TOT Biopharm: Profit Alert from Significant CDMO Achievement

TOT Biopharm (1875.HK) has reached a new milestone in its performance. On May 10th, the company announced its 24Q1 financial results, with operating revenue amounted to CNY223 million, representing a year-on-year increase of 68%, and net profit amounted to CNY7.4 million, representing a turnaround from loss to profit. The announcement stated that the revenue growth was mainly attributable to the sustained growth of the CDMO/CMO business and a significant increase in sales of self-developed products.

A throw back of the company's past performance reveals that since TOT Biopharm fully transitioned to expand its CDMO business in 2021, it has seen rapid growth in performance within just a few years. This transformation not only led to a rapid increase in the company's operating revenue from CNY14.6 million in 21Q1 to CNY223 million in 24Q1, with a CAGR of 148%, but also successfully enabled the company to turn losses into profits.

*22Q1 net loss includes the significant positive impact of revenue from license granted

Source: Public Information

The company currently possesses 4 complete commercial production lines, dedicated to the clinical and commercial production of antibodies and ADCs, featuring flexibility and sufficient capacity; A state-of-the-art large-scale commercial production line for ADC drug products has also been established and put into operation, with an annual production capacity exceeding 5 million vials, continuously strengthening the company's capabilities of CDMO commercialization.

Recently, TOT Biopharm reportedly received formal notifications from the Egyptian Drug Authority (EDA) and the Indonesian Food and Drug Authority (BPOM), a member of PIC/S, stating that the company's Bevacizumab injection had successfully passed the GMP certification in Egypt and Indonesia. TOT Biopharm's quality management system is built in accordance with the GMP standards of China, the United States, and the European Union. The company's large-scale biopharmaceutical commercialization base, located in Suzhou City, Jiangsu Province, had previously passed the Chinese GMP compliance inspection (in 2021) and the EU QP audits (in 2022). The recent recognition from the Indonesian and Egyptian drug regulatory authorities signifies that the company's quality management system has also passed the overseas GMP certifications of PIC/S and WHO, laying a solid foundation for further expansion of its overseas CDMO business.

From the perspective of revenue and profit growth trends as well as the company's strength in CDMO commercialization, TOT Biopharm has demonstrated strong self-sustainability and successfully established a stable internal growth mechanism, which significantly underpins its long-term development.

For a long time, the sustainability of most companies listed under HKEX Chapter 18A has been questioned by the capital market, leading to significant shrinkage in their market capitalization. However, companies exemplified by TOT Biopharm, which are rare in the industry for their profitability, feature certain scarcity and naturally deserve more attention from investors.

As of now, TOT Biopharm's market capitalization stands at only HKD1.553 billion. Considering the company's performance certainty and comprehensive competitiveness in the ADC CDMO field, against the backdrop of a gradual global economic recovery and the reconfiguration of international capital in the Asia-Pacific market, TOT Biopharm, as a scarce target in the industry, is more likely to gain recognition and favor from funds, and its path to value restoration may just be beginning.