On July 9, Hehuang held an annual developer day, which mainly introduced the published solepinib ITP data and waiHA data, updated surufatinib PDAC data, and HMPL-306 AML data. Overall, it was in line with previous expectations. Maintain a “buy” rating and target price ($25 for US stocks and HK$39 for Hong Kong stocks).
Solepinib has the potential optimal efficacy in ITP indications. Overseas BD is expected to occur after reading international phase 1b dose optimization data: in the phase III ESLIM-01 study (N=188), solepinib's 48.4% sustained response rate for IPT indications was significantly higher than other existing treatments, including approved TPO/TPO-RA drugs and the syk inhibitor fortinib and several other therapies under development (eg. Sanofi's Rilzabrutinib and ZaDing's Agamod) have the potential to have the best efficacy. Specifically, zolepinib showed consistent benefits in patients receiving multiple treatment lines in the past (continuous response rates of 50%, 55.2%, and 44.1%, respectively) in patients receiving previous multi-line treatment (continuous response rates of 50%, 55.2%, and 44.1%, respectively). In particular, 75% of patients who had previously received TPO/TPO-RA showed a sustained response rate of 46.8%; the median time from baseline to initial platelet count of ≥50 × 109/L was 8 days; target inhibition was durable, and 300 mg QD was good throughout 24 hours Dosing The drug concentration was maintained above EC50 at intervals, far better than fortatinib, and 84% of patients who responded continuously (n=61) had at least 5 responses in 6 visits in weeks 14-24; significantly improved patients' WHO bleeding scores and quality of life outcomes; good tolerability, low incidence of gastrointestinal toxicity and hypertension, and no thrombotic events (Note: Blood clots are common adverse effects in TPO-RA treatment). The company believes that in the future, solepinib will have a differentiated competitive advantage in people with a high risk of blood clots, second-line treatment groups that have already used hormones, especially patients seeking long-term platelet stability and focus on quality of life. In addition to monotherapy, the company will also develop a combination therapy strategy of solepinib and hormones in the future, which is expected to bring new treatment methods to ITP people. Furthermore, in addition to ITP, based on good phase II data (47.6% continuous response rate), the company also began WaiHA phase III ESLIM-02 clinical trials in May 2024. We anticipate that solepinib currently has a peak sales potential of around RMB 1 billion for the two domestic indications. Overseas, dose optimization for the international Phase 1b study is currently underway, and the company expects that authorization to go overseas will be realized after reading out the dose optimization data. According to ClinicalTrials.gov records, the overseas 1b phase began on April 2, 2024, and follow-up time will take 24 weeks, so we speculate that BD transactions may be at the end of this year or the beginning of next year.
Surufatinib showed encouraging early efficacy in PDAC indications in the IIT trial. Phase 2/3 trials have now been carried out: the company announced surufatinib plus carrilizumab+AS (albumin paclitaxel+S-1) [NASCA group] vs. AG (existing first-line chemotherapy) for PDAC treatment. This time, updated data was disclosed on the basis of previous data: the test group NASCA (n=28) showed 50% ORR (vs AG group):
26.9%, n=27), 9-month MPFs (vs. AG group: 5.8), and 13.3-month MOS (vs. current Ag therapy: 7-11 months) are all higher than current first-line treatments, and safety is manageable. According to Pharmaceutical Rubik's Cube records, the company carried out a 2/3 phase head-to-head trial in China in May 2024. Considering that current treatments for pancreatic cancer are extremely limited, if the phase 2/3 trial can replicate the positive results of the early IIT trial, it will bring significant room for new growth for surufatinib.
The HMPL-306 phase 1 data has potential best-in-class efficacy. Phase 3 clinical trials have now started:
The company also updated HMPL-306 Phase I data (n=59). AML patients with recurrent refractory IDH1 mutations showed 50% Cr+CRH (n=26), and 62.5% of CR+CRH (n=33) were shown in AML patients with DH2 mutations. In contrast, the approved Tibsovo and Rezlidhia can only treat IDH1 mutations and Cr+CrH is 30-35%, which is lower than HMPL-306; while the approved Idhifa can only treat IDH2 mutations and Cr+CrH is only 23%, far lower than HMPL-306; Eli Lilly's drug LY3410738 can treat IDH1/2 mutations at the same time, but their CR+CrH is 21% of IDH1 mutations (phase 1 trial data, n=33), IDH2 mutations The medium Cr+CrH was 17% (phase 1 test data, n=48)) was still lower than HMPL-306.
In terms of safety, HMPL-306 is about the same as LY3410738, but the sample size of the latter is twice that of the former. Overall, if HMPL-306 can maintain a similar level of efficacy in subsequent phase 3 trials with larger sample sizes (N=316, started in May 2024), we think it will be quite competitive in IDH mutant AML.
The main catalysts from 2024 to early 2025 include: 1) fruquintinib approval for gastric cancer in China (expected 3Q24); approval for colorectal cancer in Japan; better than expected overseas sales; 2) US declaration of cevotinib; 3) approval and completion of overseas authorization for solepinib in China; 4) reading of Tazepistar (EZH2) FL bridging test data.
Maintaining a “buy” rating and target price: Based on updated information, we have made minor adjustments to our financial forecasts, mainly including fine-tuning gross profit margins, operating expenses, and non-operating financial items.
Based on the DCF valuation model (WACC: 9.1%, sustainable growth rate: 3.0%), we maintain the company's “buy” rating and the company's target price of $25 for US stocks and HK$39 for Hong Kong stocks.
Investment risk: Sales of commercial products fall short of expectations, poor clinical data for pipeline products.