Recently, the company has made a number of positive clinical and approval progress, and we think it can partially relieve the pressure faced by propranolol.
The US Food and Drug Administration (FDA) has accelerated the approval of Lurbinectedin for the treatment of patients with second-line small cell lung cancer (SCLC), which will help its domestic listing prospects.
We maintain our target price of HK $7.7 based on the category-plus valuation method. We find the risk return of the current stock price attractive, valuing it at 8 times / 7 times 2020 / 21 earnings and maintaining the buy rating.
Steady progress of R & D pipeline
Green Leaf has recently made a number of clinical and approval progress: 1) LY03011 (Liss's one-day transdermal patch) has been approved by China's State Drug Administration (NMPA) for the treatment of mild to moderate Alzheimer's disease. We believe that after the drug is on the market, we can quickly open the market with the help of the existing central nervous system sales team. At the same time, Liss's listing application posted in Europe tomorrow has also been accepted by EU authorities (MAA) to enter the approval process, and the company is expected to be listed on a number of international markets during 2021-24; 2) the listing application of LY01008 (Avetine bioanalogues) has been accepted by NMPA or approved for listing in 2021. Despite the increasing competition in the field of bevacizumab, we believe that the approval of the drug may partially ease the risk and pressure on the company; 3) the company has also indicated that LY03005 (Ansufaxin) and LY03004 (risperidone microspheres) are also pressing ahead with listing applications as planned. We believe that the steady progress of these clinical pipelines shows the company's efforts to diversify the risks of existing pipelines.
Lurbinectedin brings new treatment options for second-line SCLC patients
FDA's accelerated approval is based on a phase 2 single-arm clinical trial of Lurbinectedin in second-line SCLC patients (NCT02454972, nasty 105). The results showed that the therapeutic effect of the drug reached 35% objective remission rate (ORR) (95%CI, 26-45%) and a median sustained remission time (DoR) of 5.3 months (95%CI, 4.1-6.4 months). The safety data were good. Although the incidence of SCLC is low (about 15% of all lung cancer), the degree of malignancy is high and the treatment is limited. According to the American Cancer Society, the 5-year relative survival rate is only 3-27%. The approval of the drug on the market will provide a new treatment for adult patients with recurrent SCLC who have developed the disease after receiving platinum chemotherapy. Green Leaf reached an authorized R & D cooperation agreement with PharmaMar in April 19 to obtain the exclusive right to develop and commercialize Lurbinectedin in China. The company plans to launch clinical trials for listing applications in China in the near future.
Maintain the buy rating and obtain the target price of HK $7.7 based on the classified plus valuation method
We maintain the target price of HK $7.7 based on the classified plus valuation method. We believe that Greenleaf is fulfilling its rich late-stage clinical pipeline as scheduled, and it is expected that 3-5 new varieties will be on the market each year in 2020-21, including potential blockbuster varieties such as risperidone microspheres and Ansufaxin. The company's 2020 / 21 price-to-earnings ratio, currently valued at 8 times / 7 times, is at the low level of the historical price-to-earnings channel. Maintain the buy rating.