20230331-招银国际-荣昌生物-B-09995.HK-Wide_clinical_studies_to_unlock_global_potential_5页_1mb

RemeGen (9995 HK) Summary

Core Information

RemeGen (9995 HK) is a biopharmaceutical company focused on innovative ADC (Antibody Drug Conjugate) and fusion protein medicines. The company has been actively expanding its clinical development pipeline and exploring market opportunities both in China and globally.

Financial Highlights (FY21–FY22)

• Revenue: RMB768 million in FY22, down from RMB1,424 million in FY21, reflecting a -46.1% YoY decline.
• Product Sales: RMB738 million from RC18 and RC48 in FY22, compared to RMB131 million in FY21.
• Gross Profit Margin: Improved from 48.9% in 2021 to 63.4% in 2022.
• SG&A Expenses: Increased by +47.7% YoY to RMB713 million due to expanded salesforce and marketing.
• R&D Expenses: Rose by +38.1% YoY to RMB982 million, driven by clinical trial spending and employee benefits.
• Net Profit: Recorded a net loss of RMB999 million in FY22, compared to a net profit of RMB276 million in FY21.
• Cash Balance: Maintained a healthy cash position of RMB2.07 billion as of end-2022.

Clinical Development and Market Potential

RC18

• Autoimmune Diseases: RC18 is in advanced development for multiple autoimmune diseases, including SLE, IgA, pSS, and MG.
• Conditional Approval in China: Conditionally approved for SLE in China, with confirmatory Phase 3 trial showing promising efficacy.
• Phase 3 Trials: Will start patient enrollment in 2Q23 for the three indications in China.
• Global Trials: MRCT trial for SLE is ongoing in the US, Europe, and APAC. A Phase 3 trial for MG in the US is planned for 2H23.
• FDA Approvals: Phase 3 trials for IgA and pSS have been approved by the FDA.
• Out-License Potential: Strong potential for a blockbuster out-license deal due to positive proof-of-concept data.

RC48

• UC Market: Added to the NRDL for treatment of 2L UC with stable pricing, which is expected to significantly drive product sales.
• Frontline Treatment: Exploring RC48 for 1L HER2-expressing UC with Phase 3 trials for RC48+toripalimab.
• BC and GC: RC48 is being tested in HER2-low BC (279 patients enrolled by end-2022) and 1L HER2-expressing GC with combination therapy.
• International Expansion: Seagen plans to start a Phase 3 trial of RC48+Keytruda for 1L HER2-expressing UC in 2H23.

Analyst Recommendation and Valuation

• Rating: BUY (maintained).
• Target Price: Revised to HK$71.89 from HK$79.13.
• Valuation: Based on DCF analysis with a WACC of 10.95% and terminal growth rate of 3.0%.
• Equity Value: Estimated at RMB34,433 million.
• DCF per Share (HK$): HK$71.89.
• Price Performance:
  • 1-month: -13.8%
  • 3-months: -23.5%
  • 6-months: +16.4%
  • 12-months: -16.0% (relative)

Shareholding and Stock Data

• Market Cap: HK$24,110.9 million.
• Share Performance:
  • 1-month: -13.8%
  • 3-months: -23.5%
  • 6-months: +16.4%
• Shareholding Structure:
  • HKSCC nominees limited: 34.8%
  • Yantai Rongda: 18.8%

Valuation Comparison and Sensitivity Analysis

• CMBIGM vs Consensus:
  • Revenue estimates are 20% lower than consensus.
  • Gross profit estimates are 23% lower than consensus.
• Sensitivity Analysis:
  • Target price varies from HK$64.98 to HK$97.36 depending on terminal growth rate and WACC.
  • At 3.0% terminal growth rate and 10.95% WACC, the target price is HK$71.89.

Key Financial Metrics (2020–2025)

Summary of Key Points

• RC18: Shows strong potential for multiple autoimmune diseases, with Phase 3 trials and FDA approvals.
• RC48: Expanding into HER2-low market and frontline treatment for UC.
• Financials: Revenue declined in FY22, but product sales and gross margin improved.
• Net Loss: Despite improved gross margins, net loss remained significant due to SG&A and R&D expenses.
• Valuation: Target price revised to HK$71.89, indicating long-term growth potential.
• Analyst Rating: BUY, suggesting positive outlook for the stock.

Disclaimer

This report is for informational purposes only and is not investment advice. It is subject to risks and uncertainties, and past performance does not guarantee future results. Investors are advised to consult professional financial advisors and make independent evaluations.