Incident: On October 29, 2024, the company's three-quarter report was announced. The company's revenue for the first three quarters reached 1.271 billion yuan, an increase of 28.87% over the previous year. Among them, in the third quarter, Junshi Biotech achieved operating income of 0.485 billion yuan, a year-on-year increase of 53.16%; in the first three quarters of 2024, a loss of 0.927 billion yuan, a year-on-year reduction of 34.12%; loss in the third quarter was 0.282 billion yuan, a year-on-year decrease of 31.05%.

Comment:

1) 24Q3 performance exceeded expectations, revenue growth was significant, net profit loss to mother narrowed, and capital reserves were sufficient. Revenue side: The increase in the company's revenue is mainly due to the increase in sales revenue of commercial pharmaceuticals. Among them, the core product Tuoyi (triplimab, product code: JS001) achieved sales revenue of about RMB 1.068 billion in the domestic market, an increase of about 60% over the previous year. In the third quarter of 2024, Tuoyi achieved sales revenue of about RMB 0.397 billion in the domestic market, up about 79% year on year and 9.07% month on month. Profit side: The main reason for the narrowing of losses is that the company strengthened cost control and focused resources on more promising R&D projects. At the same time, R&D expenses decreased by 31.19% year on year, accounting for 68.78% of revenue. As of the end of the reporting period, the total balance of the company's monetary capital and transactional financial assets was $3.045 billion, with sufficient capital reserves.

2) Trepril's major indications, advantageous indications, and combined strategy results are gradually showing. Market performance is improving quarter by quarter, and overseas commercial expansion is gradually accelerating. The first is the dosage of large indications. The first is the dosage of Trepri 1L for lung cancer treatment; second, sales of trepri in dominant indications such as urothelial cancer also contributed to the company's revenue; this year, it was approved as first-line exclusive indications for renal cell cancer and triple-negative breast cancer, which also became an additional amount. Tripley had sales of 0.307 billion yuan in Q1, 0.364 billion yuan in Q2, and 0.397 billion yuan in Q3, just as we expected to improve quarterly. Third, the company is starting a joint use matrix and superimposing overseas strategies to open up the global commercial market, and is in the process of opening up the global commercial market. 2024Q3, triplimab combined with bevacizumab for first-line treatment of patients with unresectable or metastatic hepatocellular carcinoma, and the marketing application for treprilimab for first-line treatment of unresectable or metastatic melanoma were accepted by the State Drug Administration; treprilimab was approved for marketing in Europe, India, and Hong Kong, China; in addition, many other countries have also accepted marketing applications for treprilizumab, which are expected to be approved for listing one after another.

3) Second-tier products are progressing at an accelerated pace and are expected to become the company's second-tier revenue growth curve. Q3. Angorizumab injection was approved by the National Drug Administration for marketing, which is expected to benefit the PCSK9 inhibitor market and generate revenue for the company. The company will accelerate the development and marketing application of late-stage pipelines such as anti-tumor anti-BTLA monoclonal antibodies and anti-IL-17A monoclonal antibodies, and continue to explore early-stage pipelines including Claudin18.2 ADC drugs, PI3K-α oral small molecule inhibitors, CD20/CD3 bispecific antibodies, PD-1/VEGF bispecific antibodies, anti-DKK1 monoclonal antibodies, etc., and push more advantageous products and indications into the registered clinical trial stage as soon as possible to provide continuous growth for the company's future operating income Motivation.

Profit forecast: We expect the company's revenue for 2024-2026 to be 1.7, 3.2, and 4.25 billion yuan, respectively, with year-on-year growth rates of 13.14%, 88.24%, and 32.81%, respectively, and net profit to mother of -1.842, 0.041, and 0.805 billion yuan, respectively. The year-on-year growth rates are 19.34%, 102.21%, and 1882.91%, respectively, maintaining the “Highly Recommended” rating.

Risk warning: risk of clinical failure, risk of increased competition, risk of product sales falling short of expectations, policy risk.