Matters:

On September 8, 2024, Harmoni-2 clinical data was released at the WCLC annual meeting. Kangfang Biotech's PD-1xVEGF dual antibody evosin PD-L1 (+) NSCLC 1L indicated head-to-head K drug reached the main clinical end of PFS.

Guoxin Pharmaceutical's opinion:

1) Among first-line lung cancer indications, ivoxide achieved significant PFS efficacy, and achieved strong positivity in almost all subgroups, and was safe, indicating that Evosil has fully demonstrated the potential of the next generation immune cornerstone drug; 2) Patients enrolled in HarmonI-2 clinical trials are representative, and data on K drugs in the control group are comparable with historical data. Clinically, evasil showed efficacy and safety data different from PD1 monoclonal antibodies in combination with anti-VEGF drugs, and the PFS advantage obtained by evasil compared to K drugs is expected to be transformed into an OS advantage;

3) Based on excellent domestic clinical data, Kangfang Biotech's partner Summit has launched two global multi-center phase 3 clinical trials overseas, Harmoni (eGFRM NSCLC 2L) and Harmoni-3 (sqnsCLC 1L), and plans to open the third phase 3 clinical Harmoni-7 (PD-L1TPS ≥ 50% NSCLC 1L) in 2025 to further realize the global commercialization value of Evosi; 4) Evarsi has been approved domestically Indications and will participate in health insurance negotiations at the end of the year; the marketing application for the PD-L1 (+) NSCLC 1L indication has been accepted by the CDE. Evosi is deeply involved in many segmented indications of lung cancer and continues to expand other tumor types.

Investment advice: Kangfang Biotech's Evosi continues to verify the potential of FIC & BIC, and the company cooperates with Summit to continue to advance clinical trials around the world. Cardonelli and Ivorsi have been successfully commercialized domestically and are expected to become major varieties. The company is rich in research pipelines, and different molecular forms such as double antibodies, ADC, and monoclonal antibodies have formed an echelon. We maintain the company's profit forecast. We expect the company's revenue for 2024-26 to be 2.554/4.203/6.436 billion yuan, up -43.6%/53.1% year over year, and net profit to mother of -0.334/0.319/1.4 billion yuan, maintaining the “better than the market” rating.

Commentary:

At the WCLC 2024 plenary meeting held on the evening of September 8 (Beijing time), Evosi obtained strong positive results on PD-L1 (+) NSCLC 1L. At the WCLC 2024 plenary session held on the evening of September 8, Beijing time, Ivoraci gave an oral report on the results of the Chinese ph3 registered clinical (Harmoni-2/AK112-303) trial results for first-line treatment of PD-L1 (+) NSCLC. AK112

The results showed that evasil reached the main end point of clinical efficacy: mPFS was 11.14 vs 5.82 months, HR = 0.51, p<0.0001, proving that evasil achieved clinically significant and statistically significant PFS benefits compared to K drugs. Subgroup analysis showed that in almost all subgroups, compared to K drugs, evosil can provide similar and significant PFS benefits to the overall population, regardless of patients' PD-L1 expression level (1-49% or ≥ 50%), histological type (squamous cell carcinoma or non-squamous cell carcinoma), baseline status (age, gender, smoking history, physical condition), disease metastasis (whether brain metastasis, liver metastasis); at the same time, compared to K drugs, Evosil can also further improve ORR and DCR compared to K drugs, and DoR shows long-lasting response characteristics. Safety analysis shows that the safety characteristics of evosil are similar to previous studies, and are well tolerated; both immune-related adverse events (IRAES) and anti-vascular adverse events are tolerable and manageable, and the proportion of serious adverse events or drug discontinuation due to monotherapy is lower than that of K drugs.

Further subgroup analysis showed that patients with different levels of PD-L1 expression obtained PFS benefits compared to K drugs: in people with low PD-L1 expression (TPS 1% ~ 49%), PFS HR = 0.54; in people with high PD-L1 expression (TPS ≥ 50%), PFS HR = 0.46; according to historical data, the clinical benefit of K drug monotherapy was more significant in people with high PD-L1 expression, and evosil was still more pronounced in the K drug dominant group (PD-L1 high expression) Obvious results have been achieved Lifetime benefits. Furthermore, in different histological types, evossi also showed consistent benefits: PFS HR = 0.48 in squamous cell carcinoma (sqnsCLC) and 0.54 PFS HR = 0.54 in non-squamous cell carcinoma (nsQnsCLC).

