Investment highlight
For the first time, Mingjunuo (02126) rated the outperforming industry with a target price of HK $43.69, which is 17.9 per cent higher than the company's current share price. The reasons are as follows:
Yao Ming Juno is a leading company focusing on the research and development of a new generation of hematological cancer and solid tumor cell therapy. Based on the company's internal research and development capabilities, as well as the licensing opportunities brought to the company by its strong business development ability, Yao Ming Juno has established a comprehensive and differentiated cell therapy product pipeline. In addition, the company has established leading commercial production facilities and supply chain.
An integrated cell therapy platform. Mingjunuo has a wide range of cell therapy platforms, including CAR-T therapy, TCR-T cell therapy and CAR-NK therapy.
Based on the company's diversified platform, we expect that Yao Ming Juno will be able to develop more effective and safer cell therapy, and the company is expected to make a breakthrough in the field of solid tumor treatment.
Relmacabtagene autoleuce (l Relma-cel) is the leading anti-CD19CAR-T product in China. In the critical research stage, relma-cel has similar efficacy and better safety compared with other anti-CD19CAR-T products. The State Drug Administration is currently approving the application of relma-cel for the third-line treatment of diffuse large B-cell lymphoma. We expect relma-cel to go public in 2021, and risk-adjusted sales are expected to peak at 4.76 billion yuan in 2031.
What is the biggest difference between us and the market? Based on the company's diversified platform and the company's ability in process development and manufacturing, we expect that Mingju Nuo is expected to develop a more effective and safer cell therapy.
Potential catalyst: Relma-cel has been approved in China.
Profit forecast and valuation
We estimate that the EPS of the company in 2020-2022 will be-2.16,1.65 and-0.96 yuan respectively. We use the DCF valuation model to value the company. Assuming a weighted average cost of capital of 10.1% and a sustainable growth rate of 2.5%, we expect the company to be reasonably valued at HK $17.22 billion by the end of 2021.
Risk
New product launches, clinical trial results and sales are lower than expected; the prices of drugs listed in the national health insurance catalogue are lower than expected; competition for similar products is higher than expected; pharmaceutical industry reform or regulation may have an unexpected impact on companies; new technologies and new products are replaced.