Event
On October 21, 2023, the company announced that GlaxoSmithKline (GSK) would receive a down payment of US $85 million, a milestone payment of up to US $1.485 billion (equivalent to more than RMB10 billion) and a tiered royalty for net commercialized sales to GlaxoSmithKline (GSK) with a global equity outside of HS-20089 Greater China.
Comment
B7-H4 ADC is the first to break through, and the clinical data of stage I of triple negative breast cancer (TNBC) are excellent. (1) HS-20089 is an antibody drug conjugate (ADC) targeting B7-H4, and its payload is topoisomerase inhibitor (TOPOi). B7-H4 is a transmembrane glycoprotein of the B7 superfamily that is highly expressed in a variety of cancers including breast cancer, ovarian serous carcinoma, endometrial carcinoma and cholangiocarcinoma. (2) HS-20089 Chinese Ⅰ clinical data were selected into the "latest Breakthrough Summary (LBA)" of the European Society of Oncology Annual meeting (ESMO) in October 2023. In 33 patients with assessable remission of advanced solid tumors, 8 patients with partial remission (PR=24.2%) were observed, with a disease control rate of 63.6%. Of the 16 patients with triple negative breast cancer (TNBC), 6 were PR (PR=37.5%). Under the potential target therapeutic dose (4.8mg/kg and 5.8mg/kg), 5 cases of PR (PR=41.7%) were observed in 12 patients with TNBC. In the lowest-dose 0.7mg/kg group, patients who received PR had been treated for 403 days and continued to receive research treatment. (3) at present, most of the treatments for B7-H4 are antibodies and ADC drugs, most of which are breast cancer and ovarian cancer. The target products mainly include AZD8205 (ADC) developed by AstraZeneca PLC, SGN-B8H4V (ADC) developed by Seagen, and PF-07260437 (B7H4/CD3 double antibody) developed by Pfizer Inc. All the above products are in the clinical stage or preclinical stage of Ⅰ. In order to speed up the global clinical progress of HS-20089, GSK plans to conduct phase Ⅰ clinical trials of HS-20089 outside China in 2024. In addition to B7-H4, the company's ADC drug HS-20093, which targets B7-H3, has also entered the Ⅰ phase.
Global ADC innovation target research and development is in full swing, a number of important Becton Dickinson & Co have achieved one after another. In recent years, the clinical research and development of ADC drug differentiation targets such as CLDN18.2, Nectin-4, B7-H3/B7-H4 and so on is on the rise. The international giants have invested heavily. On October 20, 2023, Merck and first three reached a partnership with Becton Dickinson & Co on ifinatamab (B7-H3 ADC), patritumab (HER3ADC) and raludotatug (CDH6 ADC). Merck will pay up to $22 billion and $4 billion in advance.
Earnings forecast, valuation and rating
We estimate that the company's annual revenue in 2023-24-25 will be 98.9%, 11.95 billion yuan, an increase of 5.41% / 20.83%, 14.23%, and its net profit, 28-33-37, will be 100 million yuan, an increase of 6.75%, 19.62%, 12.30%. Maintain a "buy" rating.
Risk hint
Risks such as the impact of collection, the lower-than-expected research and development of new drugs and the change of competition pattern.