Investment highlight
For the first time, San Nuo Pharmaceuticals-B (02257) rated the outperforming industry with a target price of HK $106.00.
The reasons are as follows:
Domestic leading company of RNA therapy. RNA therapy is in the stage of rapid development in recent years, and it has the potential to treat a variety of indications. Sano Pharmaceuticals has announced more than 15 drug candidates, of which two core products have entered the clinical development stage. STP705 is a small molecular interference ribonucleic acid (siRNA) drug candidate of the company, which is a TGF- β 1 / COX-2 inhibitor for local administration. We expect STP705 to be available in the United States in 2024 and in China in 2025, and the product is expected to reach a global risk-adjusted peak sales of more than $600 million by 2031. STP707 is a siRNA drug candidate of the company that also targets TGF- β 1 / COX-2, but this candidate molecule has the potential for systemic administration. We expect STP707 to be available in 2026 and global risk-adjusted sales of the product are expected to reach $380 million at the end of the year (2037).
The company has a proprietary RNA delivery platform to address the major challenges facing RNAi therapy.
San Nuo Pharmaceuticals has proprietary peptide nanoparticles (PNP) and a new N-acetylgalactosamine (GalNAc) delivery platform. The company's PNP delivery platform has the potential to deliver small interfering ribonucleic acid (siRNA) and messenger ribonucleic acid (mRNA) to target cells through local or systemic drug delivery, with lower potential toxicity. At the same time, the platform is easy to produce and has the potential to deliver RNA molecules to more target organs except liver.
What is the biggest difference between us and the market? We believe that if the systematic administration of STP707 achieves positive results in the clinical proof of concept, the PNP platform is expected to be more widely used.
Potential catalysts: STP705 BCC & iSCC data readout; STP707 early data readout.
Profit forecast and valuation
We expect the company's EPS to be-$0.88 in 2022 and-$1.05 in 2023.
Based on our DCF model, we cover the "outperform industry" rating and target price of HK $106for the first time, which is 27% upside from the company's current share price.
Risk
Project progress is not as expected; commercial sales are lower than expected; over-reliance on some products; price pressure from regulators and competitors; intellectual property protection is not as expected.