Despite the impact of the pandemic, Sivio still recorded sales of 160 million yuan after listing in May 2022. We expect that as commercialization coverage expands and new indications are approved, the final sales peak in authorized regions is expected to reach around 2 billion yuan. Early this year, pipeline molecules will be concentrated and released for the first time, which is expected to further verify the company's self-research capabilities. We believe that the long-term value of the company is still far underestimated, maintaining the “buy” rating and lowering the target price to HK$5.40.
Expansion of indication coverage+overseas market access supports short-term rapid release and long-term high space:
As patients seek medical treatment and medication return to normal after the domestic epidemic abates, we expect Sivio to quickly penetrate the target market, and 2023/24/25E domestic sales will rise sharply to 340 million/580 million/8.3 billion yuan. The driving force for future growth mainly comes from: 1) Currently, Sivio has been recommended by guidelines for the treatment of relapsed/refractory multiple myeloma (MM) (first recurrence & multi-line recurrence). As patients' survival period extends and demand for continuous treatment increases, the average medication time for patients is expected to gradually increase over the long term; 2) Major indications such as myelofibrosis and diffuse large B lymphoma (DLBCL) are expected to be declared for listing within two years. The number of patients in the domestic stock of both indications is around 200,000, which is expected to become an important pillar of long-term sales growth. In other Asia-Pacific regions, Sivio was approved in Australia in September 2022 and is expected to be covered by health insurance in 1H23. At the same time, it is expected to be covered by local health insurance in places such as Singapore, South Korea, and Taiwan within the next 12 months. Therefore, we expect overseas sales to rise rapidly in 2023-25, and overseas will contribute 25-30% of overall product sales in the long term.
Core clinical development/regulatory catalysts for the next 12 months include: 1) Celinisol is expected to submit third-line DLBCL (monopharmaceutical) and second-line MM (combined bortezomib and dexamethasone) SnDA in mid-2023 and early 2024, respectively; 2) ATG-008 (mTORC1/2) More phase II data was released after AACR published data, including cervical cancer (end 2022/early 2024) and nasopharyngeal cancer (1H24) cohort. Preliminary OR efficacy data showed that ATG-008 reached R in back-line cervical cancer 52.4%, compared to around 10-30% of approved immunotherapy; 3) In early self-developed pipelines, highly differentiated ERK1/2 inhibitors, PDL1/4-1BB antibodies, small molecule CD73, and CD24 monoclonal antibodies are expected to usher in the first data release.
Maintaining the “buy” rating: Based on the company's FY22 performance and product release pace, we lowered our 2023-24E revenue forecast to $370,000/$580 million, while the forecast for long-term product sales was also more conservative. Considering the company's excellent resource investment efficiency, we lowered our SG&A and R&D cost rate forecasts. We continue to value the company based on the DCF model, arrive at a target price of HK$540 and a target market capitalization of US$4.7 billion, and maintain a “buy” rating.
Investment risk: Sivio's sales fell short of expectations; clinical development of important projects failed.