In 3Q24, RemeGen achieved robust product sales, with revenue reaching a record high of RMB467mn (+14% QoQ, +35% YoY), driven by product sales of RC18 (~RMB270mn, +43% YoY) and RC48 (~RMB200mn, +25% YoY). Total revenue in 9M24 was RMB1,209mn (+57% YoY), representing approximately 73% of our previous FY24 estimate, aligning with our expectations. We are reassured that the Company will meet its FY24 sales target of a 50%+ YoY increase, and expect the strong sales momentum to continue in 4Q24 and beyond. GP margin improved to 82.1% in 3Q24 (vs 78.3% in 1H24). RemeGen’s SG&A expense ratio decreased to 68.5% in 3Q24 from 72.4% in 1H24. In 3Q24, the R&D expense was RMB347mn, down 27% QoQ vs RMB475mn in 2Q24, due to pipeline optimization and R&D team restructuring. The Company narrowed its net loss to RMB291mn in 3Q24, vs RMB432mn in 2Q24. In 3Q24, net cash spending from operations narrowed to RMB15mn, vs RMB394mn in 2Q24. As of Sep 2024, RemeGen had a cash balance of RMB925mn (incl. financial assets), RMB1,027mn of short-term borrowings, and RMB1,341mn of long-term borrowings, which were largely consistent with the balance as of end-Jun 2024, indicating a proper cash control in 3Q, though there was a need for further financing.
Looking forward to RC18’s global development. We expect RemeGen to unblind the first-stage of RC18’s Ph3 global SLE trial (NCT05306574) in 1H25 after a 52-week treatment period for the 90 enrolled patients. Concurrently, the enrolment for the second stage of the Ph3 study is underway with FPI expected in 4Q24. A parallel global Ph3 study of RC18 in SLE (NCT06456567) has also been registered. RemeGen is conducting a global Ph3 trial of RC18 for MG in the US with FPI in Aug 2024. In China, approved for SLE and RA already, the BLA for MG was submitted in Oct 2024 with priority review, and the Ph3 trials for pSS and IgAN also completed enrolment with BLA submission expected in 2025. The Ph3 trial in IgAN is expected to read out the UPCR data in 1H25. We anticipate that RC18 holds potential for global collaboration, albeit with some uncertainties.
Smooth clinical progress of RC48 globally. Pfizer is actively conducting a pivotal Ph2 trial of RC48 monotherapy in 2L HER2-expressing UC and a Ph3 trial of RC48 + Keytruda in 1L HER2-experssing UC. The timeline of BLA submission of the Ph2 pivotal trial is tied to the progress of the Ph3 trial. In China, RC48 has already been approved for 2L+ UC and 3L GC with NRDL coverage. The BLA of RC48 for HER2-positive BC with liver metastasis was submitted in Oct 2024 and detailed data of the Ph3 study are to be released at the SABCS meeting in Dec 2024. A Ph3 trial of RC48 in HER2-low BC is currently ongoing with data readout expected in 1Q25. To expand RC48’s use for front-line treatment, a Ph3 trial of RC48+toripalimab for 1L HER2-expressing UC is ongoing with data readout in 1H25. RemeGen is planning a Ph3 trial of RC48 in 1L GC.
Maintain BUY. We believe that the rapid growth in product revenue will help to alleviate the Company's cash flow risks. We revise up our DCF-based TP from HK$19.59 to HK$21.09 (WACC: 12.93%, terminal growth rate: 2.0%).