Key points:
Focus on the field of malignant tumors and self-prevention, and develop best-in-class or first-of-its-kind drugs. The company is an innovative biomedical enterprise with excellent independent research and development capabilities as the core driving force. It has now built a platform for the entire industry chain from source innovation, clinical development, production to commercialization. The product layout focuses on fields such as hematomas, autoimmune diseases, and solid tumors that have huge unmet medical needs and broad market space, covering small molecule drugs, monoclonal antibodies and bispecific antibodies. The company's core product, obutinib, has been approved for marketing in China and Singapore, and included in the national medical insurance catalogue and clinical diagnosis and treatment guidelines; the core product Tafasitamab treatment plan has been approved for listing in Hong Kong, and domestic marketing applications have recently been accepted by the NMPA; 13 products are in the clinical stage, and many clinical studies are being promoted in China and various regions around the world.
Commercialization of obutinib continues to advance, and new indications are expected to be submitted for NDA within this year. Obutinib is potentially the best-in-class, highly selective, covalently irreversible oral BtKI; based on its special molecular structure, it has more accurate BTK kinase selectivity compared to other marketed BtKI. Obutinib has been approved for three indications. Among them, r/r CLL/SLL and r/r MCL were conditionally approved for marketing in 2020, and r/r MZL indications were conditionally approved in 2023, making it the first and only BtKI approved in China; 1L CLL/SLL (China) and r/r MCL (US) are expected to submit an NDA in the third quarter of this year; several other indications are in phase III clinical trials. Additionally, Obutinib and ICP-248 in combination with IND for 1L SLL/SLL patients were approved by the CDE this year.
Tafasitamab and lenalidomide have been officially accepted for the domestic BLA and are expected to contribute to increased performance next year. Tafasitamab in combination with lenalidomide therapy has been approved for marketing in the US, Europe and Hong Kong, China, and domestic marketing applications have been officially accepted by the NMPA. In terms of patient accessibility, Tafasitamab combined with lenalidomide therapy has been approved for use by eligible DLBCL patients in the Hainan Boao Lecheng International Medical Tourism Pilot Zone and Greater Bay Area, and has been included in the overseas special drug commercial insurance catalogue by various provinces and cities. Furthermore, the treatment of Tafasitamab combined with lenalidomide was first included in the “Chinese Society of Clinical Oncology (CSCO) Lymphoma Diagnosis and Treatment Guidelines” in 2022 and recommended as Level II. Tafasitamab has fewer competitors and has a progress lead and treatment cost advantage over most competitors
Obutinib has the potential to treat autoimmune diseases caused by abnormal B-cell signaling pathways. Obutinib for the treatment of ITP has shown excellent efficacy and good safety in completed phase II clinical trials. 36.4% of all patients (12 of 33 patients) reached the primary endpoint, 40% of patients in the 50mg group reached the primary endpoint (6 of 15 patients); of the 12 patients who reached the primary endpoint, 83.3% (10 of 12 patients) achieved long-lasting remission (at least 4 platelet counts greater than 50 x 109/L in 6 visits over a 14-24 week period); 22 for sugar Patients sensitive to corticosteroids or intravenous immunoglobulins: In the 50 mg group, 75.0% reached the primary endpoint (6 of 8 patients); Phase III registered clinical trials for this indication are currently progressing smoothly in China. Furthermore, the phase IIa clinical trial of obutinib on SLE achieved positive results in March 2022. It may become a first-in-class BtKI for potential treatment of SLE, and phase IIb clinical trials have been initiated in China. Its oral administration has obvious advantages over commonly used SLE injectable drugs.
NTRK mutations are the causative agent of multiple cancers, and the company's development strategy focuses on the pediatric population. The company's product Zurletrectinib (ICP-723) is a second-generation pan-TrKi that can overcome the resistance of first-generation TrKi generation, and is used to treat patients with advanced or metastatic solid tumors that have not received TrKi treatment and those with advanced or metastatic solid tumors carrying the NTRK fusion gene that are resistant to first-generation TrKi.
Zurletrectinib has now initiated phase II registration clinical trials in mainland China for adults and adolescents (12 years +) with advanced solid tumors positive for NTRK gene fusion; the IND application for the new dosage form for pediatric patients (2 to 12 years old) was approved by the CDE in July 2023. The company expects to submit an NDA in mainland China by the end of 2024 or the beginning of 2025. Up to now, 80%-90% ORR has been observed.
Investment advice:
We make NPV estimates for the existing marketed product obutinib (three approved indications) and products or indications that are expected to be marketed before 2026 (Tafasitamab, Zurletrectinib, domestic 1L CLL/SLL, and US r/r MCL). Assuming the risk-free interest rate Rf is 2.27% (10-year treasury bond yield), the market expected return on investment Rm is 8%, the income tax rate is 15%, and the sustainable growth rate is 1%. We calculated WACC of 6.54% through DCF The model estimates that the total equity value of the company is RMB 23.5 billion.
We expect the company's revenue for 2024-2026 to be 0.976/1.398/1.846 billion yuan, and net profit to mother of -0.554/-0.598/-0.433 billion yuan, respectively. Considering that the company's multiple hematoma indications have been approved for listing and that the marketing application for new indications is imminent, sales volume can be expected; Tafasitamab's marketing application has been accepted and is expected to contribute to performance next year. The self-exemption pipeline is progressing smoothly, and the total equity value of the company is greater than the current market value. For the first time, we have given it a “buy” rating.
Risk warning:
Commercialization progress falls short of expectations, R&D falls short of expectations, risk of brain loss, risk of declining gross margin, and health insurance policy risk.