Recommended logic: 1) Olevatinib fully approved indications (treatment of 1st and 2nd generation drug resistance and/or CML-CP for intolerance) is expected to be approved for listing in the first half of 2023, further expanding the patient population; by the end of 2022, it was successfully included in the national health insurance catalogue with a 6% reduction (actual execution price), and release is expected to accelerate in 2023. Peak domestic sales of olevatinib are expected to reach 1.5 billion yuan; in the US, Olevatinib's CML and ALL trials for punatinib resistance are expected to start registered clinical trials in China; 2) APG-2575 is expected to start registered clinical trials; 2) is expected to start registered clinical trials; Nozomi A marketing application was submitted to treat R/rCLL as a single drug; in the US, APG-2575 combined with acatinib for CLL is expected to enter registered clinical research. APG-2575's peak domestic sales are expected to reach 2 billion yuan; 3) APG-2449 has significant advantages compared to loratinib and is expected to enter critical registration phase II clinical trials. APG-2449's domestic peak sales are expected to reach 770 million yuan; 4) Sufficient global clinical research and development experience, China and the US double newspaper are developing products facing the global market.
Commercialization of orebatinib is speeding up, and major indications are about to be implemented. Olevatinib is the first third-generation BCR-ABL inhibitor marketed in China. It is also the only treatment for CML with the T315I mutation. Olevatinib was successfully included in the 2022 health insurance catalogue with a 6% reduction (compared to the actual execution price), and release is expected to accelerate in 2023. CML-CP, which are resistant or intolerant to first- and second-generation tyrosine kinase inhibitors (TKI), submitted marketing applications in July 2022 and are expected to be approved for marketing in 2023. At the 2022 ASH (American Society of Hematology), orebatinib had excellent effects on CML and ALL of punatinib resistant drugs, and it is expected that registered clinical trials for punatinib resistant CML and ALL will commence in the US in 2023.
The APG-2575 data is impressive, and the first-mover advantage is obvious. Indications for CLL treatment with monotherapy are expected to be NDA. APG-2575 is the first domestically produced BCl-2 inhibitor to enter critical phase II clinical registration in China. APG-2575 published a number of major highlights at ASH 2022. Combining acatinib with first-line and second-line treatment of CLL had excellent results. China is expected to complete the registration phase II study in 2023 and submit a listing application. The US is expected to enter the registered clinical phase. Furthermore, data on the first-line treatment of APG-2575 combined with chemotherapy for AML is expected to be read.
APG-2449 has shown remarkable efficacy in patients with NSCLC with brain metastases, and the differentiated advantages are expected to break the game.
APG-2449 is the first third-generation ALK inhibitor to enter clinical practice in China. For ALK-positive NSCLC patients with brain metastases resistant to second-generation TKI treatment, the ORR of APG-2449 reached 50% and CR reached 12.5%. It is the first third-generation ALK inhibitor to observe an objective response rate of 50% in brain metastases. It has obvious advantages over loratinib for patients with brain metastases. APG-2449 is expected to enter critical registration phase II clinical trials in 2023.
Profit forecasts and investment recommendations. We expect the company's revenue for 2023-2025 to be 43, 7.1, and 1.31 billion yuan respectively. Yasheng Pharmaceutical's performance growth is highly certain, and its R&D strength is strong. The company was given 20 times PS in 2023, corresponding to the target price of HK$29.8, with initial coverage and a “buy” rating.
Risk warning: R&D falls short of expected risks, commercialization falls short of expected risks, increased market competition risks, drug price reduction risks, pharmaceutical industry policy risks.