Rongchang Biology (688331)
Key investment points
Event: the company released the first quarterly report of 2022. In 2022q1, it realized an operating revenue of 150 million yuan, a year-on-year increase of 3406.6%; The loss of net profit attributable to the parent company is 290 million yuan, and the loss of net profit not attributable to the parent company is 290 million yuan.
2022q1 has made positive progress in commercialization and continued to increase R & D investment. The operating revenue of the company in 2022q1 increased significantly compared with that in 2021 (3406.6%), which was mainly due to the commercial sales revenue of the core commercial products tetasip and vidicizumab. The company invested 220 million in R & D in 2022q1, with a year-on-year increase of 60.3%, mainly due to the gradual increase of clinical projects entering the early clinical stage and registered clinical stage; Sales expenses increased by 271.6% year-on-year, mainly due to the expansion and construction of the commercialization team of the two products and the increase of market development activities.
The core pipeline is advancing smoothly, and the product echelon is becoming richer and richer. Rc18 and rc48 are developing at home and abroad, with great commercial expansion flexibility. The R & D Progress of 2022q1 is advancing smoothly. Rc18: the results of treatment for Sjogren’s syndrome indication phase I and I were excellent. 42 patients were randomly assigned to 240 mg, 160 mg and placebo groups. The change of essdai score in the treatment group compared with the baseline value was statistically significant; The indications of rc18 in the treatment of systemic lupus erythematosus (SLE) and IgA nephritis have been carried out overseas in clinical stage I, II and I, respectively. Rc48:1) the treatment of terminal line HER2 positive gastric cancer was recommended by class IIa of CSCO guidelines, and the treatment status of rc48 in terminal line gastric cancer was highly recognized; 2) The therapeutic potential of urothelial carcinoma is expanded. The phase Ib / II rc48-c014 study of rc48 combined with tuoyi (PD-1) in the treatment of metastatic urothelial carcinoma shows that the orr evaluated by the researchers is 75%. Patients can benefit from the combination of rc48 + PD-1 regardless of the expression of HER2 and PD-L1, especially in HER2 (3 +) patients; 3) The phase I clinical study of tuoyi combined with tuoyi in the treatment of peri operative myometrial invasive bladder cancer was approved by nmpa.
Successfully landed on the science and Innovation Board of Shanghai Stock Exchange and was recognized by the capital market. The company successfully landed on the science and Innovation Board of Shanghai Stock Exchange in March 2022, raising a total of 2.61 billion yuan to support subsequent new drug research and development and supplement working capital. The company officially opened the “a + H” dual channel to help the steady development of the company.
Profit forecast and investment suggestions. The company focuses on source innovation, and its core technology leads the research and development of similar drugs in China. The commercialization of rc18 and rc48 helps the company to achieve profitability in advance. We expect the company to realize a net profit attributable to the parent company of -9.4 / – 5.6 / – 380 million yuan in 2022 / 2023 / 2024. Considering that the company’s core pipelines are ready to go and the overseas prospect is promising, we maintain the “buy” rating.
Risk tip: risk of medical insurance price reduction; The risk of intensified industry competition; Epidemic risk; Product R & D and clinical progress were less than expected.
