Performance: The company released its annual report on March 25, 2023. The company's revenue in 2023 was 1.54 billion yuan, an increase of 91.6%. This increase was mainly due to increases in down payments and milestone payments due to licensing and cooperation agreements signed with MSD. The annual loss was reduced to RMB 574 million in 2023, a decrease of 6.8%. R&D expenditure increased to RMB 1.03 billion. Trop2 ADC, HER2 ADC has submitted an NDA application to the CDE. The company has signed three cooperation agreements with MSD, of which SKB264 has carried out a number of global clinical trials.
SKB264 (MK-2870) -trop2 ADC: 1) Triple-negative breast cancer (TNBC): CDE has accepted a new drug marketing application (NDA) for TNBC that has received at least 2 types of systematic treatment in the past and included it in priority review. Phase 3 clinical trials of second-line or above TNBC have reached the main end point. First-line PD-L1 negative TNBC phase 3 clinical trials have been initiated. 2) HR+/HER2-breast cancer (BC): 2L+ HR+/HER2-BC registration phase 3 study in progress, 2023 ESMO data mPFs 11.1 months. 3) NSCLC where EGFR-TKI treatment failed: First case enrolled in the 3rd phase in July '23, ASCO published data in '23, ORR 60.0%, median PFS of 11.1 months. 4) EGFR wild-type NSCLC: Combined with A167 phase II clinical trial, PD-1 resistance data published in 23 years, ORR 26%, mPFs 5.3 months.
Currently, MSD has launched 6 global phase III clinical trials overseas, namely: 1) PD-L1 TPS >= 50% non-small cell lung cancer (NSCLC) first-line treatment (NCT06170788); 2) second-line endometrial cancer (NCT06132958); 3) NSCLC that does not respond to EGFR or other TKI (NCT06074588); 4) drug-resistant NSCLC (NCT06305754) after EGFR-TKI treatment; 5) HR+/HER2- Breast cancer (NCT06312176); 6) Adjuvant treatment for patients with early NSCLC who did not achieve pCR after neoadjuvant treatment (NCT06312137).
A166 (HER2 ADC): Key Phase II major endpoints for 3L+Late HER2+ BC were reached, NDA was submitted to CDE in May 2023, and Confirmatory Phase 3 of 2L+ Late HER2+ BC was launched in June 2023.
Rich innovation pipeline: 1) SKB315 (MK-1200, CLDN18.2 ADC): Granted MSD with exclusive global development and commercialization rights, phase 1a in China and phase 1/2 in progress globally; 2) SKB410 (MK-3120) Nectin-4 ADC: It has obtained IND approval from CDE and initiated phase 1a clinical trial. 3) A167 (PD-L1 monoclonal antibody) has completed phase 3 clinical enrollment for first-line nasopharyngeal cancer (RM-NPC). A140 (EGFR monoclonal antibody), an NDA application has been submitted to the CDE for the treatment of RAS wild-type metastatic colorectal cancer (mCRC) and head and neck squamous cell carcinoma (RM-HNSCC).
Profit forecasting and valuation: The company was one of the pioneers in ADC development and established OptiDC, an in-house ADC development platform. Currently, the company has established a strong pipeline with more than ten clinical-stage drug candidates, four of which are in the NDA application stage and one is in the critical testing phase. We believe that its pipeline is rich, and the overseas value of ADC is gradually becoming prominent. It is estimated that its 24-26 revenue will be 955, 14.27, and 2,289 million yuan. Maintain a “buy” rating.
Risk warning: risk of clinical development failure, risk of sales falling short of expectations, risk of clinical development progress falling short of expectations