The current situation of the company
On June 29, 2022, the State Drug Administration conditionally approved Hengrui androgen receptor (AR) inhibitor riverutamide for metastatic sex hormone sensitive prostate cancer (mHSPC) with high tumor load.
Comment
Reverutamide is a second-generation AR inhibitor developed by Hengrui Medicine. AR inhibitors are important drugs for the treatment of prostate cancer and other diseases. The second generation inhibitors have stronger AR inhibition than the first generation products. According to the company announcement and WHO data, the global sales of the second-generation AR inhibitors in 2021 are nearly 6.3 billion US dollars. In 2020, there were about 115,000 new cases of prostate cancer in China, of which about 40-70% of the newly diagnosed patients were in the stage of metastatic disease. Reverutamide is the first domestic AR inhibitor approved for mHSPC, mainly based on the III phase study codenamed CHART, which reported the results orally in ASCO 2022. The study showed that riverutamide combined with androgen deprivation therapy (ADT) compared with standard therapy combined with ADT significantly prolonged OS and rPFS in patients with mHSPC, and significant benefits were observed in the trial group at multiple secondary endpoints. At present, reverutamide has been included in the CSCO guidelines for the diagnosis and treatment of prostate cancer (version 2022) as a level I recommendation; in addition, the international multicenter phase III clinical trial for perioperative treatment of high-risk prostate cancer was launched in September 2021.
Innovative pipelines are densely realized, and the international layout continues to advance. The company continues to invest in R & D. in 2021, the company invested 6.2 billion yuan in R & D, accounting for about 24% of the income. Up to now, 11 new drugs (including reverutamide) have been approved for listing in China, of which 3 are approved since December 2021, 3 molecules are still in the stage of listing application, and more than 60 new drugs are in the stage of clinical development. it covers many disease areas, such as oncology, autoimmunity, metabolism, pain and infection. The company attaches importance to the global layout of new drug development. According to the 2021 annual report, the company's overseas R & D investment accounts for nearly 20%, with more than 170 overseas clinical teams and nearly 20 international clinical projects. In the advanced pipeline, PD-1 antibody Carrilizumab has carried out a number of international clinics. among them, the international multicenter III phase clinical trial of Carrelizumab combined with apatinib and sorafenib for first-line treatment of hepatocellular carcinoma has reached the preset efficacy standard in May 2022, and the company plans to communicate with FDA about submitting the application for listing. In addition, varieties such as Haitrexol tablets are qualified as FDA orphan drugs. HER2 ADC and other varieties are being developed synchronously all over the world.
Profit forecast and valuation
Keep the profit forecast unchanged; we use the SOTP valuation method, maintain the outperform industry rating, and maintain the target price of 50.00 yuan, which is 41% upward compared with the current stock price.
Risk
The sales of new drugs are lower than expected; the progress of new drug research and development is not as expected; the price of generic drugs is reduced or failed to win the bid.