Incidents:
On January 30, 2024, Hutchison Pharmaceutical announced that fruquintinib has obtained approval from the Hong Kong Pharmacy and Poison Administration for use in Hong Kong, China for the treatment of treated adult patients with metastatic colorectal cancer. From January 18 to 20, at the 2024 ASCO GI conference, a number of clinical studies on the treatment of colorectal cancer and gastric cancer were presented with the fruquintinib combination regimen.
Comment:
Overseas sales exceeded expectations, entered the Hong Kong market under the new mechanism, and continued to contribute to performance growth. Based on approval from China's National Drug Administration and local clinical data in Hong Kong, China, Huhuang Pharmaceutical submitted an application for registration of fruquintinib in Hong Kong, China. Prices in the Hong Kong market are relatively high, and subsequent sales growth contributions are optimistic. Additionally, fruquintinib was approved by the FDA in November 2023. According to the 2023Q4 quarterly report data disclosed by Takeda, furoquintinib's 23 sales for colorectal cancer in the US are included in other items in the tumor line. Sales are expected to exceed $13 million in more than a month (including holidays), which is significant, and the company will continue to reap the dividends.
Fruquintinib ASCO GI showed potential for combined use and multiple indications. At the ASCO GI conference, safety and initial efficacy data on the safety and initial efficacy of fruquintinib in combination with SOX and treprimizumab as a first-line treatment regimen for GC/GEJC were presented at the ASCO GI annual conference. A total of 17 GC patients participated in the study and finally determined the recommended dosage of fruquintinib in combination with SOX and treprilizumab is 5 mg. Of the 16 patients whose efficacy could be assessed, 9 achieved partial remission and 7 achieved stable disease, with an overall remission rate of 56.3%. The median PFS was 9.3 months. Adverse events during treatment were mainly grade 1-2, and no treatment-related deaths were reported. Preliminary results showed that fruquintinib in combination with SOX and treprilizumab had good efficacy and controlled safety in patients with advanced gastric cancer. Fruquintinib is expected to expand its indications in the future, and it is expected that H1 will be approved as a second-line gastric cancer indication in 2024.
Multiple pipelines are progressing smoothly, and the overall research and development bureau's capabilities are outstanding. The marketing application for solepinib for the treatment of adult patients with primary immune thrombocytopenia has been accepted and given priority approval by the China Drug Administration. Sevotinib has filled the demand for NSCLC treatment. In the future, it will achieve breakthroughs in the MET-mutated gastric cancer market and explore treatment in combination with PD- (L) 1 inhibitors. Surufatinib provides more options for neuroendocrine tumors and will further explore more markets. The clinical indications for tazepastat are advanced epithelioid sarcoma (ES) and follicular lymphoma (FL). Listed in Hainan in 2022, approved for listing in Macau, China in March 2023, and completed the China Bridging Research Group.
Investment suggestions: The company has abundant pipeline reserves, broad product market space, and the commercialization volume of medical insurance products exceeds expectations. We maintain our expectations that the company will achieve revenue of $782/7.29/$866 million in 23-25, earnings per share of -0.07/-0.05/0.11 for 23-25, and maintain the company's “buy” rating.
Risk warning: risk of R&D falling short of expectations, risk of sales falling short of expectations, policy risk, etc.