occurrences
On March 28, 2024, Colombotai Biotech announced its 2023 annual results. The company achieved revenue of 1,540 billion yuan, or 91.62% compared with the same period, of which revenue from license and cooperation agreements from partner MSD was 1,532 billion yuan; net profit to mother for the whole year was 574 million yuan, a year-on-year loss of 6.81%, and an adjusted annual loss of 451 million yuan. Net operating cash flow of 60 million yuan was corrected for the first time. As of the end of the reporting period, the company's cash and equivalents amounted to $2,528 billion.
reviews
Milestone revenue continues to be realized, and the company's financial situation is healthy
During the reporting period, the R&D expense ratio was 66.88%, up to 38.35 pct; the sales expense ratio was 1.27%; the management expense ratio was 78.73%, 38.36 pct year on year; and the financial expense ratio was 5.47%, -13.04 pct year on year. The decline in the cost ratio was mainly due to the increase in operating income. The total R&D expenditure in 2023 was 1,031 million yuan, and the absolute value increased by 185 million yuan over the same period last year. The milestone revenue realized to support R&D investment, and the company's overall operating conditions were good. During the reporting period, partner MSD paid the company $175 million ($1.05 billion), $30 million ($215 million) for various preclinical ADC assets, $30 million ($215 million), and reimbursement for other routine project expenses, respectively, for SKB264 milestones.
Head pipeline SKB264 was soon approved. During the reporting period in preparation for domestic commercialization, the NDA application for the first indication of the company's head product TROP 2 ADC (SKB264/MK-2870) - locally advanced/metastatic TNBC (triple negative breast cancer) - was accepted by CDE and included in priority review. In March 2024, its first-line treatment, TNBC, was certified as a breakthrough therapy and has entered phase 3 key clinical trials; the second indication for SKB264 - locally advanced/recurrent TNBC (triple negative breast cancer) - BC (breast cancer) was certified as a breakthrough therapy by the National Drug Administration, and phase 3 registered clinical trials were initiated for second-line treatment; its lung cancer indications were EGFR mutation and wild NSCLC (non-small cell lung cancer), respectively, and its EGFR mutant NSCLC indication was recognized as a breakthrough therapy for NSCLC where TKI failed, and the first case was enrolled in July 23; the phase 2 clinical trial of EGFR wild NSCLC combined with PD-L1 (A167) is ongoing.
Overseas, MSD has conducted 6 global phase III clinical trials on SKB284/MK-2870, involving first-line NSCLC treatment, second-line endometrial cancer treatment, EGFR-TKI response, drug-resistant NSCLC, HR+/HER2-breast cancer, and early NSCLC adjuvant treatment that has not met the target of new adjuvants.
As the initial indications for SKB264 are about to be approved, the company is actively preparing to set up a domestic commercialization team and has established an internal departmental structure, including various departments such as marketing, access and commerce, medical affairs, sales, and strategy and operational excellence. Overseas, partner MSD is mainly responsible for registration and commercialization matters.
Many ADC and non-ADC pipelines go hand in hand. After continuous research and development, Jinju's reserve pipeline also had many highlights. ADC and non-ADC products went hand in hand. In the ADC pipeline, global Phase 1/2 clinical trials of CLDN 18.2 ADC (SKB315/MK-1200) are ongoing; Nectin-4 ADC (SKB410/MK-3120) received IND approval from the National Drug Administration in February 2023; the key phase II main endpoint of HER2 ADC (A166) 3L+advanced HER2+BC was reached, and an NDA application was submitted to CDE in May 2023. In the non-ADC pipeline, EGFR monoclonal antibody (A140) was accepted by the National Drug Administration in September 2023; the RET inhibitor (A400) began enrolling patients in key trials of advanced RET+ NSCLC, and was certified as an orphan drug by the FDA in November 2023.
Investment advice
We expect the company's revenue from 2024 to 2026 to be 1,332 billion yuan, 1,993 billion yuan, and 2,261 billion yuan, respectively, up -14%, 50%, and 13% year on year, and net profit to mother of -540 million yuan, 0.05 billion yuan, and -68 million yuan respectively, up 6%, 101%, and -1481% year on year.
I am optimistic about the company's ability to continue to incubate as a platform-based ADC innovative pharmaceutical company, partner with MNC's global potential, and maintain a “buy” rating.
Risk warning
New drug development failure risk; risk of approval falling short of expectations; risk of industry policy risk; risk of rising costs; risk of new product release being slower than expected