Hua Medicine (2552) H1 2024 earnings summary

Executive summary

• HuaTangNing sales surged after NRDL inclusion in January 2024, expanding to over 2,100 hospitals and 2,900 pharmacies across 31 provinces, with 846,000 packs sold in H1 2024, up from 212,000 in H1 2023.

• Revenue for H1 2024 reached RMB102.7 million, a 46% year-over-year increase, driven by expanded hospital access and government support for novel drugs.

• Gross margin declined to 46.5% in H1 2024 from 62.6% in H1 2023 due to a 64.1% price reduction post-NRDL entry.

• Loss before tax increased 57.9% year-over-year to RMB142.2 million, mainly due to higher R&D and operational expenses.

• Ongoing post-marketing and real-world evidence studies for dorzagliatin involve over 1,470 patients to assess long-term safety and new indications.

Financial highlights

• Total revenue for H1 2024 was RMB102.7 million, with cumulative revenue since launch at RMB196.9 million.

• Gross profit for H1 2024 was RMB47.8 million, with a margin of 46.5%.

• Other income reached RMB55.1 million, mainly from Bayer milestone amortization.

• R&D expenses rose 68.7% year-over-year to RMB119.8 million in H1 2024.

• Loss before tax for H1 2024 was RMB142.2 million; basic and diluted loss per share was RMB0.15.

Outlook and guidance

• Revenue is expected to continue growing in H2 2024 as hospital and pharmacy coverage expands.

• Manufacturing process optimization and capacity expansion are underway, targeting profitability in 2025.

• New product launches, including dorzagliatin-metformin FDC, are planned, with the FDC expected to launch in 2028.

• Topline data from a US Phase I study of 2nd generation GKA HMS1005 is expected in Q4 2024.