【行业研究报告】复宏汉霖-Anticipating sustained profitability

Profitturnarounddrivenbycorebusinessoperations.Henliu’sFY23revenue
increased67.8%YoYtoRMB5.40bn,drivenbystrongsalesofHANQUYOU
increased67.8%YoYtoRMB5.40bn,drivenbystrongsalesofHANQUYOU
(trastuzumabbiosimilar)andserplulimab(PD-1).HANQUYOUrecorded
RMB2.74bnrevenueinFY23,+58%YoY.WethinkHANQUYOUmaybefreefrom
VBPrisksin2024duetorelativelymoderatecompetitionlandscapeforHerceptin
biosimilars.GPmargin(as%ofproductsales)increasedto83.0%inFY23,vs
80.7%inFY22.Sellingexpenseratio(as%ofproductsales)decreasedto38.5%
inFY23,from39.2%inFY22,andadminratiodecreasedfrom13.2%inFY22to
8.4%inFY23,showingimprovingoperatingefficiency.R&Dexpensedecreased
20%YoYtoRMB1.12bninFY23.InFY23,Henliusrecordedc.RMB1.05bn
operatingcashinflows,andachievednetprofitofRMB546mn,markingthe
Company’sfirstprofitableyearinitshistory.Webelievethatthenetprofitwas
primarilyderivedfromitscoreoperations,namelythepromotionofdrugs.Thus,we
areconfidentthatthisprofitabilitywillbesustainableinthecomingyears.Asofend
2023,HenliushadRMB989mncashreserves.
Serplulimab(PD-1)hasglobalpotentialthanksitssuperiorprofileinSCLC
andCRC.ThesalesofserplulimabwasRMB1.12bninFY23,with2H23sales
remainingstable(+1%HoH).Thisstabilityisnotableevenamidstachallenging
periodfortheindustryinChina,attributabletothedrug'sdifferentiatedprofilein
SCLC.TheNDAforserplulimabasafirst-linetreatmentforES-SCLCwasaccepted
bytheEMAinMar2023,withtheapprovalexpectedin3Q24.IntheUS,Henliusis
conductingabridgingstudyofserplulimabfor1LES-SCLC,withdatareleaseand
BLAsubmissionexpectedbyend-2024.Henliushasrecentlyreleasedencouraging
dataofserplulimabin1LmCRC,especiallyintheunderservedMSSCRC(CMBI
report,link).APh3trialinAsia,combiningserplulimabwithHLX04and
chemotherapyforfirst-linemCRC,issettocommence.
PromisinginnovativeassetswithglobalBDpotential.HLX22(anovelHER2
mAb)incombowithHANQUYOUandchemohaddemonstratedoverwhelming
PFSsignalsin1LGCcomparedwiththecurrentSoC(CMBIreport,link).Weexpect
HenliustostartaglobalPh3trialofHLX22+HANQUYOU+chemoasafirst-line
treatmentforGC,withKeytrudainthecontrolarms.Henliushasdevelopeda
differentiatedADCplatformleveragingMediLink’spayload-linkertechnologywhich
enablesselectivereleaseofpayloadintumormicroenvironment.Basedonthis
platform,HLX42(EGFRADC)hasrecentlycompletedFPIinChina,andalso
receivedafasttrackdesignationfromFDAforEGFR-TKIresistantNSCLC.HLX42
showedpromisingpotentialinpostosimertinibEGFRmNSCLCinpreclinical
studies.HLX43(PD-L1ADC)startedaPh1studyinChinainlate2023withUSIND
approvedaswell.WethinkHenliusislikelytoachieveglobalBDdealsforits
differentiatedinnovativeassets,suchasHLX22,HLX42andHLX43.
MaintainBUY.WeexpectHenliustofileNDAsintheUSforHLX14in3Q24and
forHLX11inend2024.HLX11maybecomethefirstpertuzumabbiosimilarinthe
US/EU.WemaintainourDCF-basedTPunchangedatHK$18.67(WACC11.46%,
terminalgrowth2%).