Incident: On April 7, the marketing application for a new indication of PD-1 monoclonal tripril combined with axitinib independently developed by Junshi Biotech for first-line treatment of medium- to high-risk patients with unresectable or metastatic renal cell carcinoma was approved by the National Drug Administration (NMPA).

Comment: This is the eighth indication that treprilizumab has been approved in China. It is also the first approved immunotherapy for kidney cancer in China.

1) Patients with advanced kidney cancer lack effective treatment drugs, and clinical needs have not been met. Kidney cancer is the third most common malignant tumor in the urinary system worldwide, and renal cell carcinoma (RCC) accounts for 80% to 90% of all kidney cancer cases. There are about 75,000 new cases of kidney cancer in China every year. Of these, about 1/3 (about 25,000) of kidney cancer patients had distant tumor metastasis at the time of initial diagnosis, while 20% to 50% of localized patients still had distant tumor metastasis after undergoing nephrectomy. Currently, drugs approved for advanced RCC treatment in China include prazopanib, sunitinib, axitinib, sorafenib, etc., but the median overall survival time of high-risk patients with metastatic RCC receiving these anti-vascular targeted treatments is only 5.4 months. As a result, medium- to high-risk advanced RCC patients have significant unmet clinical treatment needs.

2) Trepril target-free combination therapy for MPFs for 18 months, pioneering a new pattern of immunotherapy for kidney cancer.

Clinical data showed that compared with sunitinib monotherapy, treatment with treiprizumab combined with axitinib significantly increased patients' PFS by nearly 2 times (median PFS: 18.0 vs. 9.8 months), and the risk of disease progression or death was reduced by 35%. The mPFS data were superior to pabrizumab plus axitinib (median PFS 15.1 vs. 11.1 months) and navulizumab combined with cabotinib (median PFS 17.0 vs. 8.3 months). Furthermore, the triplimab group had a better ORR (56.7% vs. .30.8%) and a longer DoR (median DoR: not achieved vs. 16.7 months), had a clear OS benefit trend (median OS: did not achieve vs. 26.8 months), reduced risk of death by 39%, and had good safety and tolerability. The curative effects of treprilizumab combined with axitinib have been approved to fill the gap in first-line immunotherapy for advanced kidney cancer in China, leading advanced RCC treatment in China into a new era of target-free combination.

3) The listing of Trepril as an exclusive indication for kidney cancer is expected to drive further sales growth. In 2023, sales revenue of treprilizumab was about 900 million yuan, an increase of about 25% over the previous year. We calculated based on the number of new cases of kidney cancer, MPFs, PD-1 penetration rate, and the market share of Trepri. It is estimated that sales of 1L of Trepril to treat renal cell cancer will peak at RMB 457 million. The approval of an exclusive indication for kidney cancer will help further increase its sales.

Profit forecast: We expect the company's revenue for 2024-2026 to be 17, 32, and 4.25 billion yuan, respectively, with year-on-year growth rates of 13.14%, 88.24%, and 32.81%, respectively, and net profit to mother of -18.42, 0.41, and 805 million yuan, respectively. The year-on-year growth rates are 19.34%, 102.21%, and 1879.05%, respectively, maintaining the “Highly Recommended” rating.

Risk warning: risk of clinical failure, risk of increased competition, risk of product sales falling short of expectations, policy risk.