Key points of investment
Dizhe Pharmaceutical was born out of the former AstraZeneca R&D center in Asia. We are optimistic about the company's core pipeline differentiation and international competitive advantage. The indications for the company's core product suvortinib are opening up from the second line to the first line, and the prospects for global commercialization expansion are further improving; in addition, golisitinib's differentiated lymphoma indications have a clear leading edge in the world. For the first time, it was covered and given a “buy” rating.
Dizhe Pharmaceutical: Positioning for global innovation, with obvious pipeline differentiation advantages 1) Built on an international platform, with global competitiveness. The company was founded in 2017, formerly known as AstraZeneca's Asian R&D center, which is one of AstraZeneca's top four R&D centers. Relying on world-class new drug development and transformation capabilities, the company successfully commercialized sulvoritinib. Golisitinib has also entered the NDA stage. Multiple core product pipelines are already in the global registration/phase III clinical stage, and commercialization is expected to accelerate.
2) The core team is experienced in R&D, and translational medicine empowers steady and far-reaching progress. Many of the company's executives have worked for AstraZeneca and have rich experience in R&D and commercialization of major new drugs around the world; at the same time, the company has leading translational science research capabilities to help improve R&D decision-making efficiency and R&D success rate.
Suvortinib: EGFR Exon20Ins NSCLC efficacy breakthrough, BIC (best-in-class) dosage can be expected 1) Industry: NSCLC has little room for clinical unmet demand. EGFR exon20Ins mutations account for about 2% of NSCLC. The objective remission rate of traditional 1-3 generation EGFR-TKI, chemotherapy, and immunotherapy is less than 20%. The effect is limited, and innovative drugs with better curative efficacy are still needed clinically.
2) Efficacy: Excellent clinical data, great BIC potential. ① 2L treatment of EGFR exon20InS NSCLC single agent ORR is nearly 60.8%, and the effect on patients with brain metastases is obvious (ORR up to 48.5%); ② 1L treatment of EGFRExon20INs NSCLC ORR reached 78.6%, MPFs reached 12.4 months, highlighting the best potential in the same category; ③ EGFR-TKI resistance: treatment methods are limited, and the combined treatment of sulvortinib and golixitinib was 5.8 months, with good curative efficacy; NSCLC clinical studies after EGFR TKI resistance are in phase II, and we are looking forward to reading the data.
3) Commercialization: Sulvortinib 2L EGFR exon20ins NSCLC monotherapy achieved sales revenue of 91 million yuan in 2023, with rapid release. Meanwhile, 2L and 1L EGFR Exon20Ins NSCLC international multi-center clinical trials are in register/phase III. Based on excellent clinical data, we are optimistic about the prospects for rapid sales volume of suvoritinib and its potential to expand in the field of EGFR-TKI resistance treatment. We forecast that the peak sales of suvortinib in the Chinese market and the US market will reach 3.07 billion yuan and 2.15 billion yuan respectively, and the total sales peak is expected to reach 5.22 billion yuan.
Golixitinib: Highly selective JAK1 inhibitor, differentiated layout lymphoma 1) Differentiation: JAK1 target with high specificity, differentiated layout T-cell lymphoma. There is no standard treatment plan for recurrent refractory peripheral T-cell lymphoma. As of February 2024, in the field of JAK inhibitors, only golisitinib for recurrent refractory peripheral T-cell lymphoma has been declared and listed domestically and is in the registered clinical stage globally. The competitive pattern is relatively good
2) Efficacy: Outstanding ORR, reliable safety. Golisitinib had an ORR of 44.3% (versus 26-41% of other approved PTCL drugs) in treating recurrent refractory peripheral T-cell lymphoma (PTCL), with excellent efficacy and reliable safety; furthermore, in PTCL maintenance/consolidation treatment data, golisitinib MPFs reached 16.7 months, with positive results.
3) Commercialization: An NDA application for treatment of relapsing refractory peripheral T-cell lymphoma was submitted in September 2023. Commercialization is imminent, and the US is also in a registered clinical state. We predict that golixitinib will peak sales of 2.38 billion yuan in the domestic and US markets for the two major indications of recurrent refractory peripheral T-cell lymphoma and recurrent refractory cutaneous T-cell lymphoma.
Pipeline: Focus on platform transformation. In the development of a variety of new drugs with global competitiveness, through a translational science core technology platform focusing on the field of oncology, Dizhe Pharmaceutical has independently developed a number of innovative small molecule drugs that are in the early clinical stages:
① DZD8586: A highly selective targeted small molecule inhibitor with the ability to penetrate the blood-brain barrier. The overall ORR for B-NHL patients who failed multi-line treatment reached 64.7%, showing good anti-tumor activity and safety. Global phase I/II clinical trials are ongoing. ② DZD2269: A global innovative, highly selective adenosine A2a receptor antagonist. The single drug has shown certain anti-tumor activity in various animal models of tumors. The international multi-center clinical phase I healthy subjects trial has been completed. ③ DZD1516: Highly selective HER2 TKI that is efficient, reversible, and penetrates the blood-brain barrier. It is already in clinical phase I/II internationally, and domestic phase II clinical trials are underway.
DZD8586, DZD2269, and DZD1516 all have global competitiveness, and we look forward to clinical progress and more data reading.
Profit forecasting and valuation
According to the DCF valuation model, we calculate that the reasonable valuation of the company's core products such as sulvortinib and golisitinib is estimated at 22.589 billion yuan, and sensitivity test results show a reasonable market value range of 209.38 to 24.522 billion yuan.
We are optimistic about the company's core pipeline differentiation and international competitive advantage. The high-level translational science platform is expected to continue to empower, cover and give a “buy” rating for the first time.
Risk warning
Risk of product sales falling short of expectations due to clinical failure or increased competition, risk of inaccurate sales calculation assumptions, policy risks, etc.