Alex is a commercially successful innovative pharmaceutical company, and its core product, Vumetinib, has been approved to form its basic disk. The ongoing expanding clinical trials of indications open up the future space. 20 exon insertion indications are expected to be excellent. There is a poor expectation. Coverage for the first time, giving a "highly recommended" investment rating.
The NSCLC clinical needs of EGFR 20 exon insertion mutation (Exon 20ins) have not been met, and there is a poor expectation of excellent efficacy of vermetini. EGFR 20 exon insertion mutation is the third largest mutation type in NSCLC with EGFR mutation, accounting for about 4-10% of EGFR mutation. There are about 23000 new patients in China every year. The therapeutic effect of 1-3 generation EGFR-TKIs on exon 20 insertion of NSCLC is limited. The clinical guidelines recommend that the first line therapy is still chemotherapy, and the posterior line therapy recommends Amivantamab (Johnson & Johnson EGFR/cMet double antibody) or Mobocertinib (Takeda TKI).
The second-line treatment ORR of Amivantamab is 40%, and the second-line treatment ORR of Mobocertinib is only 28%, and there is much room for improvement in safety. The intractability of NSCLC with EGFR 20 insertion mutation is related to the structural changes of EGFR, the selectivity of TKIs is the key to proprietary medicine, and the selectivity of vermetini is good. Early clinical trials show that ORR is 60%, which has great potential for proprietary medicine and poor expectation.
The sales volume of conventional mutation indications constitutes the Alex basic disk, and the 20 exon insertion indications further open up the space. The Ellis product line, which revolves around fumetinib, has launched first-and second-line therapies for EGFR mutations in NSCLC, and conventional mutation indications are rapidly expanding as first-line therapies enter health insurance. In-line adjuvant therapy is in the III clinical stage, the second-line indication of EGFR 20 exon amplification mutation is in the II phase, and the first-line indication global multicenter clinic is in the III phase. According to our estimation, the peak sales of conventional indications and adjuvant indications are expected to reach 4.9 billion yuan and 900 million yuan, respectively. 20 exon insertion indications are only considered in China, the sales peak is expected to reach 1.2 billion yuan, while overseas is expected to further open up space.
Coverage for the first time, giving a "highly recommended" investment rating. Fumetinib has begun to sell in volume, and we expect that the sales growth of Vumetinib in 2023-2025 will be supported by NSCLC, which is routinely mutated by EGFR, with operating income of 15.0,22.50 and 2.9 billion yuan respectively, which is + 90%, 50% and 29% compared with the same period last year. The net profit was 3.0,5.1 and 700 million yuan respectively, which was + 133%, 68% and 38% respectively compared with the same period last year. The corresponding PE is 40x, 24x and 18x, respectively. Only consider the domestic indications, and adjust the risk of adjuvant therapy and 20 exon insertion indications. Alice is valued by DCF method, WACC is 10%, and WACC is 2%. According to DCF model, Alex is valued at 15.9 billion yuan, covered for the first time, and given a "highly recommended" investment rating.
Risk hints: research and development is less than expected risk, commercialization is less than expected risk, payment policy change risk, competition intensification risk, assumption condition is not established risk.