The new DLBCL and mCRC indications for sidabenamide are expected to peak at 3.38 billion

(1) The peak sales of DLBCL indications is expected to reach 1.17 billion yuan

On April 30, 2024, Microchip Biotech announced that sidabenamide combined with R-CHOP was approved for marketing in patients with previously untreated diffuse large B-cell lymphoma (DLBCL) with positive MYC and BCL2 expression. The patient population is expected to account for 50% to 60% of the total number of DLBCL patients. According to GLOBOCAN 2022 data and lymphoma diagnosis and treatment guidelines (2022 edition), there were 80,829 new cases of non-Hodgkin lymphoma (NHL) in China in 2022, accounting for 35% to 50% of DLBCL. We assume that the patient population is 0.024 million, the penetration rate is 20%, the treatment cost for a single patient is 0.12 million yuan/year, and the medication period is 2 years. The peak sales of sidabenamide for new DLBCL indications is expected to reach 1.17 billion yuan.

(2) The peak sales of mCRC indications is expected to reach 2.21 billion yuan

On May 12, 2024, a phase III clinical trial of advanced microsatellite-stabilized or mismatched complete (MSS/pMMR) colorectal cancer (mCRC) with sidabendamide combined with cindilizumab and bevacizumab failed in line 2 standard treatment was accepted by the National Drug Administration Drug Evaluation Center; on June 2, 2024, the Drug Evaluation Center of the China Drug Administration plans to include sidabendamine triple treatment mCRC as a breakthrough treatment.

According to GLOBOCAN statistics, the number of cases of colorectal cancer in China in 2022 (0.5171 million, 0.3077 million men, 0.2094 million women) and deaths (0.24 million) ranked second and fourth among all malignant tumors, respectively. We assume that the mCRC patient population is 0.25 million, the penetration rate is 30%, the per capita treatment cost is 0.06 million yuan, the success rate of sidabendamine mCRC development is 50%, and the peak sales is expected to reach 2.21 billion yuan.

The world's first PPAR full agonist to treat T2DM is expected to expand NASH indications

(1) The country talks about speeding up admission after entering health insurance

After siglitasone was successfully included in the “2022 National Medical Insurance Drug Catalogue” through negotiations in January 2023 (implemented on March 1, 2023), the company's self-operated team and partners vigorously promoted the admission of siglitasone to public medical institutions. According to the 2023 annual report data, siglitazepam has been admitted to 1,052 hospitals, covering 1,850 pharmacies across the country.

(2) NASH clinical phase II achieved positive results

On February 22, 2024, the phase II clinical trial of sitaglita monotherapy for NASH (CGZ203), led by Beijing Friendship Hospital affiliated to Capital Medical University, successfully completed data clean-up and locking; preliminary results showed that in terms of primary efficacy endpoints set in the trial, compared with placebo controls, both dosage groups were statistically significant and dose-dependent.

Profit forecasting and valuation

We expect the company's revenue for 2024-2026 to be 0.68/0.891/1.149 billion yuan, respectively, with a year-on-year growth rate of 30%/31%/29%; net profit to mother of -0.111/-0.055/0.045 billion yuan, respectively.

According to the DCF valuation model, based on a sustainable growth rate of 1.00% and WACC of 6.05%, it is estimated that the reasonable market value is 11.256 billion yuan. First coverage, giving a “buy” rating.

Risk warning

Innovative drug development falls short of expectations; new product release falls short of expected risks; risks brought about by adjustments in health insurance payment policies; geopolitical risks.