Full recognition of collaboration revenue drove 2Q26 results sharply above expectations

Overview

RemeGen released its preliminary 1H26 results after market close on August 5, 2026. Revenue and profit increased sharply, driven mainly by full revenue recognition of the USD 650mn payment received from out-licensing RC148 to AbbVie, as well as continued sales growth of RC18 and RC48. Based on the report's estimates, 2Q26 results were significantly above Nomura's forecasts, but the beat was mainly attributable to the scale of collaboration revenue recognition rather than drug sales exceeding expectations.

Core views

2Q26 drug sales were approximately CNY 700mn, up 21% YoY and broadly in line with Nomura's forecast, indicating that commercialization progress continues to grow but has not yet delivered a clear positive surprise. Excluding collaboration revenue, the report estimates 2Q26 profit at approximately CNY 300mn, still above forecast, likely reflecting better-than-expected expense control. As one-off or milestone-based collaboration revenue significantly magnified current-period results, while the A-share target price is close to the current price, Nomura continues to maintain a Neutral view.

Analysis framework

The report derives single-quarter 2Q26 revenue and net profit from preliminary 1H26 results and compares them with 2Q25 and Nomura's previous forecasts; it then breaks down revenue into AbbVie collaboration revenue and drug sales to identify the source of the earnings beat. Valuation uses a DCF model and assesses share price upside based on WACC, perpetual growth rate, and forward sales multiples.

Methodology notes

• Valuation methodsDCF

  Discounted cash flow valuation

  The A-share target price of CNY 119.71 is based on a DCF model, assuming a WACC of 10.8% and a perpetual growth rate of 3.0%; both assumptions remain unchanged.

• Earnings analysisSegment revenue breakdown

  Breakdown of collaboration revenue and drug sales

  2Q26 revenue is broken down into RC148 licensing collaboration revenue and drug sales such as RC18 and RC48, to distinguish accounting-recognition drivers from commercialization operating drivers.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• RemeGen 688331.SS

  A-share covered directly by the report

  Strengths

  Out-licensing of RC148 brings substantial collaboration revenue, sales of RC18 and RC48 continue to grow, and expense control may be better than expected.

  Weaknesses

  2Q26 drug sales were only broadly in line with forecasts, and the sharp profit increase is highly dependent on full recognition of collaboration revenue.

  Comparison

  The DCF target price is CNY 119.71, versus a closing price of CNY 117.80 on August 5, 2026, implying potential upside of approximately 1.6%; the valuation benchmark is the CSI 300.

  Risks

  Slower-than-expected ramp-up in drug sales, unsatisfactory clinical results, and earnings volatility and reduced comparability caused by collaboration revenue.

• RemeGen 9995.HK

  Hong Kong-listed security of the same issuer

  Strengths

  Shares the fundamental benefits from commercialization growth of RC18 and RC48, as well as overseas licensing and clinical progress of RC148.

  Weaknesses

  Also faces issues related to realization of core drug sales, R&D progress, and volatility from milestone-based collaboration revenue.

  Comparison

  The Hong Kong share DCF target price is HKD 89.44, versus a price of HKD 82.55 on August 5, 2026, corresponding to approximately 8.3% potential upside; the valuation benchmark is the Hang Seng Index.

  Risks

  Drug sales growth below expectations, disappointing clinical data, and exchange-rate and market-pricing differences.

Key data

• 1H26 revenueCNY 5.85bnUp 433% YoY.
• 1H26 net profitCNY 4.75bn1H25 recorded a net loss of CNY 450mn.
• Estimated 2Q26 revenueCNY 5.2bn2Q25 was CNY 572mn, while Nomura's previous forecast was CNY 2.7bn.
• Estimated 2Q26 net profitCNY 4.4bn2Q25 recorded a net loss of CNY 195mn, while Nomura's previous forecast was CNY 1.6bn.
• RC148 licensing paymentUSD 650mnThe AbbVie transaction payment was fully recognized as revenue in 1H26.
• Recognized AbbVie upfront paymentApproximately CNY 4.5bnNomura had previously estimated current-period recognition of CNY 2.0bn.
• 2Q26 drug salesApproximately CNY 700mnUp 21% YoY, broadly in line with Nomura's CNY 686mn forecast.
• 2Q26 profit excluding collaboration revenueApproximately CNY 300mnEstimated based on a 10% tax rate; better-than-expected performance may be due to expense control.
• Full-year sales growth guidance25% YoY growthProvided by management; delivery needs to be tracked in subsequent quarters.
• A-share target price and current priceCNY 119.71 / CNY 117.80The target price is approximately 1.6% above the closing price on August 5, 2026.
• Forward sales valuation4.2x FY35F salesFY35F sales are forecast at CNY 15.2bn.

Impact & implications

This earnings beat significantly improved current-period profit performance, but the main incremental contribution came from full recognition of the RC148 licensing payment. Investors need to distinguish the timing of collaboration revenue recognition from ongoing operating growth. Drug sales being in line with expectations and expense control being better than expected provide some support for commercialization and core profitability, respectively; however, with the A-share target price close to the current price, the current risk-reward profile remains relatively balanced.

Risks

• Sales ramp-up of products such as RC18 and RC48 is slower than expected.
• Clinical progress of RC18 or RC148 is delayed, or clinical data are weaker than expected.
• Commercialization performance fails to meet management's guidance of 25% YoY full-year sales growth.
• The timing of recognition of large collaboration revenue may cause quarterly profit volatility and weaken comparability of YoY data.
• Achievement of the target price may be affected by the overall market, macroeconomy, and deviations of company earnings from forecasts.

What to watch

• Whether drug sales in subsequent quarters can deliver on management's full-year guidance of 25% YoY growth.
• Clinical progress and overseas data performance of RC148 over the next several quarters.
• Continued commercialization ramp-up of RC18 and RC48.
• Whether recurring profitability and expense control excluding collaboration revenue can be sustained.
• Subsequent milestones and revenue recognition pace under the AbbVie collaboration.
• Changes in the A-share price relative to the CNY 119.71 target price.