Vumetinib: the third generation of EGFR-TKI with differentiated clinical advantages. Compared with the other three generations of EGFRTKI, in the first-line treatment, vermetini has a certain advantage in PFS; in the second-line treatment, fumetinib has a certain advantage in ORR. In terms of safety, compared with similar products, fumetinib has a lower incidence of rash, diarrhea and hematological adverse reactions, and better patient tolerance and compliance. We believe that Fumetinib is expected to occupy an important market position in the field of EGFR mutation positive NSCLC targeted therapy. In addition, the company is also actively promoting the expansion of vermetini indications, showing good clinical data in the treatment of EGFR20 exon insertion mutation NSCLC indications, and the clinical research on NSCLC adjuvant therapy indications is currently in the IIII phase clinical trial screening stage.

After the first-line indications are included in health insurance, it is expected that vermetini will usher in a period of rapid growth. After analyzing the competition pattern of the three generations of EGFR-TKI, we think that it will take some time for the follow-up varieties to be approved for listing, especially for the first-line treatment of advanced EGFR positive NSCLC indications with a large number of patients, and it is expected that the EGFR-TKI market can still maintain a good competition pattern. From the point of view of the cost of each EGFR-TKI, the annual treatment cost is inversely proportional to the time of medication and the number of indications. This time, Vumetinib will conduct health insurance negotiations for the new first-line treatment of EGFR mutation positive NSCLC indications. With reference to previous health insurance payment standards for varieties such as Oshitinib, we believe that this time, Fumetinib is expected to expand the scope of health insurance payment with a more reasonable rate of reduction, which will bring greater income elasticity.

Earnings forecasts and valuations. We estimate that the company's operating income from 2022 to 2024 will be 7.50,14.21 and 2.226 billion yuan respectively, with year-on-year growth rates of 41.5%, 89.5% and 56.6% respectively, and the return net profit will be 0.84,2.55% and 523 million yuan respectively, with year-on-year growth rates of 360.5%, 203.2% and 105.0% respectively. Based on the closing price on December 28, the corresponding PE is 101.1, 33.3 and 16.3 times respectively. For the first time, coverage gives a "buy" rating.

Risk hints: failed negotiations, first-line treatment of EGFR mutation positive NSCLC adaptation did not enter health insurance; health insurance payment standards decreased more than expected; the other three generations of EGFR-TKI were approved and included faster than expected, market competition intensified; clinical studies of other indications failed.