Introduction to this report:
The core product CM310 adult moderate to severe AD has submitted an NDA. It is expected to be approved as the first domestically produced IL-4R monoclonal antibody by the end of 24. The R&D pipeline layout avoids cancer and continues to advance clinical trials, with sufficient backup capacity and performance growth momentum.
Summary:
Maintain an “Overweight” rating. The company's 2023 revenue of $354 million (+254%) mainly comes from CMG901 authorized down payment revenue, adjusted loss of 318 million yuan during the year, and R&D expenses of 596 million yuan (+18%), mainly due to increased R&D staff costs and depreciation of new equipment. As of December 31, 2023, cash and cash equivalents, and short-term financial management totaled $2,719 million, a decrease of $456 million from the end of 2022, and the capital utilization rate was high. Taking into account the CMG901 milestone payments and the commercialization of the product in 25 years, the 24-25 revenue forecast was lowered to $115,526 million (previously $231/697 million yuan), and the 26-year revenue forecast was increased by $1,441 million, maintaining the additional holdings rating.
CM310 is expected to be approved in '24 and commercialization to commence in '25. CM310 adult moderate to severe AD submitted an NDA in December 23 and was included in priority review and approval by the CDE. We expect it to be approved for marketing by the end of '24, making it the first IL-4R monoclonal antibody produced in China and the second most approved in the world, and commercialization officially began in '25. Phase III registered clinical top-line data for AD was revealed in the 2023.10 EADV. The baseline for 500 patients was comparable. The CM310 group and the control group had 66.9% and 25.8% of 16w EASI-75, respectively, and the ratio of IGA0/1 decreased by ≥2 from the baseline was 44.2% and 16.1%, respectively. Other itch control and quality of life scores were also significantly improved, and the efficacy data were excellent and safety was good. A phase III double-blind trial of moderate to severe AD in adolescents was launched in February 2024, and the target population continues to expand. The phase III trial of crSWnP reached the main clinical endpoint on 2023.12, with excellent efficacy. Changes in NPS and NCS scores have highly significant statistical differences, and it is expected that NDA will be submitted within 2024. Phase III of allergic rhinitis has been initiated, and phase II/III of moderate to severe asthma responsible for Shiyao is progressing steadily.
CMG901 has excellent early data, rapid clinical progress, and huge market potential. CMG901 was authorized to AZ in 2023.2 and was granted FDA fast-track eligibility and orphan drug qualification for the treatment of G/GEJ. 2023.11 Data were published in the ASCO Medication Series. 89 patients had ORR = 33% and DCR = 70%, including ORR = 33% and mPFS = 4.8 mon in the 2.2 mg dose group, showing good safety and initial efficacy. Currently, a number of phase II clinical trials have been carried out, including: ① single drug treatment for advanced or metastatic gastric and gastroesophageal adenocarcinoma; ② treatment of pancreatic cancer with a single drug or combination of 1L; and phase III clinical trials for 2L and above advanced/metastatic gastric cancer. Clinical progress is fast, curative potential is good, and market potential is huge.
The multi-product pipeline continues to advance, and clinical data have revealed excellent performance. ① CM313 (CD38) Phase II data for ITP was released on ASH 2023.12, showing initial efficacy and good safety; ② CM326 (TSLP) is currently promoting phase I and CRSWnP phase IB/IIa for AD and asthma (responsible for stone medicine); ③ multiple pipelines such as CM350, CM355, and CM336 are progressing steadily.
Risk warning: New drug development falls short of expected risk, new drug launch volume falls short of expected risk