In 2024, Innovent delivered strong 52% YoY revenue growth, driven by the continued expansion of core product sales and a 146% surge in licensing income. The company achieved its first full-year profitability, with both Non-IFRS net profit and EBITDA turning positive. Key milestones are expected in 2025-2026, including regulatory approvals for IBI362, IBI112, and data readouts for IBI363, IBI343 and IBI3009. Maintain BUY.
Key Factors for Rating
Revenue growth driven by product sales and licensing fee. In 2024, Innovent achieved total revenue of RMB9.4bn, up 52% YoY, primarily driven by strong sales growth of core products and increased licensing income. Product revenue reached RMB8.2bn, up 44% YoY, mainly fueled by the continued expansion of sintilimab (PD-1) and biosimilars. Additionally, licensing income surged 146% YoY to RMB1.1bn, mainly supported by RMB690m from IASO Bio. Innovent granted global rights for DLL3 ADC (IBI3009) to Roche, with the potential for significant milestone payments and future royalties.
2024 marks the first full-year profitability. Innovent’s profitability significantly improved in 2024, with IFRS net loss narrowing by 91% to RMB95m, while Non-IFRS net profit excluding share-based compensation and FX impact turned positive at RMB332m, marking the first full-year profitability in company history. EBITDA (Non-IFRS) also turned positive at RMB412m, compared to a loss of RMB600m in 2023. GPM improved by 2.3ppts YoY to 84%. Operating efficiency also improved, with the sales expense ratio decreasing from 54.1% to 52.8% and the administrative expense ratio improving from 13.1% to 8.8%, contributing to overall profitability enhancement. R&D expenses remained a key focus, reaching RMB2.7bn and accounting for 32.6% of revenue, in line with the company’s innovation-driven strategy and pipeline advancement.
Key milestones over the next 1-2 years. IBI362 (Mazdutide, GLP-1/GCGR) is expected to receive China NDA approval for obesity in 2Q25 and T2D in 2H25, with data readouts from the head-to-head study vs semaglutide near YE2025 to early-2026, and new PhIII studies planned in 2025. IBI363 (PD-1/IL-2) is scheduled to readout data at ASCO. IBI343 (CLDN18.2 ADC) will see key developments, including PhIII data readout for 3L GC and PhI data for 2L PDAC, with a global PhIII trial planned in 2025. IBI112 (IL-23p19) is expected to gain China approval near YE2025. IBI311 (IGF-1Ri) is projected to commence commercial launch for TED in 2H25. IBI3009 (DLL3 ADC) is expected to release global PhI/II data in 2026.
Key Risks for Rating
Slower-than-expected commercial ramp-up; challenges in global expansion; intensifying market competition; and breakdown of key partnerships.
Valuation
We raised our revenue forecasts for 2025/26 by 12%/4%, respectively, reflecting higher-than-expected licensing income. However, we adjusted expense projections upward, considering the company’s increased investments in global clinical trials and commercial activities to support its expansion. Overall, we maintain our TP of HK$56 and BUY rating.