CStone Pharmaceuticals (2616) H2 2023 earnings summary

Executive summary

• FY2023 revenue was RMB463.8m, down 3.6% YoY; IFRS loss narrowed to RMB367.2m from RMB902.7m, supported by lower operating expenses and a one-time gain on the ivosidenib rights transfer.

• Product and pipeline progress included five new NDA approvals, expanding sugemalimab and pralsetinib indications, and positive early clinical activity for CS5001.

Financial highlights

• Revenue RMB463.8m: product sales RMB336.7m, license fees RMB95.7m and sugemalimab royalties RMB31.4m; license and royalty income rose 8.6% YoY, partly offsetting lower product sales.

• Gross profit increased to RMB304.3m from RMB278.4m as cost of revenue fell to RMB159.5m from RMB203.0m.

• IFRS loss narrowed 59.3% to RMB367.2m; adjusted loss excluding share-based payment expenses narrowed 56.6% to RMB330.2m from RMB760.6m.

• Other gains were RMB199.5m, including a RMB179.5m net gain from transferring ivosidenib rights; other income rose to RMB50.6m, mainly on higher interest income.

• R&D expenses fell to RMB527.8m; administrative expenses to RMB182.7m; selling and marketing expenses to RMB199.3m, primarily reflecting lower employee costs and professional fees.

Outlook and guidance

• Sugemalimab: EU CHMP opinion expected H1 2024 and EU MAA approval expected H2 2024; U.K. MAA approval expected H2 2024.

• Lorlatinib pre-NDA/NDA discussions for ROS1-positive advanced NSCLC in mainland China planned for 2024; manufacturing-localization ANDA approval for avapritinib expected H2 2024 and pralsetinib ANDA acceptance expected H1 2024.

• CS5001 preliminary RP2D expected H1 2024, with a registrational phase Ib/II study planned by end-2024; CS5001 global partnership targeted for 2024 or 2025.

• CS2009 clinical trial notification planned by end-2024 and China IND application in Q1 2025; nofazinlimab final OS assessment and ex-China partnership exploration expected in 2025.