Incident: On September 12, 2024, Kangyueda, a Class 1 new drug independently developed by the company? (Sproximab injection) was officially approved for marketing to treat moderate to severe atopic dermatitis in adults. It is the first IL-4Rα antibody drug approved for marketing in China and the second in the world, filling the gap in the field of domestically produced atopic dermatitis biologics.

Sproximab has excellent curative efficacy, and there is a large domestic market space for atopic dermatitis.

1) The clinical efficacy is remarkable and has the best potential in its class: Clinical data shows that after one day of treatment with the first dose of sipkivimab, the patient's itching symptoms improved rapidly; after two weeks of treatment, skin damage on all parts of the body improved markedly; in 52 weeks of treatment, the proportion of patients who achieved EASI-75 was as high as 92.5%, and the proportion of patients who reached EASI-90 reached 77.1%. Sproximab is also effective in reducing the recurrence rate of the disease. The recurrence rate for patients within 52 weeks was only 0.9%, while the recurrence rate for patients was only 0.9% after 8 weeks of discontinuation of the drug.

2) The domestic market has ushered in new choices: the number of patients with atopic dermatitis in China is about 70 million, with moderate to severe cases accounting for about 30%, and the patient population base is huge. The world's first approved IL-4Rα monoclonal antibody, Dupilumab (Dupilumab), had global sales of 11.589 billion US dollars in 2023, an increase of about 33% over the previous year, thanks to the rapid development and rapid release of new indications. With sales of around 6.66 billion US dollars in the first half of 2024, it has become a new generation of “medicine king” in the field of self-protection. Domestically, dupriumab has been approved for the three indications of atopic dermatitis, prurigo nodosum, and asthma. The sales growth rate is also obvious. The domestic price of dupriumab is 2780.8 yuan/300 mg. As of July 2024, the company's commercialization team is close to 200 people. It is fully prepared for the marketing and sale of spoximab, and is expected to be rolled out quickly.

The innovation pipeline is growing, and a new round of growth engines is being built

1) Sproximab: The NDA for allergic rhinitis was accepted in April of this year; the NDA for crSWNP was accepted in June of this year; asthma is in critical stage II/III.

2) CMG901 (18.2 ADC): The first global phase III registered clinical trial for single-drug second-line gastric cancer and above completed administration in April '24, progressing to the first tier of the world.

3) CM326 (TSLP), CM313 (CD38), and CM338 (MASP2) are in phase II.

4) The three CD3 antibodies, CM355, CM336, and CM350 are in clinical phase I/II.

5) CM369 (CCR8), CM383 (Aβ), CM512 (IL-13/TSLP), and CM380 (GPRC5D) are in phase I clinical trials.

Profit forecasting and valuation. The company's revenue for 2024-2026 is expected to be 0.174/0.532/1.216 billion, respectively. Calculated using the DCF method, the reasonable equity value of the company is 15.8 billion yuan, corresponding to HK$16.9 billion (exchange rate of RMB 1 = HK$1.07).

In view of the company's approval for marketing of spoximab, it has entered the commercialization stage, and is progressing smoothly in the research pipeline, 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.