Source: Broker China

May 29, Hong Kong stock$ALPHAMAB-B (09966.HK)$The stock price suddenly plummeted, with the biggest intraday drop of 58%. As of press release, the decline was still over 40%. The main reason for the sharp drop in stock prices was an announcement made earlier by the company. Among them, it was shown that the KN046-303 test had reached the predetermined number of deaths. Data analysis showed that the overall survival (OS) results did not reach the intended statistical end point.

It is worth mentioning that KN046 is one of Corning Jerry's closest dual-resistance products to commercialization. Some analysts pointed out that for Corning Jerry, the impact of the KN046-303 failure was significant. The market once expected KN046 to have the potential to treat thymic cancer, pancreatic cancer, tri-yin breast cancer, and other cancers that do not respond to PD-1 alone.

Let's take a look at the detailed report!

Flash crash “tragedy”

The Hong Kong stock market has once again staged a “catastrophe” of individual stock crashes. In early trading on May 29, the Hong Kong stock price of Corning Jerry Pharmaceutical-B suddenly plummeted. The biggest intraday decline reached 58%. As of press release, the decline was still over 40%, and the total market value had shrunk to HK$2.72 billion.

The main reason for the sharp drop in stock prices was a negative announcement previously issued by the company.

On the evening of May 28, Corning Jerry said in an announcement that the KN046-303 trial had reached the expected number of deaths. Data analysis showed that overall survival (OS) results did not reach the preset statistical end point.

KN046 is a PD-L1 and CTLA-4 bispecific antibody developed by Corning Jerry and has independent intellectual property rights. The innovative design of KN046 includes the fusion of CTLA-4 and PD-L1 single-domain antibodies with different mechanisms; it can target tumor microenvironments with high PD-L1 expression and remove Treg cells that inhibit tumor immunity.

It is worth mentioning that KN046 is one of Corning Jerry's closest dual-resistance products to commercialization. Currently, multiple registered clinical trials of KN046 are ongoing. First-line treatment of squamous NSCLC combined with chemotherapy and first-line treatment of pancreatic cancer are critical phase III clinical trials. This is a failure of the first-line phase III clinical trial for pancreatic cancer.

According to the announcement, KN046-303 is a multicenter, randomized, double-blind, placebo-controlled phase III clinical trial aimed at testing patients with unresectable locally advanced or metastatic pancreatic duct adenocarcinoma (PDAC) without systematic treatment to evaluate the efficacy and safety of KN046 combined with albumin paclitaxel and gemcitabine compared with placebo combined with albumin paclitaxel and gemcitabine.

Prior to that, Corning Jerry's stock price had plummeted several times due to new drug development falling short of expectations. In May of last year, Corning Jerry Pharmaceuticals' stock price plummeted due to KN046's phase 3 clinical trial study ENREACH-LUNG-01 (KN046-301), which had not yet reached a statistically significant difference in OS; in November of last year, the market once again broke related negative rumors, causing its stock price to plummet by nearly 50% within 2 trading days.

Prior to these two rounds of sharp declines, Corning Jerry's stock price was at a high of HK$15, with a total market capitalization of about $14.5 billion.

According to reports, Corning Jerry was founded in 2015, and its founder is Xu Ting, which focuses on the development, production and commercialization of bioinnovative drugs in the field of anti-cancer. Listed on the main board of the Hong Kong Stock Exchange on December 12, 2019. The company has created a biomacromolecular drug discovery, R&D, and production technology platform with independent intellectual property rights, such as protein, antibody engineering, antibody screening, multi-module, and multifunctional antibody modification, focusing on the development, production and commercialization of bioinnovative drugs in the field of anti-cancer.

Currently, Corning Jerry has more than 10 products under development. The product pipeline covers innovative anti-tumor drugs such as single-domain antibodies, monoclonal antibodies, multi-functional antibodies and antibody conjugates: 1 product, KN035 (Envolimab injection, the world's first subcutaneous PD-L1 inhibitor) has been approved for marketing; several varieties have entered the critical clinical research stage in China and the US; 2 products have been selected for the national “Major New Drug Creation” project; 3 products have been granted 4 orphan drug qualifications by the US FDA.

How big is the impact?

Some analysts pointed out that for Corning Jerry, the impact of the KN046-303 failure was significant. The market once expected KN046 to have the potential to treat thymic cancer, pancreatic cancer, tri-yin breast cancer, and other cancers that do not respond to PD-1 alone.

KN046 has carried out nearly 20 clinical trials covering more than 10 types of tumors, including non-small cell lung cancer, pancreatic cancer, thymus cancer, liver cancer, esophageal squamous cell carcinoma, and tri-yin breast cancer in Australia, the United States, and China. The test results showed that patients had the advantage of survival benefits.

Among them, the most competitive indication for KN046 is pancreatic cancer. As a result, after Corning Jerry announced that the overall survival results of the KN046-303 test did not reach the pre-set end, it once again triggered a wave of sell-off in the market.

Pancreatic cancer is known as the “king of cancers”. Among them, about 90% of pancreatic cancers are pancreatic ductal adenocarcinoma (PDAC). It is difficult to detect, progresses rapidly, and has a high fatality rate. Patients have no obvious symptoms in the early stages. Once discovered, most have lost indications for surgery, there are no effective treatments clinically, and there is a huge unmet clinical need.

In recent years, the incidence of pancreatic cancer has also shown a rapid upward trend. According to data from Frosalivan, the number of cases of pancreatic cancer worldwide in 2019 was about 472,000, and is expected to reach 639,000 in 2030.

However, as a cold tumor, current PD (L) -1 immunotherapy for pancreatic cancer has no significant effect. Other clinical trials of PD-1 and L1 monoclonal antibodies to treat pancreatic cancer have basically failed. Domestic PD-1, L1 monoclonal antibodies, or double antibodies have not been deployed for pancreatic cancer, and only some early combination drug exploratory trials are still ongoing worldwide. CTLA-4 of KN046 played a key role and became one of the few IO products advancing first-line phase III clinical trials of pancreatic cancer.

If KN046 can beat pancreatic cancer, it is expected to become the core treatment for this indication and will have great market value. However, judging from the company's latest announcement, there is still quite a distance between KN046 and this goal.

From a commercialization perspective, Corning Jerry is also in urgent need of a new competitive product to launch.

Currently, Corning Jerry's only commercial product, Envolizumab injection, is suitable for the treatment of patients with advanced solid tumors in adults with unresectable or metastatic microsatellites (MSI-H) or mismatched repair gene defects (dMMR). It is the world's first and currently the only subcutaneous PD- (L) 1 antibody approved for marketing.

In 2022 and 2023, the commercialization results of envolizumab injections in China were 567 million yuan and 634.9 million yuan.

According to financial reports, throughout 2023, Corning Jerry achieved total revenue of 219 million yuan, a year-on-year increase of 31.12%, and achieved product revenue of 196 million yuan, an increase of 32.54% over the previous year. The total annual loss was 200 million yuan, a year-on-year decrease of 35.35%. By the end of 2023, the company had cash reserves of 1.4 billion yuan.

editor/tolk