Increase investment in research and development, and proceed in an orderly manner in the research pipeline. In 2023, the company achieved net profit of 801 million yuan to mother, and losses increased. The main reason was that the company's various new drug products were under development, various new drug research and development projects progressed in an orderly manner, and R&D investment increased compared to the same period last year. Among them, total R&D expenditure in 2023 reached 620 million yuan (+36.5% YoY). The company currently has 15 research lines, of which 9 products have been approved for clinical use, 2 have been approved for clinical use, NDA has been accepted for 2 indications, and 2 are in the Ph3 clinical stage, covering treatment fields such as autoimmune diseases, infectious diseases, and tumors.

The core product GR1501/Celiac monoclonal antibody is about to be approved, leading domestic progress. GR1501 is the first domestically produced anti-IL-17A monoclonal antibody to be declared for marketing in China. Ph3 clinical data for moderate to severe plaque psoriasis are excellent. The proportion of subjects who achieved PASI 75 and PASI 90 in the 52nd week was 96.5%/84.1%, respectively, and the proportion of subjects who reached PGA (0 to 1) was 84.4%. The curative effect was remarkable and long-lasting.

Currently, there are 3 IL-17 related targets and 2 IL-23 related target psoriatic antibody drugs on the market. They are all imported products. Domestic products are only GR1501 from Zhixiang Jintai and SHR-1314 from Hengrui Pharmaceutical. The company's products are expected to be approved for marketing in 2024H1. An NDA application has been submitted for the axial spondyloarthritis indication, and domestic commercialization is expected in 2025.

GR1802 completed the first clinical trial for moderate to severe atopic dermatitis with Ph3 clinical enrollment. The company's IL-4Rα antibody GR1802 completed the first Ph3 clinical trial enrollment for moderate to severe atopic dermatitis in early 2024; indications such as chronic sinusitis with nasal polyps, chronic spontaneous urticaria, asthma, and allergic rhinitis are in the Ph2 clinical trial stage, and the overall progress is closely following the first tier in China.

Production capacity and commercialization preparations are adequate. The first phase of the company's antibody industrialization base project has completed the addition of 20,000 litres of biological fermentation production capacity, which can quickly achieve large-scale commercial production of products such as Celizumab, GR1802, and GR1603; the second phase of the antibody industrialization base project is in the early planning and design stage. The company's autoimmune disease product line commercialization team has begun to take shape. The core managers have rich experience in promoting and commercializing innovative drugs and drugs in the field of autoimmunity, and team building is progressing steadily.

Investment suggestions: The company's core product GR1501/Celizumab is the first domestically produced IL-17A monoclonal antibody reported for production. Indications for medium/severe plaque psoriasis and axial spondyloarthritis are expected to be approved for marketing in 2024H1 and 2025Q3, respectively, leading domestic progress; GR1801 is the first anti-rabies virus G protein dual antibody product to enter the clinical stage in China. It is expected that 2025Q4 will achieve domestic commercialization and contribute to increased performance; GR1802 has completed the first clinical trial of Ph3 subjects, and is closely following the first tier. We maintain our previous profit forecast. We expect that in 2024-2025, the company's net profit to mother will be -7.09/-600 million yuan, respectively, and the net profit forecast value for 2026 will be added to -210 million yuan, maintaining the “increase in holdings” rating.

Risk warning: risk of valuation, risk of profit forecasting, risk of failure in product development under development, risk of product commercialization falling short of expectations, etc.