Event

The company released the third quarter report of 2024: in the first three quarters of 2024, the company achieved operating income of 5.663 billion yuan, an increase of 1,399.22% over the same period of the previous year; The net profit attributable to shareholders of the listed company was 4.065 billion yuan, and the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was 4.043 billion yuan, and the company's operating income increased significantly during the reporting period mainly due to the irrevocable and non-deductible down payment of US$800 million received from BMS, a global multinational pharmaceutical company, an overseas partner, based on the BLB01D1 cooperation agreement.

In the first three quarters of 2024, the company's R&D investment was 932 million yuan, an increase of 422 million yuan, or 80.34%, compared with 510 million yuan in the first three quarters of 2023, mainly due to the smooth progress of the company's research and development pipeline products and the continuous increase in clinical trial-related expenses.

Comments:

According to the company's announcement, in addition to the $800 million upfront payment already received, BMS will make up to $500 million in near-term contingent payments after the conditions of the contract are triggered, and up to $7.1 billion in milestones after the development, registration and sales milestones are met.

In terms of the company's innovative drugs, BL-B01D1 monotherapy is in 7 phase III registrational clinical trials, including 2 indications for non-small cell lung cancer, 1 indication for small cell lung cancer, 2 indications for breast cancer, 1 indication for esophageal squamous cell carcinoma, and 1 indication for nasopharyngeal carcinoma. Four indications have been included in the Breakthrough Therapy Variety List by the Drug Evaluation Center, the indication of nasopharyngeal carcinoma was included in the Breakthrough Therapy Variety List by the Drug Evaluation Center in April 2024, and two indications for non-small cell lung cancer and one indication for esophageal squamous cell carcinoma were included in the Breakthrough Therapy Variety List by the Drug Evaluation Center in September 2024 and October 2024, respectively. In addition, the Company is conducting 10 Phase II clinical trials evaluating its combination with PD-(L)1 therapy or TKI for the first-line treatment of 10 cancer indications (small cell lung cancer, non-small cell lung cancer, EGFR wild-type and mutant, nasopharyngeal cancer, head and neck squamous cell carcinoma, esophageal cancer, gastric cancer, colorectal cancer, breast cancer, and urothelial cancer). The company has a total of 5 projects approved by the FDA for clinical studies, including BLB01D1, BL-M07D1, SI-B001, BL-M05D1, BLM11D1 clinical trials in the United States.

Investment Suggestions

Considering the company's strong independent R&D strength, obvious advantages in technology platform, successful overseas use of core products, rich management team, active promotion of clinical indication pipeline, reasonable layout at home and abroad, and maintain the previous profit forecast, that is, we forecast that the company's total operating income in 2024-2026 will be 61.0/24.3/2.46 billion yuan, a year-on-year increase of 985.7%/-60.2%/1.2% respectively, and the net profit attributable to the parent company will be 44.22/ 0.73/151 million yuan, a year-on-year increase of 666.5%/-98.4%/106.9% respectively, and the corresponding earnings per share were 11.03/0.18/0.38 yuan. Optimistic about the company's commercial operation ability after the launch of products, the continuous increase of products, and the continuous innovation of the follow-up target pipeline, the company adopts the free cash flow DCF discounted valuation method to maintain the company's valuation at 105.2 billion yuan, corresponding to the stock price of 262 yuan, and maintain the company's "buy" rating.

Risk Warning:

The R&D of new drugs is less than expected, market competition is intensifying, the commercialization performance of products after marketing is lower than expected, and the winning bid and price reduction of centralized procurement are affected.