Revenue reached RMB1.09bn (+48% YoY), and net loss narrowed by 42% to RMB450m in 1H25, beating our expectation. Drugs sales maintained strong momentum, with revenue growing 39% YoY and 9% QoQ. Excluding impacts from BD collaboration, management expects the net loss to decrease by 50% in 2025 and the company to achieve breakeven in 2026. After updating our risk-free rate and market premium assumptions to 3.3% and 6.7%, we derive a TP of HK$90. Downgrade to HOLD rating. Our TP priced in RMB4.6bn/2.2bn peak sales of RC18/RC48 in China and RC18’s US$2.6bn overseas revenue. We prefer to wait for the significant overseas clinical development of RC18 and more data publications for RC148.
　　Key Factors for Rating
　　1H25 results beat expectations with drugs sales maintaining strong momentum: Revenue was RMB1.09bn (+48% YoY) in 1H25, and net loss narrowed by 42% to RMB450m. The sales of telitacicept (RC18) and disitamab vedotin (RC48) were RMB650m (+59% YoY) and RMB440m (+38% YoY), respectively. Thanks to the scale effects, gross margin improved significantly by 7.3ppts to 84.4%. The company continued its stringent cost control, with ratio of R&D expenses, admin expenses and selling expenses decreased by 50ppts, 7ppts and 48ppts to 59%, 14% and 48%, respectively. 2Q drug sales maintained strong momentum. 2Q25 revenue grew 39% YoY/9% QoQ and loss narrowed by 55% YoY/23% QoQ.
　　Management guidance: Management maintained its guidance for 30% YoY topline growth in 2025, a 50% decrease in net loss for the year, and achieving breakeven in 2026, thanks to (i) sales ramp-up of RC18, especially for MG patients, (ii) improvements in GPM and selling expense ratio on scale effects, and (iii) decreased R&D costs following an optimisation of the R&D team and the transfer of the overseas clinical team for RC18 to Vor Biopharma. For RC18's overseas development, the current focus is on patient enrolment for MG, with the next potential indication being primary Sjgren's syndrome.
　　Key catalysts in 2H25-2026: (i) data publication of RC18 in pSS (ii) updated data for RC18 in MG, (iii) NMPA sBLA submission for RC18 in IgAN, (iv) early- stage data publication of RC148 (PD-1/VEGF), (v) potential BD collaboration for RC148, (vi) BLA filing for RC48 in 2L UC in the US.
　　Potentially more share placements: As of December 2025, RemeGen has cash and trading assets of RMB1.4bn, including net proceeds of c.HKD796m from a placement in May. Although the upfront payment from Vor Biopharma (US$45m) and Santen Pharmaceutical (RMB200m) have not been booked yet, we do not believe RemeGen's cash reserve is abundant, as the company plans to devote more resources to early-stage R&D, focusing on bsAb, ADC, Fc fusion. Management expects future financing to be raised through equity rather than debt.
　　Key Risks for Rating
　　Upside risk: (i) Out-license of early-stage candidates like RC148, RC278, and RC288m (ii) acquisition of Vor Biopharma by MNC, and (iii) faster-than-expected clinical development of RC18 in overseas markets. Downside risk: (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 incorporated the upfront payments from Vor Biopharma (US$45m) and Santen Pharmaceutical (RMB200m) into our 2025 forecasts. We also raised our 2025 sales forecast for RC48 due to its better-than-expected revenue in 1H25 and increased the sales growth trajectory for RC18 in 2026-27 based on its outstanding data in MG. Consequently, we uplifted our peak sales estimates for RC18 and RC48 in China to RMB4.6bn and RMB2.2bn, respectively. Furthermore, we increased the projected overseas contribution for RC18 based on promising data published in China. After updating our risk-free rate and market premium to 3.3% and 6.7%, we derive a TP of HK$90. Downgrade to HOLD rating. RemeGen's share price has surged 516% YTD due to investor optimism surrounding RC18's overseas sales potential and the potential for BD collaboration on RC148. However, we prefer to wait for further progress in RC18's overseas clinical development and more data publications for RC148.