Performance review
2022 adjusted net profit is in line with our expectations
The company announced its 2022 results: revenue of 159 million yuan, +183.1% year on year; net profit of the mother - 403 million yuan, adjusted net profit - 181 million yuan. Losses narrowed year-on-year, in line with our expectations.
Development trends
The company continues to expand its product pipeline, and R&D investment continues to increase. As of December 2022, the company had 24 ophthalmic drug combinations and established a comprehensive ophthalmic drug pipeline, including 11 commercialized products (5 more than at the beginning of the year) and 6 clinical phase III pipelines. According to the company's disclosure: 1) OT-401 (Yushiying) completed the first injection in December 2022 after listing, and the “Early Bird Program” sold more than 200 copies in 2022; 2) OT-101 atropine has completed phase III enrollment for Chinese patients. The company expects global enrollment to be completed in the first half of 2023 as soon as possible, and the company expects approval of atropine in-hospital preparations to accelerate its corresponding real-world research; 3) The OT-1001 phase III clinical trial is expected to reach the main end point as soon as 2023. A new drug marketing application (NDA) has been submitted; 4) OT-702 completed phase III clinical enrollment in March 2023; 5) OT-502 has completed the first patient enrollment, and real-world research is progressing steadily; 6) OT-202, a new class 1 drug developed by the company for dry eye, has entered phase II clinical trials. In 2022, the company invested 184 million yuan in R&D, an increase of 9% over the previous year. We believe that as the company's commercialization pipeline continues to increase, future revenue volume development is expected to enter the fast track.
Pipeline expansion is conducive to channel expansion. In 2022, the company's commercialized products achieved hospital terminal revenue of 159 million yuan, mainly due to the sharp increase in revenue after commercialization by Yu Shiying and the increase in revenue from other ophthalmology products.
As of December 2022, the company covered 8,171 hospital terminals, of which 1,384 were level-III hospitals, and the number of commercial teams reached 191. We believe that with the continuous expansion of the company's commercial pipeline and the strengthening of nationwide commercial network coverage, the company is expected to continue to increase its influence in the domestic ophthalmology market.
The company's consolidated gross margin reached 65% in 2022. According to the company announcement, the company achieved gross profit of 103 million yuan in 2022, +178.6% year on year. Gross profit growth was basically the same as revenue growth. The company expects the Suzhou plant to achieve commercial mass production in 2023 to ensure supply stability and product quality.
Profit forecasting and valuation
We maintain our revenue forecasts of $350 million and $700 million for 2023 and 2024, but considering the impact of the company's equity incentive expenses, we lowered our 2023/2024 net profit from -140 million yuan and -0.6 billion yuan to -330 million yuan and -250 million yuan. We continue to outperform industry ratings. Due to adjustments in earnings forecasts, we lowered our target price based on DCF by 17.5% to HK$13.70, which has 50.1% room for improvement from the current stock price.
risks
New product launches fell short of expectations; drug candidates were less profitable than expected.