Zhong Jin maintains Innovent Bio's 'outperform the industry' rating, with no changes to its revenue and profit forecast for 2024 and 2025. Based on the DCF model, because the company's pipeline clinical data continues to be realized, the bank believes that the pipeline's value potential is increasing, and it has raised its target price by 4.2% to HKD 50. The company recently disclosed positive data on three tumor pipeline products at the 2024 ASCO conference and ESMO Plenary, and the positive clinical data combined with the company's efficient clinical promotion strategy led the bank to believe that Innovent Bio's tumor pipeline is expected to continue to be enriched, and recommends paying attention to further data disclosure of tumor products such as IBI363.

CICC's main points are as follows:

The early small-sample clinical data of IBI363 (PD-1/IL2 fusion protein) is positive, and attention should be paid to its future potential for treating IO-treated solid tumor patients.

IBI363 released phase Ia/Ib study, as of April 16, 2024, a total of 347 subjects were enrolled (including 100 NSCLC, 89 melanoma, 102 CRC patients and other solid tumor patients), and the patients received doses of 0.2μg/kg QW-3mg/kg Q3W, with dose escalation stage showing positive initial treatment response of IBI363 in NSCLC, melanoma and CRC. Of note, the data of the 9 high-dose group lung cancer patients are worth paying attention to, among which 8 had received PD-(L)1 treatment in the past and 1 had received TCE treatment. The patients received 3mg/kg Q3W, and 6 lung squamous cell carcinoma patients achieving ORR 100%. The bank believes that the high-dose group data is worth paying attention to in early sqNSCLC, and the company is expected to further explore the potential of IBI363 monotherapy in post-treatment of lung cancer and melanoma, and explore the further therapeutic potential of IBI363 combined with ADC and other products. It is recommended to pay attention to the further clinical development and data readout rhythm of IBI363.

CLDN18.2 bispecific antibodies and ADC product IBI389&IBI343 have achieved efficient clinical promotion, demonstrating positive therapeutic potential in PDAC.

IBI343 is currently conducting global phase III clinical trials for mono-therapy of CLDN18.2 positive and HER2 negative mGC/GEJ. At this ASCO conference, the company released phase I preliminary data of IBI343 for pancreatic cancer patients who had received at least one line of treatment, showing ORR of 40% among the 10 patients with high expression (IHC1/2/3+≥60%) of CLDN18.2 who received 6mg/kg drug treatment. Currently, the FDA has granted IBI343 the fast track qualification for the treatment of late-stage pancreatic ductal adenocarcinoma with CLDN18.2 expression positive. The bank believes that systemic chemotherapy is still the main treatment for patients with advanced pancreatic cancer, and IBI343 early-stage data has potential, and it is recommended to actively pay attention to further data readout. In addition, the CD3/CLDN18.2 bispecific IBI389 also shows positive data response in early-stage pancreatic and gastric cancers. The bank expects IBI389&IBI343 to form a combination layout in the future for pancreatic and gastric cancers.

Pay attention to the expectation of reduced losses in the report and the sales growth momentum of products.

In 2023, Innovent Bio has good control over the three expenses, with R&D expenses decreasing by 22% YoY, administration expenses decreasing by 10% YoY, and sales and marketing expenses decreasing by 6.9 percentage points compared to 2022. As the income of the product side is stable and rising, the bank expects that the company will have many chronic disease products that will start generating revenue in 2025. It is recommended to pay attention to the improving trend of the company's financial statements.

Risk

Pipeline progress is slower than expected; commercialization is slower than expected; product price reduction exceeds expectations.