Incidents:
Kang Fang Biotech released its 2023 annual report on March 19: in 2023, it achieved revenue of 4,526 billion yuan, an increase of 440% over the previous year; of this, product sales revenue was 1,631 billion yuan and technical licensing and technical cooperation revenue was 2,923 billion yuan; the company achieved profit of 1.94 billion yuan for the first time, with a net loss of 788 million yuan after excluding technical licensing and cooperation revenue (net loss of 1,422 million yuan in 2022).
Investment highlights:
The commercialization of Ketani continues to be released, and major indications have been expanded to achieve important breakthroughs. In 2023, the company achieved revenue of 4,526 billion yuan, including product sales revenue of 1,631 billion yuan, which is in line with our expectations. As the world's first oncology immune dual antibody, ketanil has excellent clinical value. With its excellent clinical value, sales reached 1.36 billion yuan in 2023, an increase of 149% over the previous year. It has built a broad and deep commercial moat through the layout of 16 indications through combined drug use. Furthermore, Ketanil has achieved important breakthroughs in developing major indications such as gastric cancer, cervical cancer, liver cancer, and lung cancer. Phase III midterm analysis of first-line treatment of advanced gastric cancer reached the main end point of overall survival (OS), phase III mid-phase analysis of first-line treatment of advanced cervical cancer reached the main end of progression-free survival (PFS), phase III clinical studies on adjuvant treatment after hepatocellular carcinoma, and phase III clinical studies of first-line treatment of non-small cell lung cancer with negative PD-L1 expression with the cardonil regimen are also being carried out efficiently. Clinical studies of gastric cancer progressing in combination with VEGFR2 monoclonal and proxil therapy for gastric cancer progressing after PD-1/L1 treatment are also being carried out efficiently. Launched.
The domestic launch of Evosi is imminent, and clinical research is on a global scale. The marketing application for the world's first PD-1/VEGF dual antibody evossi was accepted by the CDE in August 2023 and included in the priority review. It is expected to become the world's first dual antibody with a “tumor immunity+antiangiogenesis” mechanism. Meanwhile, Evosi has 6 phase III clinical studies currently underway. Of these, 2 are international multi-center phase III clinical studies led by partner Summit Therapeutics, and 4 are phase III clinical studies head-to-head with PD-1 monoclonal antibodies. By the end of 2023, the company had conducted 20+ clinical trials for 16 indications, including lung cancer, pancreatic cancer, breast cancer, hepatocellular cancer, and colorectal cancer, covering more than 1,600 subjects worldwide, while simultaneously expanding the Chinese and global markets.
The pipeline layout of self-developed products is rich, and drug development has entered the harvest period. In terms of oncology drugs, Anicol (Paiampril, PD-1), developed independently by the company, was approved for first-line treatment of squamous non-small cell lung cancer, and was accepted for marketing of a new drug for first-line treatment of nasopharyngeal cancer. In addition, Anicor has granted part of its overseas sales rights to Specialised Therapeutics (ST), which is currently listed for sale in relevant countries. In the non-tumor sector, the new drug marketing application for inucimab (AK102, PCSK9) was accepted by the CDE in June 2023 for the treatment of primary hypercholesterolemia and mixed hyperlipidemia and heterozygous familial hypercholesterolemia (hEFH). The new drug marketing application for iroximab (AK101, IL-12/IL-23) was accepted by the CDE in August 2023 for the treatment of moderate to severe plaque psoriasis. The phase III clinical trial of gumocizumab to treat moderate to severe plaque psoriasis was completed in August 2023, and all efficacy endpoints were reached in December. Phase II efficacy data for active ankylosing spondylitis are good, and phase III clinical enrollment is ongoing.
Profit forecast and investment rating: We expect the company's 2024-2026 revenue to be $28.04/47.07/6.495 billion, respectively, up -38%/68%/38% year over year. The company is a domestic leader in dual resistance. The company's R&D pipeline continues to be realized, the long-term growth momentum of performance is sufficient, and it maintains a “buy” rating.
Risk warning: risk of failure in new drug development; risk of commercialization falling short of expectations; risk of market competition increasing risk; risk of falling short of expectations in the research pipeline; policy risk.