Core views:

Incident: According to the Hisco Investor Relations website, a study on the efficacy and safety of its self-developed thyroid hormone receptor beta (THR-beta) agonist HSK31679 in treating patients with metabolism-related fatty liver disease (MAFLD) in China was included as a breakthrough progress study at the European Society for Liver Research (EASL) conference, and the study achieved positive results.

Resmetirom was approved to verify target efficacy in the rapid progress of two HSK31679 phase II clinical trials. By binding to THR-beta receptors, HSK31679 tablets affect key steps in the lipid metabolism process, and can lower cholesterol, blood lipids, and liver fat. According to the company's 23-year financial report, two phase II clinical trials of HSK31679 tablets are currently progressing rapidly. The indications are adult essential hypercholesterolemia and MAFLD, respectively. According to the company's Investor Relations account, the same targeted drug Resmetirom was approved for marketing by the FDA in March '24, becoming the world's first drug to treat MASH, verifying the effectiveness of THR-beta in treating liver disease.

HSK31679 has had positive results in MAFLD patients in China and can significantly reduce liver fat content. The study was a phase IIa study. A total of 210 subjects who met the criteria (liver fat content LFC ≥ 8% and LDL-C LDL-C ≥3.44 mmol/L) were randomly evenly distributed with oral HSK31679 40 mg QD, 80 mg QD, and 160 mg QD, placebo, or ezetimibe (an oral potent lipid-lowering drug). The main endpoint was the relative change in LFC compared to baseline after 12 weeks. The 10 mg ezetimib, placebo, HSK3167940 mg, 80 mg, and 160 mg groups decreased by 5.6%, 4.1%, 14.0%, 22.7%, and 29.2%, respectively. The secondary endpoint was the proportion of LFC falling by more than 30% from the baseline. The groups were 11.9%, 17.1%, 23.8%, 47.6%, and 50.0%, respectively. HSK31679 also demonstrated good safety, with no serious drug-related adverse events and grade 3 TRAE.

Profit forecasting and investment advice. We are optimistic about the company's proven ability to develop and commercialize innovative drugs. EPS is expected to be 0.39, 0.59, and 0.90 yuan/share in 24-26, respectively. The reasonable value of the company was obtained through the DCF Act at 39.41 yuan/share, maintaining a “buy” rating.

Risk warning. Drug review risks, cost control policy promotion risks, R&D progress falls short of expectations.