Incident: On July 29, Kang Fang Biotech announced that the marketing application for the world's first PD-1/VEGF dual-antibody evoximab single-line first-line treatment of locally advanced or metastatic NSCLC with positive PD-L1 expression (PD-L1 TPS ≥ 1%) has been accepted by the China Drug Administration.
A single drug is superior to K medicine, and first-line NSCLC has great potential for first-line NSCLC indications. The current application for the marketing of the new indications of Evosil is based on the HarmonI-2 (AK112-303) study. HarmonI-2 is a registered phase III randomized, double-blind clinical trial that evaluates positive PD-L1 expression (PD-L1 TPS ≥ 1%) in the first-line treatment of evosil (K drug). A total of 398 subjects were enrolled. Among them, the proportion of subjects with PD-L1 TPS 1-49% was 57.8%, and the proportion of subjects with PD-L1 TPS ≥ 50% was 42.2%, which is consistent with the distribution of expression levels among patients in the real world. On May 31, 2024, the company announced that the midterm analysis of the HarmonI-2 study had obtained strong positive results: among those who intended to be treated, evosimab alone significantly extended patients' progression-free survival (PFS) compared to pabolizumab alone, and the risk ratio (HR) was significantly better than expected. Pabolizumab is one of the most successful innovative drugs commercialized globally in recent years. Evosi has become the only drug in the world to date that has proven to be significantly superior to pabolizumab in single-drug head-to-head phase III clinical studies. The significant positive results prove the clinical value of Evosi on a global scale, and I am optimistic about the huge potential of Evosi in first-line NSCLC treatment.
Indications continue to expand, and I am optimistic that Evaroxi will become a major global drug. In May 2024, Evosil was approved for marketing by China's National Drug Administration. It is used to treat locally advanced or metastatic nSQ-nsCLC with EGFR-TKI progression, making it the world's first approved PD-1/VEGF bispecific antibody. The marketing application for the second indication of Evosi has been accepted. Evaroxi is also expected to become a new standard treatment plan for first-line and second-line treatment of lung cancer. In addition, a phase III study on first-line treatment of squamous non-small cell lung cancer (SqnsCLC) with tirizumab combined with chemotherapy and a global multicenter phase III study of evosimab combined chemotherapy versus pabolizumab combined chemotherapy versus first-line treatment of sqnsCLC with pavolizumab combined chemotherapy are ongoing. Evosimab has also been researched and explored at different stages of treatment, including non-small cell lung cancer, small cell lung cancer, and other tumors. I am optimistic that the indications of Evosil will continue to expand and become a major global drug.
The research and development of the dual antibody faucet continues to advance, and sales continue to be realized. The company is a leading domestic dual-antibody drug company, and the products in the pipeline anchor all major tumors. At present, the company continues to advance research and development. Three innovative drugs, pimiprizumab, cardonilizumab, and evosimab, have been approved for marketing, and the indications continue to expand. The follow-up pipeline is rich, covering the fields of tumors, self-immunity, and metabolism. The company continues to fulfill its domestic sales and overseas licenses, achieving its first profit in 2023, and is expected to achieve continuous profit from 2025.
Investment advice: We expect the company to achieve operating income of 2.774/4.053/5.9 billion yuan in 2024/2025/2026, achieve net profit of 0.372/0.211/0.505 billion yuan, and maintain the “recommended” rating.
Risk warning: Market competition increases risk; risk of product development falling short of expectations; risk of overseas legal and regulatory risk; risk of changes in review requirements; risk of changes in health insurance policies and entry policies.