Event: Microchip Biotech announced phase II clinical data of siglitazide for MASH at the 2024 AASLD conference, showing good efficacy and safety. On October 15, 2024, the Microchip Biotech public account announced that the results of the Phase II clinical trial (CGZ203) of the all-PPAR agonist siglitazide to treat MASH independently developed by the company were selected as an oral report at the American Society for Liver Disease Research Annual Meeting (AASLD 2024).

Professor You Hong, Professor of the Liver Disease Center at Beijing Friendship Hospital Affiliated to Capital Medical University, Deputy Director of the Hepatology Branch of the Chinese Medical Association, and Deputy Secretary General and Executive Member of the Asia-Pacific Society of Hepatology will give a report.

Phase II clinical CGZ203 aims to explore the safety and initial efficacy of siglitazide for MASH patients. Clinically diagnosed patients with MASH received 48 mg (n=42), 64 mg (n=41), and placebo (n=21) for 18 weeks, respectively. Non-invasive study results showed that the 64 mg and 48 mg dose groups of siglitazepam showed good curative effects compared to the placebo group in reducing liver fat, repairing liver damage, and reducing liver fibrosis. In terms of safety, sitagliptin was safe compared to the placebo group. There was no significant weight gain. There was a slight weight loss in the high-dose group, and only one case of edema occurred in the low-dose group.

Comment: The phase II clinical trial of siglitat sodium has shown therapeutic potential for MASH. Currently, siglitazide is progressing ahead of similar targets, so it is recommended to pay attention to its future clinical progress and data readout.

Profit forecasting and investment advice. We predict that in 2024-26, the company's revenue will be 0.705 billion yuan, 0.938 billion yuan, and 1.224 billion yuan, respectively, up 34.5%, 33.1%, and 30.5% year-on-year; net profit will be -0.16, -0.08, 0.011 billion yuan, and EPS will be -0.39, -0.20, and 0.03 yuan respectively. We assume a sustainable growth rate of 1.35 to 1.65%, and a WACC value of 5.94% to 6.54%, then the company's DCF has a reasonable market value range of 107.3 to 13.33 billion yuan, corresponding to a reasonable value range of 26.30 to 32.68 yuan/share, maintaining a “superior to market” rating.

Risk warning: Sidabendamide patent risk, R&D risk, risk that commercialization progress does not meet expectations;