While excellent efficacy data has been obtained, there have been no new safety incidents at Evosi. Compared with K drugs, the proportion of TRAE, Gr≥3 TRAE, and STRAE of IVOSIL was slightly higher (89.8% vs. 81.9%, 29.4% vs. 15.6%, 20.8% vs. 16.1%, respectively), but there was no increase in the number of trial terminations or deaths due to TRAE (1.5% vs. 3.0%, 0.5% vs. 1.0%, respectively).

Because of its anti-VEGF activity, its safety in squamous cell carcinoma received market attention. The results showed that the safety of evasil in squamous cell carcinoma patients was similar to that of K drugs: TRAE, Gr≥3 TRAE, STRAE, and trial termination or death rates due to TRAE were 85.6% vs. 80.2%, 22.2% vs. 18.7%, 18.9% vs. 18.7%, 2.2% vs. 3.3%, and 0% vs. 1.1%, respectively. Notably, 72.2% of squamous cell carcinoma patients enrolled in the Evosi group were central, 10.0% had cavities or necrosis, and 6.7% had tumors covered large blood vessels. The test results showed that among patients with contraindications to traditional anti-VEGF treatment, evosil also showed good safety.

Among the other two categories of safety data receiving attention, Evosi still performed well. Among immune-related adverse effects (iRAE), the proportion of iRAE, Gr≥3 iRAE, and severe iRAE of evosil versus K drugs was 29.9% vs. 28.1%, 7.1% vs. 8.0%, and 5.6% vs. 11.1%, respectively; there were no cases of death due to iRAE in either group of patients, and only 5 (2.5%) patients in the K drug group discontinued treatment due to iRAE. On the other hand, compared to K drugs, there were more likely VEGF-related AEs (47.7% vs. 21.1%) and possible VEGF-related AEs of grade 3 or above; however, none of the patients had 4/5 VEGF-related adverse effects, and most of these VEGF-related adverse effects were proteinuria (31.5%), high blood pressure (15.7%), and bleeding (14.7%).

K-drug± platinum-containing dual-drug chemotherapy is the first-line standard treatment for patients with negative NSCLC, driving gene-negative NSCLC is the most common segmented indication for lung cancer, accounting for about 50% of NSCLC patients in China (accounting for a higher proportion in the US), and it is also the core indication for K drugs. NSCLC with negative driver genes can be further divided into PD-L1 negative (TPS < 1%), low PD-L1 expression (TPS 1% ~ 49%), and high PD-L1 expression (TPS ≥ 50%); and can also be divided into squamous cell carcinoma (sqnsCLC) and non-squamous cell carcinoma (nsQnsCLC) according to histological type. In all NSCLC population (All-Comers) with negative driver genes, K drug combined with platinum-containing dual-agent chemotherapy was approved for marketing and recommended as standard treatment; in PD-L1 positive (TPS ≥ 1%) NSCLC people, K drug single drug was approved for marketing by the FDA; however, only in NSCLC people with high PD-L1 expression (TPS ≥ 50%), K-drug monotherapy was recommended as standard treatment by the guideline.

A series of clinical trials have shown that K drug monotherapy brings significant clinical benefits to NSCLC patients with high PD-L1 expression (TPS ≥ 50%).

KEYNOTE-024 is a global multicenter phase 3 clinical trial in NSCLC patients with high PD-L1 expression (TPS ≥ 50%) using K-drug monotherapy versus platinum-containing dual-agent chemotherapy on the first line. The test results showed that MPFS=10.3 vs 6.0 mo (HR=0.50, p<0.001), MoS=30.0 vs 14.2 mo (HR=0.63, p=0.002), ORR= 44.8% vs. 27.8%, MDor = NR vs. 6.3 mo. In NSCLC patients with high PD-L1 expression (TPS ≥ 50%), first-line use of K drugs obtained significant efficacy advantages over platinum-containing dual-agent chemotherapy.

KEYNOTE-042 is a global multicenter phase 3 clinical trial in NSCLC patients with PD-L1 expression (TPS ≥ 1%) with first-line K-drug monotherapy versus platinum-containing dual-agent chemotherapy. Among patients with different levels of PD-L1 expression (TPS ≥ 1%/50%/1% ~ 49%), the K drug group vs chemotherapy group MPFs were 5.4 vs 6.5/7.1 vs 6.4/unpublished mo, respectively; the K drug group vs chemotherapy group MOs were 16.7 vs 12.1/20.0 vs 12.2/13.4 vs 12.1 mo, respectively.

