[investment points]
Gree's sales exceeded expectations, and the company's net profit narrowed compared with the same period last year. In 2020, the company realized operating income of 185 million yuan, an increase of 26327.13% over the same period last year, mainly due to the operating income of 183 million yuan generated by the listing and sales of Gelele products; the company realized a net profit of-513 million yuan, a loss of 509 million yuan less than the same period last year.
The company's sales expenses increased significantly compared with the same period last year, and the R & D investment decreased. In 2020, the company's sales expenses were 108 million yuan, an increase of 598.52% over the same period last year, due to the increase in product sales and the increase in sales staff and promotion expenses. The R & D cost was 563 million yuan, a decrease of 11.60% compared with the same period last year, due to the transition of some projects from the clinical R & D stage to the registration stage. Management fees decreased by 85.56% compared with the same period last year, due to equity incentive fees of about 350 million yuan in the same period last year.
The decrease in financial expenses is mainly due to the increase in interest income caused by the increase in deposits raised, as well as the increase in interest expenses on loans.
Bevacizumab bioanalogue (BAT1706) is expected to be approved in three places this year. At present, BAT1706 is in the application stage of listing in China, the United States and the European Union. It is the first Avetine bioanalogue developed and carried out by a Chinese company in a global multicenter clinical trial. Avetine has been approved for seven indications in the United States, six indications in Europe and two indications in China. The company has conducted business cooperation with BeiGene, Ltd., Brazil's Biomm and overseas CiplaLimited to expand BAT1706's global market share.
The competition of Adamu monoclonal antibody is fierce, and the penetration rate of domestic market is expected to increase. Geleli is the first Adamu monoclonal antibody bioanalogue approved to be put on the market in China, which has a certain first-mover advantage. In 2020, Gloria achieved an operating income of 183 million yuan and a gross profit margin of 89.11%. So far, Gloria has been approved for six indications, namely ankylosing spondylitis, rheumatoid arthritis, psoriasis, Crohn's disease, uveitis and plaque psoriasis in children. With the gradual approval of adamumab bioanalogues, the market penetration is expected to increase, and it is expected that the improvement of patient diagnosis rate and market penetration will lead to the continuous growth of Gelele sales in the future.
Using a global market strategy, two products have been submitted for listing. By the end of 2020, a total of two products have been submitted for listing, including bevacizumab bioanalogues and GPIIb/IIIa antagonist batifiban; a total of three biological analogues are in clinical III, covering the field of autoimmune diseases. Among them, BAT1806 has completed the global phase III trial and is expected to submit applications for listing in China, Europe and the United States by the end of 2021.
Focus on advantageous R & D projects and terminate related clinical trials. In order to allocate R & D resources reasonably, focus on the advantage projects in R & D pipeline, and consider the follow-up development of related products and market risk, the company terminated the BAT8001, BAT8003 and BAT1306 R & D projects. By the end of 2020, the cumulative R & D investment of the three projects is 339 million yuan. Considering that BAT8003 and BAT1306 are in clinical Ⅰ and Ⅱ phase respectively, the termination of the project will not have a substantial impact on the investment and layout of the company's innovative drugs.
[investment advice]
The company is an innovative biopharmaceutical enterprise focusing on the research and development of innovative drugs and biosimilar drugs. The company has rich product lines, mainly covering autoimmune diseases and tumors, and has gradually entered the harvest period. The company has a foothold in China, facing the global market, and adopts the combination of self-sale and distribution to expand the domestic and foreign markets of its products.
Our operating income forecast for 2020-2022 includes a down payment of about RMB 136 million for the authorization, distribution and supply agreement with BeiGene, Ltd. Co., Ltd., as well as milestone payments for other projects, which should be included in the account of contract liabilities in accordance with accounting policy. We reduced our operating income in 2021 and 2022 and raised R & D, sales and management expenses. We estimate that the operating income of the company in 2021, 2022, and 2023 will be 5.0846, 2.622 billion, respectively, and the net profit will be-7.61, 391, and 0.08, respectively, and the EPS will be-1.84, 0.94 and 0.08, respectively, maintaining the "overweight" rating.
[risk Tip]
Uncertainty risk of drug research and development
The progress of drug marketing is not as expected.
Competition aggravates risk
Risk of persistent unprofitability