Company Profile

Shenzhen Chipscreen Biosciences Co., Ltd. is a China-based company principally engaged in the research and development of original innovative molecular entity drugs. The Company specializes in the research and development of original innovative drugs in the three major therapeutic areas of cancer, metabolic diseases and immune diseases. The Company's main product is chidamide tablets (brand name: Epidaza) for relapsed or refractory peripheral T-cell lymphoma (PTCL). The Company distributes its products to the domestic market. (Source: MarketScreener)

Event

Shenzhen Chipscreen Biosciences (“the company”) witnessed steady growth of revenue from core products.

For the first half of 2023, the company reported CNY236 million in product revenue, a year-on-year increase of 17.69% from the product revenue of CNY200 million in the same period of 2022. The company reported CNY156 million in net profit attributable to shareholders in H1, up from the -19 million yuan in the same period of 2022. The company also reported -148 million yuan in net profit attributable to shareholders and excluding gains and losses from non-recurring items.

For the second quarter of 2023, the company reported CNY135 million in revenue, a year-on-year growth of 21.14% and a QoQ increase of 26.76%. The net profit attributable to shareholders was CNY188 million in Q2.

The company’s H1 revenue rose by 11.89% over the same period of the previous year, mainly due to the steady sales growth of two commercialized products during the reporting period.

Comments

Chidamide’s indication for the treatment of hematological tumor led to a steady increase in revenue. The sales revenue of Chiglitazar Sodium rose significantly after it was added to China’s national insurance list.

The company’s core product Chidamide indicated for the treatment of hematological tumors maintained steady growth, but the product indicated for the treatment of breast cancer still accounted for a small proportion of revenue because it was not added to the national insurance list. In the first half of the year, the company’s Chidamide achieved a sales revenue of CNY228 million, a year-on-year growth of 17.40%.

The company’s core product Chiglitazar Sodium began to adopt the price for national insurance in March, and the sales revenue rose by 456.26% YoY. Affected by the decline in unit price, the sales revenue from this product reached CNY7.5077 million in the first half of the year, up 28.38% YoY.

The company’s applications for new indications of its core product were accepted and its R&D projects progressed smoothly.

On July 5, 2023, the company’s marketing application for the first-line treatment of MYC and BCL2-positive DLBCL with Chidamide combined with R-CHOP was accepted by the China National Medical Products Administration. On June 20, the company’s marketing application for a new indication of Chiglitazar Sodium which, combined with metformin, is indicated for the treatment of adults with type II diabetes, was also accepted.

The enrollment of Chiauranib for the treatment of small cell lung cancer was successful and the market application is expected to be submitted from 4Q23 to 1Q24.

Earnings forecast and investment recommendation

The company’s revenue will continue to grow as the market for core products Chidamide and Chiglitazar Sodium is expanded and the sales volume and indications grow after the products are included in social healthcare. The steady progress of approval for more indications and the expansion of production lines will be steams that drive the growth.

We estimate the company’s revenue at CNY586 million, CNY714 million and CNY866 million for 2023, 2024 and 2025, respectively, and implying an EPS of CNY0.58, CNY0.05, and CNY0.08, respectively.

We maintain the rating of “Outperform”.

Potential risks

Less-than-expected product sales; slower-than-expected R&D progress; intensified market competition, major price drops.