Alice released its report for the third quarter of 2024. In 2024, Q1-Q3, the company achieved operating income of 2.53 billion yuan, +88% year over year; net profit to mother of 1.06 billion yuan, +159% year over year; net profit after deducting non-return to mother of 1.01 billion yuan, +166% year over year.

In the Q3 quarter of 2024, the company achieved operating income of 0.96 billion yuan, +60% YoY, +15% month-on-month; net profit to mother 0.41 billion yuan, +101% YoY, +16% month-on-month; net profit after deducting non-return to mother 0.36 billion yuan, +85% YoY and +5% month-on-month.

Revenue growth was driven by continued release of vometinib, and sales expenses were well controlled to reduce costs and increase efficiency. During the reporting period, since the first-line treatment indications and second-line treatment indications of the company's core product vometinib were both renewed and included in the scope of national medical insurance reimbursement, it effectively reduced the burden of medication use on patients, further expanded the number of beneficiaries of lung cancer patients in China, and drove rapid growth in performance. In terms of expenses, the company continued to reduce costs and increase efficiency. In the third quarter of 2024, the company's sales expenses ratio was 38.3%, a decrease of 7.5 percentage points compared with the same period last year. The net profit margin further increased, reaching 42.5%, and the quarterly profit margin continued to increase.

R&D projects are progressing smoothly, and foreign cooperation reserves future pipelines. In terms of product introduction, during the reporting period, the company signed a “Pharmaceutical Technology License and Development Agreement” with Gacos. The company obtained exclusive license to research, develop, manufacture, register and commercialize the KRAS G12C inhibitor Golerese and the SHP2 inhibitor JAB-3312 in China to further expand the company's pipeline layout in the field of oncology, including lung cancer, pancreatic cancer, and colorectal cancer. This cooperation is highly in line with the strategic plan for the overall development of Alice and helps Alice continue to launch innovative drugs with accurate curative effects and benefits the public. In terms of development progress, in September 2024, AST2303 tablets were approved by the State Drug Administration to conduct clinical trials in adult patients with advanced non-small cell lung cancer with EGFR C797S mutations. AST2303 tablets are a new generation of highly selective, injectable EGFR oral small molecule inhibitors, which can efficiently inhibit EGFR C797S mutations.

Maintain a “Highly Recommended” investment rating. Allis vormetinib is continuing to be released at a high rate. Considering the pace of volumetinib dosage, we have raised the Iris profit forecast for 2024-2026. We expect the net profit of Alice to return to mother for 2024-2026 to be 1.36 billion yuan, 1.72 billion yuan, and 2 billion yuan, respectively, +111%, +27%, and +16% compared to the same period last year. Corresponding PE is 18x, 15x, and 13x, respectively. Maintain a “Highly Recommended” investment rating.

Risk warning: risk of R&D falling short of expectations, risk of sales falling short of expectations, risk of changes in the payment environment, risk of foreign cooperation, etc.