Investment advice
On May 24, evosimab was approved by the NMPA in combination with pemetrexed and carboplatin for locally advanced or metastatic EGFR mutant nsqnsCLC that progressed after treatment with EGFR TKI. On May 31, ivoxil obtained positive results compared to Pabolizil 1L in the treatment of PD-L1 positive phase III NSCLC. The company has experienced stock price adjustments, and we recommend focusing on the flexible space brought about by commercialization of the company's products and overseas clinical progress.
rationales
Evosi has been approved domestically, and attention is being paid to commercialization. The clinical phase III Harmoni study on EGFR TKI resistance showed clinical benefits consistent with earlier studies. Compared with approved treatments for the same indications, PFS and OS advantages were statistically analyzed. Among them, PFS in the brain metastasis subgroup also benefited.
The company actively commercialized and completed the first batch 1 week after approval. Based on the company's excellent commercialization experience with cardonilizumab, another approved product, we believe that the two tumor immunotherapy products are expected to achieve strong synergy, expand the commercial team, and explore various insurance payment possibilities.
Evosil successfully treated 1L NSCLC head-to-head with K-pills and is expected to become the cornerstone drug for the next generation of IO treatment. In the HarmonI-2 (AK112-303) study, predetermined mid-term analysis by IDMC of ivorximab versus K drug PD-L1TPS ≥ 1% in the clinical trial of PD-L1TPS showed strong positive results, reaching the main end point of PFS. The company expects to disclose specific data 2 at future academic conferences. We believe that the positive results of this study further solidify the potential of Evosi as an IO cornerstone product, including a broad market for subsequent use with ADC drugs or other drugs.
Overseas partner Summit clinical trials are progressing rapidly, and two clinical phase III clinical trials are being enrolled. Harmoni/AK112-301 is an international phase III study on locally advanced or metastatic NSQ-nsclc that has progressed through three generations of EGFR TKI. Overseas patients will be enrolled starting in May 2023. Some data from the domestic Harmoni study will be incorporated into the global phase III clinical trial. Domestic clinical success has greatly enhanced our confidence in global clinical data. In addition, the first international phase III study on 1L metastatic Sq-nsclc of Harmoni-3/AK112-3003 with evosil+ chemotherapy versus K+ chemotherapy began enrolling patients in November 23.
Profit forecasting and valuation
Due to positive evosimab approval data, we raised 2024/2025 revenue by 4.4%/2.5% to RMB 24.6/4.08 billion. We anticipate an increase in initial product sales investment. We lowered our 24-year net profit forecast from -30 billion yuan to -420 million yuan, and basically maintain the 25-year net profit forecast of 590 million yuan, maintain the industry performance rating, and maintain the target price of 66.23 Hong Kong dollars (49.8% upward space) according to the DCF model.
risks
Liquidity risk; drug clinical data falls short of expectations; progress in the research pipeline falls short of expectations.