Carvykti added second-line MM indications to focus on clinical progress in primary treatment of MM. According to Johnson & Johnson's 1Q24 report, Carvykti recorded sales of US$157 million, +118.1% YoY. In April 2024, Carvykti was successively approved in the US and Europe to treat patients with early recurrent RRMM (2-4L), becoming the first BCMA CAR-T approved for this indication. In terms of production capacity, the company aims to reach 10,000 doses by the end of 2025. The first phase of the Belgian plant project will be put into commercial production by the end of 2024, and the second phase is expected to be put into commercial production in 2H25. On April 1, Legendary Biotech and Novartis reached a partnership to strengthen Carvykti's global production and supply capabilities. We expect that approval of the new indications will drive a significant reduction in product OOS, the gradual release of new production capacity, and sales are expected to rise rapidly every quarter starting in the second half of the year.
Furthermore, we recommend focusing on the E and F cohorts for evaluating primary MMs in the CARTITUDE-2 trial (legend has indicated that data were read as soon as the end of the year), which is of great indicative significance for the ongoing phase III CARTITUDE-5 and CARTITUDE-6 trials.
As the investment and financing environment continues to recover, the CDMO sector's performance has exceeded expectations: management has indicated that the annual revenue of the CDMO business (Booming Bio) will be roughly the same as last year, and 2H performance is superior to 1H.
Since the beginning of 2024, the number and amount of overseas biomedical financing cases continued to recover. 1Q24 increased 15%/78% year-on-year respectively, while the company's business development focus gradually shifted to Europe and America.
In this context, we expect the share of overseas orders and revenue to increase further, and considering the current market's pessimistic expectations for the performance of mainland CXO companies, this year's booming performance and order volume are likely to exceed expectations. For the life sciences services sector and Bestmaster, the company's annual revenue recorded strong growth rates of 15-20% and 20-30% (@CER).
Maintain the target price and focus on the 2H catalyst: Based on actual sales in 1Q24, we slightly lowered Carvykti's 2024-25 sales forecast to 900 million/1.7 billion US dollars, but the expansion of global production capacity and the successful approval of 2L MM boosted our confidence in long-term sales climbing and slightly raised Carvykti's peak sales forecast to $6.5 billion. We continue to value the company based on the SOTP model and maintain our target price of HK$27.75 unchanged. We believe that the company's current stock price is clearly undervalued, far from reflecting the long-term potential of Boom, Best, and Legend, and the high scarcity of the target itself in the Chinese pharmaceutical industry. Recent catalysts include Carvykti sales volume, CARTITUDE-2 test E/F queue data readout, and recovery in CDMO sector performance and order volume, which may be implemented centrally in 2H.