INNOCARE(688428)2025-05-18 14:08InnoCare Pharma (9969.HK) Earnings Review Summary Company Overview - Company: InnoCare Pharma (9969.HK) - Industry: Biotechnology Key Financial Highlights - 1Q Sales Performance: - Orelabrutinib sales reached Rmb312 million, representing an increase of 89% year-over-year and a slight increase of 1.5% quarter-over-quarter, outperforming expectations [1] - Sales growth driven by volume expansion in Marginal Zone Lymphoma (MZL) due to National Reimbursement Drug List (NRDL) coverage and market share gains in relapsed/refractory Chronic Lymphocytic Leukemia (CLL)/Small Lymphocytic Lymphoma (SLL) and Mantle Cell Lymphoma (MCL) [1] - Profitability: - The company turned profitable in 1Q with earnings of Rmb18 million compared to a net loss of Rmb165 million in 4Q24 [1] - Gross Margin: - Improved to 88.4% from 85.3% in 1Q24 and 86.8% in 4Q24, attributed to product scale-up [1] - Expenses: - Selling expenses increased by 27% year-over-year, but selling expenses as a percentage of total sales decreased to 37% from 47% in 4Q24 [1] - R&D expenses rose by 17% year-over-year as more assets progressed to pivotal stages [1] - Cash Position: - As of 1Q25, the company holds a cash balance of Rmb7.8 billion, providing flexibility for global development and in-licensing opportunities [1] Sales Guidance and Forecasts - Revised Sales Guidance: - Management raised sales guidance for Orelabrutinib to over 35% year-over-year growth in 2025, up from the previous estimate of 30% [1] - Future Sales Growth: - Sales growth in 2026 may depend on the magnitude of price cuts for Orelabrutinib in the 2025 NRDL revision [1] Clinical Development Updates - Global Trial Acceleration: - The company is accelerating global clinical trials for selected assets, including: - ICP-332 (TYK2-JH1) for prurigo nodularis, with phase 2 studies starting in 1H25 [2] - Orelabrutinib's phase 3 global trials for Primary Progressive Multiple Sclerosis (PPMS) and Secondary Progressive Multiple Sclerosis (SPMS) set to begin in mid-2025 [2] - NDA filing for MCL in regions outside the US, such as Singapore [2] - Focus on Acute Myeloid Leukemia (AML) for mesuloclax (BCL2) global development [2] Potential Catalysts - Upcoming Data Releases: - Expected phase 2b data for Orelabrutinib in Systemic Lupus Erythematosus (SLE) by the end of 2025 [3] - Phase 2 data for ICP-332 in vitiligo anticipated by mid-2026 [3] - Preliminary clinical data for the company's first Antibody-Drug Conjugate (ADC), ICP-B794 (B7-H3), expected by the end of 2025 or early 2026 [6] Price Target and Risks - Price Target: - 12-month target price set at HK$12.72 for H shares and Rmb23.10 for A shares, reflecting a potential upside of 33.9% and 13.5% respectively [7][9] - Key Risks: - R&D risks for key clinical assets, lack of proven commercialization track record, pricing uncertainties, and potential entry of generic ibrutinib in 2027 in China [8] Conclusion InnoCare Pharma shows strong sales growth and improved profitability in 1Q, with a solid cash position to support ongoing clinical development. The revised sales guidance and upcoming clinical data releases present potential catalysts for future growth, although risks remain in R&D and market competition.