Revenue was RMB1.7bn (+59% YoY) and net loss slightly narrowed from RMB1.51bn in 2023 to RMB1.47bn in 2024, in line with preliminary results. RemeGen expects at least 30% YoY growth in top-line in 2025 and continues its stringent cost control, especially to R&D expenses, as it has removed some early-stage candidates from pipeline and paused overseas development of RC18 in SLE. Post results, we lifted our drugs forecasts mainly on more optimistic view on RC18’s sales thanks to strong growth in 2024 and label expansion in 2025. Rolled over DCF model and lifted TP to HK$27. Maintain BUY. We expect RemeGen’s tight cash budget to mitigate in 2025-26 given its stringent cost control, and keep eyes on NDA approval of RC18 in MG in 2Q25.
　　Key Factors for Rating
　　2024 results in line: Revenue was RMB1.7bn (+59% YoY) in 2024, in line with preliminary results and management guidance (at least +50% YoY). The sales of telitacicept (RC18) and disitamab vedotin (RC48) were RMB970m (+88% YoY) and RMB720m (+36% YoY), respectively. Gross margin increased by 3.5ppts to 80%. Despite the cost control efforts, R&D expenses, admin expenses and selling expenses increased by 18%, 6% and 22% YoY, while the ratios decreased by 31ppts, 10ppts and 17ppts to 90%, 19% and 55%, respectively. Net loss slightly narrowed from RMB1.51bn in 2023 to RMB1.47bn. As of December 2025, RemeGen has cash balance of RMB763.1m.
　　Management guidance: 1Q25 drug sales growth was on track and the management expects at least 30% YoY growth in top line in 2025. RemeGen will continue its stringent cost control with selling expenses ratio expected to decline to below 50% (vs. 55% in 2024), admin expenses (excluded amortisation) to decrease, and R&D expenses to fall from c.RMB1.5bn in 2024 to c.RMB1.3bn. At the same time, gross margin will continue to improve in 2025 thanks to economies of scale. Overall, the management expects net loss in 2025 to narrow to below RMB1bn and RemeGen to largely achieve breakeven in 2026. In terms of cash position, the company expects operating cash flow to turn positive in 2026. The management highlighted the BD potential of RC18, RC148 (PD-1/VEGF), and RC28.
　　Key pipeline updates: NDA approvals of RC18 in MG and RC48 in HER2-high BC with liver metastasis are expected in 1H25. NDA submission RC18 in IgAN and pSS and RC28 in DME are expected in 2025. In overseas, RemeGen paused the clinical development of RC18 in SLE while focusing on MG indication instead, with the expectation of patient enrolment to complete in 1H26. Pfizer is accelerating patient enrolment for RC48 in 1L UC and the management expects Pfizer to enroll 50%+ patients by YE25.
　　Key Risks for Rating
　　(i) Slower-than-expected sales ramp-up of RC18 and RC48; (ii) delay or failure of major clinical trials; and (iii) change of key management.
　　Valuation
　　Post results, we lifted our drugs forecasts mainly on more optimistic view on RC18’s sales thanks to strong growth in 2024 and label expansion in 2025. Despite intensified HER2-ADC, we expect RC48 to continue steady growth as it focuses more on UC patients, earlier-line therapy for GC, and BC patients with (i) liver metastasis, (ii) lung metastasis or impair lung function, or (iii) sequential therapy after other ADC treatments. We lifted our selling expenses forecasts while trimming R&D expenses, per management guidance. We see some early stage candidates were removed from pipeline, probably due to the tight budgets. Rolled over DCF model and lift TP to HK$27 from HK$25 and maintain BUY (WACC: 11.1%, terminal growth: 3.0%).