occurrences

On January 2, 2024, the company announced that the marketing application for Gesulexib tablets (KRAS G12C) was accepted by the CDE for the treatment of patients with non-small cell lung cancer (NSCLC) with previous disease progression or intolerable KRAS G12C mutations after first-line system treatment.

reviews

Clinical trials of Gesulexi are being promoted simultaneously at home and abroad, and cooperation with Zhengda Tianqing is speeding up the commercialization process.

(1) Gesulexib (D-1553) is a KRAS G12C inhibitor independently developed by the company to treat various cancers such as non-small cell lung cancer and colorectal cancer with KRAS G12C mutations. (2) In June 2022, gesulexib launched a single-arm phase II registered clinical trial in China to treat NSCLC with KRAS G12C mutations. At the same time, clinical studies of single drugs and combination drugs in 1L NSCLC treatment and other solid tumors such as colorectal cancer are also being conducted at international multi-centers. The results of the Phase I clinical study were published in April 2023. Among 74 evaluable NSCLC patients, the confirmed objective response rate (ORR) was 40.5%, and the disease control rate (DCR) was as high as 91.9%. The median progression-free survival (PFS) was 8.2 months. (3) In August 2023, the company reached a cooperation agreement with Chia Tai Tianqing to grant exclusive licensing rights for Gesulexib in mainland China. The company will receive no more than 550 million down payments and milestone payments, as well as a share of net sales.

The innovative target is KRAS G12C. Only two domestic drugs have applied for listing, and the competitive pattern is excellent.

(1) KRAS is the most common RAS protein subtype. Nearly 90% of patients with pancreatic cancer, 30-40% of colon cancer, and 15-20% of lung cancer patients have KRAS gene mutations, and the incidence of mutations is greater than the sum of ALK, RET, and TRK gene mutations. G12C is also one of the most common KRAS mutations, so NSCLC patients with KRAS G12C mutations have a large base group. (2) There are only 2 KRAS G12C inhibitor drugs approved for marketing worldwide. Amgen's Lumakras (Sotorasib), a second-line treatment for KRAS G12C mutation NSCLC, was approved by the FDA in June 2021, with sales of approximately US$285 million in 2022 and nearly US$200 million in Q1-3 in 2023. Mirati Therapeutics' Krazati (Adagrasib), a second-line treatment for KRAS G12C mutation NSCLC, was approved by the FDA in December 2022, and sales for Q1-3 2023 were US$36 million. Currently, none of the above two drugs are marketed domestically.

(3) The target domestic competition pattern is good. Previously, only products similar to Cinda Biotech submitted a listing application to the CDE on November 24, 2023 and were included in the priority review.

Profit Forecasts, Valuations, and Ratings

According to the company's approval of Befotinib as a first-line treatment for NSCLC in October and the entry into medical insurance in December, we expect that the company's sales share for the fourth quarter and beyond will be better than expected, increasing revenue by 36%/7%/44% for 2023/24/25 to 1.79/345 million yuan respectively; reducing losses by 31%/23%/23% to loss of 3.63/3.53/337 million yuan. Maintain a “buy” rating.

Risk warning

Risks such as health policy risks, market competition risks, and failure to advance new products as expected.