Company event: On July 9, Huhuang Pharmaceutical held a 2024 R&D day exchange event. During the conference, the company management focused on sharing clinical data and market value of the candidate innovation pipeline, including analysis of clinical data and advantages of solepinib in autoimmune diseases, treatment potential of surufatinib in pancreatic cancer, early data analysis and phase III clinical design of HMPL-306 for the treatment of acute myeloid leukemia.
The company's candidate innovation pipeline is progressing rapidly, has core competitiveness, and has great market potential:
1) Solepinib (Syk inhibitor): Zolepinib is mechanically different from TPO/TPO-RA, and acts simultaneously on B cells and macrophages to solve the underlying problem. Selectivity is superior to fortatinib, and inhibits only 1 kinase, so off-target toxicity is avoided, and safety is good.
Sustained response rate/total remission rate data is excellent, effective speed of action, good safety (low incidence of gastrointestinal toxicity and hypertension, no thrombotic events). Early commercialization focused on people who are resistant to TPO drugs or who are at high risk of blood clots, and can later be promoted in combination with hormones. Overseas ITP indications are in the phase I dose exploration stage. The global competition pattern is good, and there is potential to go overseas. Furthermore, the WaiHA randomized controlled phase III ESLIM-02 study has been initiated.
2) Surufatinib (VEGFR/FGFR1/CSF-1R): ASCO GI IIT data showed that surufatinib plus PD1+ chemotherapy was 9 months for PFS and 13.3 months for OS. (Existing chemotherapy regimens MPFs: Approximately 3-6 months. (MoS: about 7-11 months). Phase II/III research on first-line PDAC is being carried out in China, and phase II verification is currently being carried out.
3) HMPL-306 (IDH1/2 dual inhibitor): Treats relapsed/refractory acute myeloid leukemia (AML) with IDH1 and/or 2 mutations. Currently, an IDH1 inhibitor has been approved in China, two IDH1 inhibitors and an IDH2 inhibitor have been approved in the US, and no IDH1/2 dual inhibitor has been approved in the world. The company has initiated the RAPHAEL registration phase III study.
The company's future catalytic events will be intense, and the innovation pipeline will usher in a harvest period. 1) Overseas sales of fruquintinib are expected to continue to grow. Japan submitted a marketing application in September 23 and is expected to be approved in the second half of '24. 2) Fruquintinib's domestic 2L gastric cancer indications were accepted by the NMPA in April 23, and it is expected that H2 will be approved in '24, bringing a new impetus for sales growth. 3) Global rights of sevotinib (c-Met inhibitor) are authorized to AstraZeneca. Second-line MET amplifies EGFR-TKI resistant NSCLC indications overseas are expected to be submitted to the FDA by the end of 24, and domestic marketing applications are expected to be submitted by the end of 25. 4) The domestic NDA for second-line ITP (SYK inhibitor) was accepted in January 2024 and is expected to be approved this year; small overseas samples are enrolled in Phase 1 clinical trials and have the potential to go overseas. 5) The first phase II/III registered clinical administration of surufatinib for first-line pancreatic cancer was completed in May 2024.
6) The domestic FL indication NDA for tazepastat was accepted in July '24.
Profit forecasting and valuation. The company guides the comprehensive revenue of the oncology/immunization business to be 0.3 billion to 0.4 billion US dollars in 2024 (thanks to a target increase of 30% to 50% in sales of marketed oncology products and royalties). Furthermore, as of the end of '23, the company had $0.886 billion in cash. We expect total company revenue of $0.705, 0.912, 1.185 billion in 2024-2026. Using DCF calculations, assuming a sustainable growth rate of 2%, WACC of 8.94%, the reasonable equity value of the company is HK$40.9 billion (exchange rate = HK$7.81). The company has a rich pipeline of innovative products, and globalization is progressing smoothly, maintaining the company's “buy” rating.
Risk warning: risk of clinical development failure, risk of deteriorating competitive landscape, risk of sales falling short of expectations, industry policy risk, etc.