J.P. Morgan: RemeGen posts recurring profits for two consecutive quarters, cuts 2027 revenue forecast

What drove the improvement in third-quarter profitability?

In the third quarter of 2026, RemeGen reported revenue of 910 million yuan, up 46% year over year. Product sales accounted for 810 million yuan, rising 33% year over year and 16% quarter over quarter, alongside approximately 100 million yuan in licensing revenue.
Excluding non-recurring items, third-quarter recurring net profit was 74 million yuan, marking a second consecutive quarter of recurring profitability. The excluded items primarily arose from a fair-value gain of 542 million yuan.
Product sales for the first three quarters of the year totaled 2.15 billion yuan, up 26% year over year. Telitacicept contributed 1.43 billion yuan and disitamab vedotin (RC48) contributed 720 million yuan.

Management maintained its target of product sales growth exceeding 25% in 2026 and expects to break even on a recurring basis for the full year after excluding business development-related items. J.P. Morgan believes the first three quarters’ performance and a relatively low base in the fourth quarter of 2025 support the sales target.
Looking ahead to 2027, J.P. Morgan expects telitacicept to maintain annual growth of 10%–20% in systemic lupus erythematosus and expand into IgA nephropathy, myasthenia gravis and Sjögren’s syndrome. Management’s combined peak sales target for the latter two indications is 1 billion yuan.
Expansion of RC48 into first-line urothelial cancer is another source of growth, but depends on medical insurance reimbursement. Licensing revenue depends on milestones; a relatively clear near-term trigger is the start of an overseas phase III trial of RC148, with the first patient expected to enroll in the fourth quarter of 2026.
On costs, management preliminarily expects research and development expenses in 2027 to remain flat or increase year over year, while moderately expanding the regional sales team.

After revising its sales assumptions for telitacicept and RC48, J.P. Morgan adjusted its revenue forecasts for 2026, 2027 and 2028 by +2%, -5% and -10%, respectively, while leaving its licensing revenue forecasts unchanged. Its 2027 revenue forecast fell from 5.026 billion yuan to 4.754 billion yuan.
The bank also raised its gross margin assumptions and adjusted expenses and the effective tax rate based on management guidance and recent trends. As a result, it raised recurring net profit forecasts for 2026 and 2027 by 8% and 14%, respectively, and lowered its 2028 forecast by 8%.
Despite its positive view of product sales growth, total revenue in J.P. Morgan’s model falls from a forecast 7.632 billion yuan in 2026 to 4.754 billion yuan in 2027. Licensing revenue depends on milestones, making it necessary to distinguish product sales from total revenue when assessing operating trends.
J.P. Morgan maintained its overweight ratings on the A and H shares, but lowered its December 2027 price targets from 151 yuan and 129 Hong Kong dollars to 132 yuan and 114 Hong Kong dollars, respectively.

Results from the Vor Bio-led global phase III study of telitacicept in myasthenia gravis are expected around the middle of 2027; data from the Pfizer-led global phase III study of RC48 in first-line urothelial cancer could be released in the first half of 2027.
J.P. Morgan considers these two readouts key milestones for assessing the pipeline’s overseas potential. The bank also identifies weaker-than-expected clinical data for RC48 in China and the United States, and weaker-than-expected Chinese sales of the two core products, as downside risks to its price targets.