Hua Medicine (2552) H2 2024 earnings summary

Executive summary

• Dorzagliatin (HuaTangNing), a first-in-class GKA for type 2 diabetes, achieved broad label approval in China, entered the NRDL in late 2023, and saw a 234% sales increase to RMB255.9 million in 2024, with over 150,000 patients treated and 2,700 hospitals prescribing.

• Full commercialization responsibility transitioned from Bayer to Hua Medicine as of January 2025, with a 100-day initiative to expand hospital engagement and a new sales team.

• International expansion is underway, including registration plans for Hong Kong, Macau, Southeast Asia, and a successful US Phase 1A trial for a second-generation GKA.

• Pharmacovigilance efforts recognized nationally, with dorzagliatin observed as safe and well-tolerated in real-world use.

• Over 200 granted patents worldwide, with protection extending to at least 2042.

Financial highlights

• Net sales rose 234% year-over-year to RMB255.9 million in 2024, with gross margin stable at 48.7% despite a 64.1% price drop.

• Loss before tax increased 18% to RMB250.1 million, mainly due to higher R&D and selling expenses.

• Unamortized contract liabilities of RMB1,243.5 million will be recognized as a gain in 2025 following the Bayer agreement termination.

• Cash and cash equivalents stood at RMB1,139.8 million at year-end 2024, supporting ongoing operations and growth.

• Gross margin currently around 48.7%, with a target to reach 80% through cost optimization and scale.

Outlook and guidance

• Net sales are expected to exceed RMB1 billion, with break-even targeted for 2027.

• Plans to expand hospital coverage from 500 to 2,000 core hospitals over three years, leveraging a hub-and-spoke sales model.

• Registration applications for dorzagliatin in Hong Kong and Macau planned for 2025, with manufacturing capacity expansion underway.

• Continued investment in digital platforms and AI to enhance branding and operational synergy.

• Ongoing business development for second-generation GKA in Western and Southeast Asian markets.