The KEYNOTE-042 China Study reported data on KEYNOTE-042 clinically enrolled patients in China. Among patients with different PD-L1 expression levels (TPS ≥ 1%/50%/1% ~ 49%), the MPFs in the K group vs chemotherapy group were 6.3 vs 6.7/8.3 vs 6.5/unpublished mo, respectively; the K drug group vs chemotherapy group MOs were 20.2 vs 13.5/24.5 vs, respectively 13.8/18.6 vs 10.4 mo

Test results showed that K drug alone can benefit NSCLC patients with PD-L1 expression; furthermore, K drug brings better clinical benefits to patients with high PD-L1 expression than patients with low PD-L1 expression.

Compared to clinical trials such as KEYNOTE-024 and KEYNOTE-042, the patient population enrolled in the HarmonI-2 clinical trial is representative. Among those enrolled in HarmonI-2, the proportion of patients with TPS ≥ 50% was 42%, and the proportion of patients with TPS 1% to 49% was 58%; squamous cell carcinoma accounted for 46% and non-squamous cell carcinoma accounted for 55%, which is close to the real world situation. Furthermore, the efficacy data of K drug as a control group in the test was also comparable with historical data.

Historical review: K drug combined with lenvatinib did not reach the main clinical endpoint in PD-L1 (+) NSCLC 1L. K drugs were used in combination with anti-VEGF drugs earlier. LEAP-007 is a global multicenter phase 3 clinical trial of K-drug plus lenvatinib versus K-drug plus placebo for first-line treatment of NSCLC patients with PD-L1 expression (TPS ≥ 1%). Compared to the control group, the K drug+lenvatinib group showed the advantages of PFS (mPFS = 6.6 vs 4.2 mo, HR = 0.78) and ORR (40.5% vs. 27.7%), but did not reach the OS clinical endpoint (mOS = 14.1 vs 16.4 mo, HR = 1.10).

There is currently no conclusion on why the PFS and ORR advantages cannot be converted into OS advantages. The trial researchers discussed them to a certain extent. Possible reasons include: 1) subsequent treatment had an effect on OS; 2) the K drug+lenvatinib group had a higher TRAE ratio, leading to a higher rate of suspension or termination of the trial, which affected OS benefits. Notably, similar phenomena (PFS benefits cannot be converted into OS benefits) have also been reported in some clinical trials with bevacizumab (bevacizumab+platinum-containing dual-drug chemotherapy vs. platinum-containing dual-drug chemotherapy). Compared with the efficacy advantages and safety data shown by Evosi in the clinical trial of HarmonI-2, we believe that the efficacy advantages shown by Evosi are more significant. The benefits it brings to patients are not the same as the combination of PD1 monoclonal antibodies and anti-VEGF drugs. The PFS advantage of Evosi over K drugs is expected to be transformed into an OS advantage.

Development progress: Evosi is expected to launch the third global multi-center phase 3 clinical trial in 2025. The overseas clinical development of Evosi is led by Kangfang Biotech's partner Summit. Up to now, Evarosi has launched two global multi-center phase 3 clinical trials, namely:

1) HarmonI: Evaroxi combined with platinum-containing dual-drug chemotherapy versus placebo combined with platinum-containing dual-drug chemotherapy to treat EGFR-TKI treated EGFR-TKI patients with EGFR-TKI;

2) Harmoni-3: Evosil combined with platinum-containing dual-drug chemotherapy compared with K-drug combined with platinum-containing dual-drug chemotherapy first-line treatment for patients with negative sQnsCLC drivers.

According to Summit's plan, Iwasi will launch a third global multi-center phase 3 clinical trial in 2025:

3) HarmonI-7: Evosil monotherapy versus K drug monotherapy drives NSCLC patients with negative PD-L1 (TPS ≥ 50%) gene negative expression.

Furthermore, the Summit may also explore the therapeutic potential of Iwasil in perioperative lung cancer. In addition to lung cancer indications, Kangfang Biotech has also disclosed a number of phase 2 clinical data on other tumors (mCRC, HNSCC, TNBC, etc.), which is expected to support the exploration of Evosil in solid tumors other than lung cancer.

Investment advice: Kangfang Biotech's Evosi continues to verify the potential of FIC & BIC, and the company cooperates with Summit to continue to advance clinical trials around the world. Cardonelli and Ivorsi have been successfully commercialized domestically and are expected to become major varieties. The company is rich in research pipelines, and different molecular forms such as double antibodies, ADC, and monoclonal antibodies have formed an echelon. We maintain the company's profit forecast. We expect the company's revenue for 2024-26 to be 2.554/4.203/6.436 billion yuan, up -43.6%/53.1% year over year, and net profit to mother of -0.334/0.319/1.4 billion yuan, maintaining the “better than the market” rating.

Risk warning

Risk of clinical data falling short of expectations, risk of clinical progress falling short of expectations, risk of increased competition.