Corning Jerry recently presented a number of clinical research data at an academic conference to further verify the therapeutic potential of KN046 and KN026 in a variety of breast cancer subdivision indications. Among them, the initial efficacy and safety of KN026 in HER2 positive breast cancer patients are good, we think that the future is expected to challenge the dominant position of the gold standard therapy of trastuzol + patouzhu. We raised domestic peak sales to 2.9 billion yuan and raised the company's target price to HK $13.60.
SABCS data once again validate the potential of double antibody therapy: the company announced data from a number of breast cancer phase II studies at the SABCS annual meeting, and we suggest to focus on: 1) in HER2 positive breast cancer, the preliminary efficacy data of KN026+ docetaxel regimen in first-line treatment of recurrent / metastatic patients and early / advanced neoadjuvant therapy are better than those of standard therapies such as THP (cross-trial comparison). 2) the preliminary OS data of KN046+ white-purple first-line treatment of TNBC was better than that of PD-1/L1 monoclonal antibody plus chemotherapy. We believe that the above data further validate the differentiated competitive advantage of the company's Shuangkang pipeline and increase KN026's POS-adjusted domestic peak sales to 2.9 billion yuan. The company is communicating with CDE about the design of the III phase trial of KN026 first-line breast cancer, and it is expected that 1H23 will activate patients to join the group.
Further overseas development of hypodermic injection of PD-L1: the company's overseas partner TRACON recently released the results of a mid-term analysis of the critical II phase ENVASARC trial of Envoli monoclonal antibody: in second-line treatment of pleomorphic sarcoma / fibrous histiocytic sarcoma, Envoli monotherapy or combination of imipimumab is well tolerated, and the effectiveness exceeds the preset target, and the ORR reaches double digits. TRACON expects to conduct the next mid-term analysis in mid-2023 and complete patient enrollment by the end of the year. The commercialization of Envoli is progressing smoothly after its listing in China, and we expect Envoli to contribute 140 million / 220 million / 300 million yuan in net profit in 2022-23-24.
In 2023, we will focus on the registered clinical progress of core double antibodies, including: 1) III phase OS readout of KN046 first-line lung cancer, pre-communication with CDE and report delivery (mid-year / 3Q); 2) partial reading and delivery of III phase data of KN046 first-line pancreatic cancer (2H); 3) start of III phase trial of KN026 first-line HER2-positive breast cancer, second-line and later HER2-positive gastric cancer (1H); 4) preliminary JSKN003 data reading (1H) and reporting registered clinical (2H).
Raise the target price to HK $13.60: we raised the company's 2022E/23E/24E revenue forecast to 200 million / 450 million / 530 million yuan, corresponding to 63% 2022-24e CAGR, mainly reflecting the better-than-expected sales performance of Envoli monoclonal antibody. We continue to value the company based on POS-adjusted revenue forecasts and the DCF valuation model to obtain the company's latest target price of HK $13.6, corresponding to the target market capitalization of HK $11.1 billion / US $1.4 billion.
Investment risk: sales of Envoli monoclonal antibodies are not as expected and clinical data of pipeline products are poor.