Recent situation of the company
On June 9, the State Drug Administration approved the listing of vidixitumab for injection (trade name; Aidi, RC48) declared by Rongchang Biology with conditions through the priority review and approval process. (ADC), an innovative antibody coupling drug developed independently in China, is suitable for the treatment of locally advanced or metastatic gastric cancer with overexpression of HER2 (including adenocarcinoma of gastroesophageal junction) who have received at least two kinds of systematic chemotherapy.
Comment
Vedixitumab (RC48) has been approved to go on the market in line with expectations. RC48 is the first independent innovative ADC drug targeting HER2 in China. The company submitted an application for the marketing of a new drug RC48 for advanced gastric cancer with HER2 overexpression to NMPA in August 2020, and was approved on June 9, 2021, in line with expectations. In addition, the company plans to submit an application for new indications for RC48 in the treatment of advanced urothelial cancer in 2021H1. Another phase 3 clinical trial of RC48 for breast cancer patients with low HER2 expression is under way.
RC48 presented a number of blockbuster clinical data at the ASCO conference to differentiate competition in urothelial cancer (Uc). RC48 presented three important clinical data at the ASCO conference in 2021. Among them, in the phase 2 clinical treatment of patients with second-line and above HER2 overexpression of UC with RC48, the ORR reached 50%, and the median progression-free survival time was 5.1 months. This data is superior to the clinical results of DS-8201 on UC, and has been recognized by both the FDA of the United States and the State Drug Administration of China. We believe that RC48 is expected to fill the gap in the treatment of HER2-positive UC and achieve differentiation competition and internationalization. In addition, RC48 combined with PD-1 could further improve the response rate of UC patients, and ORR reached 94.1% (16 + 17). We believe that RC48 in UC is expected to expand to the low expression of HER2 and frontline therapy, and further expand its scope of use.
Two products have been approved to go on the market, and the company has entered a new stage of commercialization. The company's first product, Tetacil, was approved by NMPA in March 2021, and (SLE); RC48 for the treatment of systemic lupus erythematosus was approved on June 9, 2021, the company has entered a new stage of commercialization. At the same time, the research and development of the company is progressing smoothly, and it is planned to carry out overseas phase 3 clinical trials of Tetaxil in the treatment of SLE in 2021H2; RC88,RC108 and other ADC drugs are also in the clinical stage.
Valuation proposal
We keep our profit forecast for 2021 / 2022 unchanged, and we estimate that the EPS of 2021 / 2022 will be-1.26 and 1.15 respectively. We use the DCF valuation method to value the company, maintaining an outperform industry rating and a target price of HK $150.22, with 19.2% upside over the current share price.
Risk
Liquidity risk; the progress of products under research lags behind expectations; the progress of business cooperation is not smooth; product competition exceeds expectations.
