RemeGen reported 1Q25 revenue of Rmb526m (+59.2% YoY) and net losses of Rmb254m (-27.2% YoY), in line with our expectation. Its R&D expenses reached Rmb329m (-0.7% YoY) in 1Q25, with R&D expenses ratio of 62.5%. Its selling expenses reached Rmb251m (+33.7% YoY), with selling expenses ratio down 9.1 ppts to 47.7% in 1Q25. In addition, its gross profit margin increased 5.8 ppts to 83.3% in 1Q25. Considering the sales ramp-up of key products and continuous cost control, we raise our EPS forecast from -Rmb1.55 to -Rmb1.39 in 25E, from -Rmb0.25 to -Rmb0.23 in 26E and forecast Rmb0.73 in 27E. Based on the DCF model, we raise our target price from HK$21 to HK50. With 20% upside, we maintain our BUY rating.
Positive phase III results of RC18 for the treatment of MG announced in AAN. RC18’s two indications (SLE and RA) have been approved by the NMPA in China. In addition, the BLA of RC18 for the treatment of generalized myasthenia gravis (gMG) has been accepted by the CDE in October 2024, which is expected to receive NMPA’s approval in 2025E. The phase III data of RC18 for the treatment of MG was released at the AAN, which shows that after 24 weeks of treatment with RC18, 98.1% of the patients showed an improvement of ≥3 points in the MG-ADL, and 87% of the patients had an improvement of ≥5 points in the QMG, with significant clinical implications. Additionally, as for the global development of MG, the phase III trial of RC18 for MG is under patient enrollment in the US. Meanwhile, the company has completed the patient enrollment for RC18’s phase III trials in China for IgAN and pSS in 2024, which are expected to submit the BLA in 2025E. In terms of the global development, the company has received the IND approval from the FDA for the phase III study of RC18 for pSS, with the FTD received from the FDA. In addition, other indications of RC18 are under consideration, including membranous nephritis, primary immune thrombocytopenia, etc.
Expecting RC48’s new indication to receive NMPA’s approval. 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. In addition, the BLA of RC48’s third indication of HER2-positive advanced BC with liver metastasis, has been accepted by the CDE in October 2024, which is expected to receive the approval in 2025E. In addition, RC48’s combo with PD-1 for 1L UC has completed the patient enrollment for phase III trial in China, which is expected to submit the BLA in 2025E. In terms of the global development, RC48 is under pivotal study for the monotherapy for 2L UC and under phase III trial for its combo with PD-1 for 1L UC.
Continuous development of other pipelines. As for the non-ADC pipelines, RC148 (PD-1/VEGF, bispecific antibody) is under phase II trial for the combo with docetaxel for NSCLC in China and under phase I/II trial for its combo with ADC for advanced solid tumors in China. In terms of other ADC pipelines, RC88 (mesothelin ADC) is under phase I/II trial for advanced solid tumors. In addition, RC278 is a pre-clinical ADC product under development for various solid tumors.
Maintain BUY. Considering the sales ramp-up of key products and continuous cost control, we raise our EPS forecast from -Rmb1.55 to -Rmb1.39 in 25E, from -Rmb0.25 to -Rmb0.23 in 26E and forecast Rmb0.73 in 27E. Based on the DCF model, we raise our target price from HK$21 to HK50. With 20% upside, we maintain our BUY rating.
Risks: R&D failure of key pipeline; rising competitions of key pipeline; lower-than-expected sales ramp-up.