Sidabendamide is intended to be included as a breakthrough treatment, and the Phase III clinical trial application has been accepted. On May 31, it was announced on the official website of the Drug Review Center of the State Drug Administration that Microchip Biocidabendamide will be included as a breakthrough treatment. The proposed indication is “combined with cindilimab and bevacizumab for advanced microsatellites stabilized or mismatched to repair complete (MSS/ pMMR) type colorectal cancer (MSS/pMMR) where previous ≥2 line standard treatment has failed”. The publication deadline is June 7. Earlier, on May 13, Microchip Biotech announced that Phase III of this indication had been accepted by the Drug Review Center.
Colorectal cancer, the second largest tumor, is beginning to see the dawn of immunotherapy. Colorectal cancer is the second largest tumor in China. There were 517,000 cases in 2022, but more than 90% of patients with PMMR/MSS did not respond to PD-1. New drugs such as fruquintinib have made huge breakthroughs, but the ORR for third-line treatment of colorectal cancer is only 4.7%, and the median OS is only 9.3 months. The efficacy of immune-combined anti-vascular TKI was also limited in patients with terminal pMMR type, and the “Cola” combination phase III OS did not benefit.
The CapAbility-01 study (researcher-initiated clinical trial) led by Professor Xu Ruihua and Professor Wang Feng was listed in the world's top academic journal Nature Medicine (IF=82.9), showing the huge potential of sidabendamide+cindilizumab plus bevacizumab to treat pMMR terminal colorectal cancer. The ORR reached 44.0%. The median OS follow-up was not mature for 19.0 months, and showed that patients with liver metastases could benefit. The biopsy sample sequencing results showed that the tumor tissue microenvironment in patients where the three drugs were effective became “hot.” (For details, see “Monthly Report and Topic: Colorectal Cancer, the Second Major Tumor, the Dawn of Immunotherapy”)
A breakthrough in indications is expected to open up market space for sidabendamide. According to the CapAbility-01 study dosage plan (cindilizumab 200mg q3w+ sidabendamide, 30mg biw+bevacizumab 7.5mg/kgq3w), the median PFS = 7.3 months, and the median cost of 178,000 yuan per patient to progress based on current drug prices (including 21,000 yuan for cindilimab, 113,000 yuan for sidabenzamide, and 44,000 yuan for bevacizumab, all expenses before medical insurance reimbursement). Assuming that the price of sidabendamide is reduced by 50% after being covered by medical insurance, patients under the current plan will be reimbursed 121,000 yuan for pre-treatment costs. Third-line colorectal cancer is estimated to have 10-120,000 new cases each year. Assuming that the penetration rate of this plan accounts for 40% of third-line treatment, it corresponds to the third-tier market size of sidabendamide for the treatment of new patients with colorectal cancer of 2.49 billion yuan.
Profit forecasting and valuation. We expect the company's revenue in 2024-26 to be 710,000 yuan, 940 million yuan, and 1.22 billion yuan, respectively, up 34.5%, 33.1%, and 30.5% year-on-year, respectively; net profit to mother in 2024-26 is -160 million yuan, -80 million yuan, and 0.1 billion yuan. We assume a sustainable growth rate of 1.35 to 1.65% and a WACC value of 5.94% to 6.54%, then the company's DCF valuation is reasonable in the market value range of 104.4 to 13.07 billion yuan, corresponding to a reasonable value range of 25.61 to 32.06 yuan/share, maintaining a “superior to the market” rating.
Risk warning: Sidabenamide patent risk, R&D risk, risk that commercialization progress does not meet expectations.