Focus on the independent research and development of small molecular new drugs. First Pharmaceutical Holdings was established in 2016, and its wholly-owned subsidiary Sailintai Pharmaceutical was established in 2010. in the early stage, it achieved its own hematopoiesis and training team mainly by authorizing independent research and development of innovative drugs to traditional pharmaceutical companies. In June 2019, Beijing Jingkai District State-owned assets Strategy to invest in the first Pharmaceutical Holdings, the company began to transform to biopharma. Over the past decade, the company has established a strong ability of independent innovation. At present, around the layout of all kinds of tumors, there are 1 new drug listed, 1 new drug entering clinical III phase, 4 new drugs entering clinical II phase, 11 new drugs entering clinical phase I, all of which are small molecular innovative drugs.
The product pipeline is rich, and the third-generation ALK has great potential. At present, the company has six own products, including the second generation ALK inhibitors, the first domestic third generation ALK inhibitors, the first domestic RET inhibitors, BTK inhibitors, FGFR4 inhibitors, WEE1 inhibitors and so on, which are in the clinical I-III stage. 11 external authorized products, the company enjoys milestone payment and commercial rights and interests.
The second generation ALK inhibitor SY-707 has been qualified for II conditional listing. Compared with similar drugs, SY-707 has excellent efficacy and safety. Currently, two SY-707 registration trials (phase II for clozotinib-resistant non-small cell lung cancer and phase III for newly diagnosed ALK-positive non-small cell lung cancer) have been completed, and we expect to apply for NDA in 2023.
SY-3505, the first domestic third-generation ALK inhibitor, has a non-macrocyclic structure that is different from that of sirilatinib. The results of the first phase clinical trial showed that only one case of grade 3 diarrhea occurred in the highest dose group, and the others were grade 1-2, which showed better safety. Of the 28 patients who had used at least one ALK inhibitor (including two or more ALK inhibitors), 18 (64.3%) had tumor reduction, and significant anti-tumor effects were observed in patients with drug resistance to second-generation ALK inhibitors.
Especially in the 500mg dose group, the patients with second-generation ALK resistance reached 50% ORR (5%) and 100% DCR (10%). In patients with resistance to at least three ALK inhibitors, all three patients in the 600mg dose group achieved tumor reduction, showing strong post-drug resistance activity of ALK. At present, SY-3505 is conducting phase IIa clinical trials, and the best efficacy and safety results are expected for patients with second-generation ALK inhibitors, especially alatinib resistance. We believe that SY-3505 and SY-707 can meet the first-line, second-line and third-line drug needs of patients with ALK-positive non-small cell lung cancer, and they have cooperative competitive advantages and stronger market potential, and the total domestic sales peak is expected to reach about 3 billion yuan.
SY-5007, the first domestic RET inhibitor, is conducting a phase I dose expansion trial. From the existing data, some patients in the low dose group have shown good efficacy and are expected to enter the II phase registration study in 2023. RET inhibitor PFS is longer and is expected to become a "diamond mutation" similar to that of ALK, and the market size is expected to expand with the prolongation of patients' medication time.
Investment advice: the company is a rare domestic company focused on small molecular innovative drug development, is expected to submit the first product SY-707 listing application in 2023, SY-3505 is expected to become the company's first blockbuster product, we believe that the company's current value is undervalued, according to the DCF valuation model, give the overall company a valuation of 7.1 billion yuan, the target price of 48 yuan, the first coverage, given a "strong push" rating.
Risk hints: the clinical progress of the product is not up to expectation; the commercial performance is not up to expectation; the competition pattern is changing.