Starting with specific oral drugs for COVID-19, puclomide is expected to be marketed overseas this year. As a special AR inhibitor, the company's core asset, procluramide, achieves a “shut-off effect” during the coronavirus invading cells, blocking the coronavirus outside of normal cells. Currently, the US FDA has approved the III key clinical trial of pucluramide treatment and hospitalized male and female COVID-19 patients with mild to moderate illness. At the same time, the company is laying out the application of puclomide in COVID-19 treatment in many countries. We expect that pucrolamide will be listed in Brazil and the US by the end of 2021. It is estimated that in 2022, pucrolamide will receive sales of more than 1 billion US dollars and net profit of more than 600 million US dollars.
Focusing on androgen receptor research and development, the core product has obvious advantages. The company focuses on research and development of androgen receptor inhibitors. The core products are procluramide and furatane, which we expect to commercialize in 2022. With prostate cancer as the core indication, procluramide has obvious advantages over similar products abiraterone and enzalutamide. Not only does it have the potential to become the best in its class, but it can also become an alternative treatment option after clinical resistance to these drugs. The company's other product, freton, is the only treatment for androgenic hair loss currently in advanced clinical trials in China.
Compared with finasteride and minoxidil currently used clinically, forretane has obvious advantages such as topical administration, no side effects such as sexual dysfunction, and no “freak period.” We believe freton has great market potential for androgenic alopecia and acne indications.
The company prospectively introduced ALK monoclonal antibody and PD-L1/TGF-beta double antibody macromolecules. In addition to actively deploying small molecule R&D in the field of independent research and development, the company also obtained products with important clinical value through License in Authorization. The ALK antibody is Pfizer's first humanized monoclonal antibody to relinquish its global R&D, production, and commercialization interests. As it is expected to become the world's first all-human monoclonal antibody targeting ALK-1, we believe that in the future, on the one hand, the company's products can be used as novel ALK inhibitors for cancer treatment, and on the other hand, they can be used as anti-angiogenesis inhibitors to become a new treatment plan after resistance to traditional anti-angiogenesis inhibitors. Focusing on ALK monoclonal antibody, the company collaborated with KN046 (PD-L1/CTLA-4 dual antibody) to treat liver cancer and other indications globally. The company further enhanced the core competitiveness of the R&D pipeline by obtaining exclusive rights for clinical development and commercialization of the PD-L1/TGF-beta antibody from an American company in Greater China.
Profit Forecast and Investment Rating: We expect the company to achieve revenue of 61 million and 737 million yuan from 2022 to 2023. The company was given 50 times PE for 2025. Based on a 10% WACC discount, the company was given a target market value of RMB 316 billion in 2021, or HK$38.5 billion, corresponding to a target price of $85.6, or HK$104. Considering that procluramide for COVID-19 treatment will be approved in Brazil and the US, the target market value for 2021 is expected to increase by RMB 23.7 billion, or HK$28.9 billion. First coverage, giving a “buy” rating.
Risk warning: The company's R&D progress fell short of expectations, the company's clinical progress fell short of expectations, and the company's puclomide was not successfully marketed at home and abroad due to various factors in the indications for COVID-19 treatment