviews

The commercialization of Benoda 1H24 went smoothly, and operational efficiency continued to improve. According to the company announcement, 1H24 achieved revenue of 86.82 million yuan. As of June 30, 2024, Benoda has included 78 commercial insurances and 96 local government supplementary health plans. 1H24 continues to implement the cost reduction plan. The gross margin stabilized at 50.4%, and Benoda's production success rate remained at 98%. We believe that if production costs are further optimized in the future, it is expected to provide more space for health insurance negotiations. Thanks to improvements in the company's operating efficiency, the company's net loss as of 1H24 was 0.24 billion yuan, and the loss was reduced by 0.14 billion yuan year-on-year.

Benoda was approved for recurrent and intractable MCL indications to further advance the hematoma indication layout. On August 27, 2024, the company announced that Benoda was approved as an adult r/r MCL in China. This is Benoda's third indication approved domestically. The company continues to advance research in the field of hematoma. According to the company announcement, the company expects to release two-year follow-up data for the 3L r/r FL study RELIANCE by the end of 2024; 2) the enrollment of patients who are expected to complete the Phase III registered clinical trial of Benoda's standard LBCL treatment; 3) the IIT trial of 1LLBCL treatment is expected to be completed.

Relma-cel has shown potential to cure SLE, and the CD19 CAR-T market space is expected to continue to expand.

On May 30, 2024, the company announced the first IIT human data for relma-cel treatment of SLE in 2024 Eular. As of April 8, 2024, 12 patients were enrolled in the trial and the return was completed. In the low-dose group follow-up data for at least 4 months, 2 of the 3 patients had a history of more than 10 years, and 2 had used biologics. After relma-cel infusion, the SELENA-SLEDAI score of 3 patients dropped from baseline 8-14 to 0 or 1 point, and the proportion of SRI-4 targets reached 100%. We believe that CAR-T therapy has shown the potential to bring complete clinical remission away from basic medication for terminal patients.

Profit forecasting and valuation

Considering the pay-side pressure faced by CAR-T products in 2024, we lowered our 2024/2025 revenue forecast by 32%/22% to 0.183 billion/ 0.319 billion yuan; considering the continuous improvement of the company's operating efficiency, we basically kept the company's 2024/2025 net profit forecast loss of 0.733 billion yuan/loss 0.609 billion yuan unchanged. Using the DCF model, we kept the company's target price of HK$2.4 unchanged, with 38.7% upside from the current stock price.

risks

Product commercialization falls short of expectations, health insurance coverage progress falls short of expectations, and the risk of R&D failure.