The company released the 2024 three-quarter report. 2024Q3 revenue was 40.59 million yuan, +36.30% year-on-year, after deducting non-attributable net profit of -57.21 million yuan. Revenue for the first three quarters of 2024 was 91.64 million yuan, +26.90% year-on-year, after deducting non-attributable net profit of -0.233 billion yuan.

The overall cost side was optimized, and the company's revenue grew rapidly. The company's revenue in Q3 increased +36.30% year-on-year, and the company's revenue capacity increased significantly. On the cost side, 2024Q3's sales expenses were 13.8 million, a decrease of 5.54% compared to 14.61 million in the same period last year. 2024Q3 management expenses were 15.94 million compared to 20.32 million in the same period last year, down 21.56% year over year. 2024Q3 R&D cost was 36.64 million, compared to 49.49 million in the same period last year, a year-on-year decrease of 25.96%. While optimizing all expenses, the company experienced high revenue growth and significant improvement in overall operating capacity.

Continue to lay down channels and actively lay out emerging industries such as small nucleic acids. In the first three quarters, the company continued to carry out channel sinking and academic promotion work for key regional cities and county-level markets, improving patient accessibility and providing strong support for revenue growth. In the first three quarters of the company, R&D investment accounted for 119.31% of revenue. It was mainly used for post-marketing research of Aikonin, early R&D of ongoing research projects such as long-lasting anti-HIV drugs and small nucleic acid drugs, and research and development of high-end generic drugs. The small nucleic acid project is carrying out pre-clinical research to create room for future long-term growth. A joint laboratory was established with Fudan University to explore functional cures for viral infections.

On October 30, Fudan University and Frontier Biology officially signed a contract for the “Joint Laboratory for Functional Curing of Viral Infections”. Frontier Biotech will enter the field of functional hepatitis B treatment, where there is huge clinical demand, based on technology and channel advantages in the field of antiviral treatment, and based on joint laboratories, to continuously improve its ability to innovate independently in the field of antiviral treatment and functional cure for viral infections.

Profit forecast: While sales expenses are falling, the company's revenue is growing rapidly, and at the same time, it is actively developing new fields. Optimistic about the company's long-term development and maintaining a “buy” rating. According to the three-quarter report and subsequent pipeline approval schedule, we expect the company's revenue for 2024-2026 to be 0.135 billion yuan, 0.161 billion yuan, and 0.19 billion yuan, respectively, up 18.4% year-on-year; net profit to mother will be -0.224 billion yuan, -0.182 billion yuan, and -0.12 billion yuan, respectively.

Risk warning: Clinical progress falls short of expectations, product sales fall short of expectations, new technology development falls short of expectations