Hewang Pharmaceutical: An innovative pharmaceutical company with small molecules as the core. Huhuang Pharmaceutical is an innovative biomedical company in the commercialization stage, focusing on the discovery, development and commercialization of targeted therapies and immunotherapy for cancer and immune diseases; the core products furoquintinib, sevotinib, and surufatinib have all been approved for marketing in China, and fruquintinib has been approved for marketing in the US and successfully commercialized by partners. The company's existing products have great potential for expansion, and the future listing of products in the pipeline will provide new incremental growth for the company.
Fruquintinib: An innovative small-molecule drug successfully launched overseas. Fruquintinib is a selective oral VEGFR-1/2/3 inhibitor that has been approved for marketing in China and the US; with excellent clinical data, it occupies a leading position in the third-tier colorectal cancer market in China. Fruquintinib was released rapidly at the beginning of its launch in the US. It is expected to be approved for listing in Europe and Japan this year, continuing to explore the global market. The second indication for fruquintinib (second-line gastric cancer) is expected to be approved for marketing in China in the second half of this year, greatly expanding the number of patients that can be covered.
Sevotinib: Can be used in combination with ositinib for a wide range of uses. Sevotinib is a potent and highly selective oral MET tyrosine kinase inhibitor approved in China for second-line treatment of non-small cell lung cancer patients with MET exon 14 jump mutations. In addition, cevotinib and osimitinib are carrying out multiple combined clinical trials, including key clinical trials of non-small cell lung cancer with 1L and 2/3L EGFR mutations and abnormal MET levels in China and around the world, which are expected to expand the broad EGFR mutant lung cancer market.
Surufatinib challenges pancreatic cancer and solepinib applies for listing. Surufatinib is a multi-targeted small-molecule TKI that is currently approved for the treatment of neuroendocrine tumors; surufatinib in combination with PD-1 monoclonal antibodies has obtained excellent early clinical data in first-line pancreatic cancer, and phase 2/3 clinical trials have already begun. Solepinib is a potentially best-in-class Syk inhibitor. Indications for treating adult immune thrombocytopenia (ITP) have been declared and are expected to be approved for marketing in China this year.
Commercialization and overseas sales continued to be realized, and coverage was given for the first time, and a “buy” rating was given. The company's ability to develop and commercialize small molecules has been verified, and cooperation agreements have been reached with many multinational pharmaceutical companies around the world. In addition to furoquintinib, other products also have the potential to be authorized to go overseas. Sales growth of fruquintinib, cevotinib, and surufatinib will be the main driver of the company's performance over the next three years, and the company is expected to achieve break-even by 2025. We expect the company's revenue for 24-26 to be US$705/9.01/1,044 million, respectively, up -16%/28%/16% year over year, and net profit to mother of US$0.86/0.41/104 million. According to the absolute valuation method, we estimate that Hewang Pharmaceutical's reasonable value range is HK$38.0-41.1 per share. Compared with the current stock price, there is 25-35% room to rise. For the first time, we covered it and gave it a “buy” rating.
Risk warning: risk of innovative drug development and regulation, risk of drastic price reduction in health insurance negotiations, risk of commercialization falling short of expectations, geopolitical risk