RemeGen reported 9M24 revenue of Rmb1.21bn (+57% YoY) and net losses of Rmb1.07bn, with revenue of Rmb467m (+35% YoY) and net losses of Rmb291m (-11% YoY, -33% QoQ) in 3Q24, in line with our expectation. Its R&D expenses reached Rmb1.15bn (+34% YoY) in 9M24, with R&D expenses reaching Rmb347m (+9% YoY, -27% QoQ) in 3Q24. Its selling expenses reached Rmb623m (+15% YoY), with selling expenses ratio down 18.6 ppts to 51.5% in 9M24. In addition, its gross profit margin increased 2.9 ppts to 79.8% in 9M24. As the end of September 2024, the company has cash of c.Rmb1.12bn on hand. We maintain our EPS forecast of -Rmb2.72 in 24E, -Rmb1.55 in 25E, and -Rmb0.25 in 26E. We maintain our target price of HK$21. With 42% upside, we maintain our BUY rating.
　　Continuous expansion of RC18’s new indications. Now, RC18 has been approved by the NMPA for the treatment of SLE and RA in China. In addition, the BLA of RC18 for the treatment of generalized myasthenia gravis (gMG) has been accepted by the CDE with the grant of priority review process recently. Meanwhile, as for the global development of MG, the FPI for phase III trial of RC18 for MG has been completed in the US. Meanwhile, the company has completed the patient enrollment for RC18’s phase III trials in China for IgAN and pSS. In terms of the global development, RC18 is now under the global phase III stage II for SLE, which is expected to have the FPI recently. In addition, the company has reached consensus with FDA for the phase III study for IgAN and received the IND approval from the FDA for the phase Ill study of RC18 for pSS.
　　BLA of RC48’s new indication accepted by the NMPA. RC48 has been approved by the NMPA for the treatment of HER2-expressing locally advanced or metastatic GC and UC, with these two indications included into the NRDL. Recently, the BLA of RC48’s third indication of HER2-positive advanced BC with liver metastasis, has been accepted by the CDE. In addition, the company is conducting earlier line treatment studies for RC48’s combo studies for UC and GC in China. In terms of the global development, RC48 is under patient enrolment for the monotherapy for 2L UC (pivotal study) and for its combo with PD-1 for 1L UC (phase III trial). In addition, RC48’s combo with tucatinib is under phase II trial for advanced BC and GC.
　　R&D updates of other pipelines. In terms of other ADC pipelines, RC88 (mesothelin ADC) is under phase I/II trial for ovarian cancer and other advanced solid tumors. The phase I/II clinical trial results of RC88 in ovarian cancer were presented at the 2024 ASCO. In the ovarian cancer cohort, the ORR was 45.2%, with the mDoR of 8.02 months. In addition, RC248 (DR5 ADC) is under phase I trial for various solid tumors and RC278 is a pre-clinical ADC product under development for various solid tumors. As for the non-ADC pipelines, RC148 (PD-1/VEGF, bispecific antibody) is under phase II trial for the combo therapy with ADCs for multiple solid tumors. In addition, RC198 (IL-15/IL-15Rα) is under phase I trial for the treatment of advanced solid tumors.
　　Maintain BUY. We maintain our EPS forecast of -Rmb2.72 in 24E, -Rmb1.55 in 25E, and -Rmb0.25 in 26E. We maintain our target price of HK$21. With 42% upside, we maintain our BUY rating.
　　Risks: R&D failure of key pipeline; rising competitions of key pipeline; lower-than-expected sales ramp-up.