Performance: On March 19, 2024, Kangfang Biotech announced that the total revenue for 2023 was 4.526 billion yuan, an increase of 440% over the previous year. Product sales in 2023 were $1,631 million (up 48% year over year), and the company confirmed annual technical licensing and technical cooperation revenue of about RMB 2,923 billion, mainly from the down payment for the Evarsi (AK112, PD-1/VEGF) license from Summit. Due to these reasons, the 2023 profit was $1,942 million.
The company invested a total of 1,254 billion yuan in R&D throughout the year. At the end of 2023, the company's cash reserves were about 4.9 billion yuan. As of December 31, 2023, the company had 2,778 employees, 320 R&D personnel, 679 clinical personnel, and 788 sales people. As of 2023, the company has approved 3 new drugs for marketing, 6 new drugs have been submitted for sale, and the company has more than 50 ongoing research projects, 19 of which are in the clinical stage. Using cardonil and evosil as the cornerstones, the company has carried out 80+ combination therapy studies, and is also comprehensively exploring related technology platforms such as ADC, mRNA, and cell therapy.
AK104 (cardonil, PD-1/CTLA-4): Sales were in line with expectations, and major indications ushered in gains. It was approved for listing in June 2022 for 2/3L treatment of recurrent/metastatic cervical cancer, with sales of 1,358 billion yuan in 2023, an increase of 149% over the previous year. Cardonil has achieved important breakthroughs in developing major indications such as gastric cancer, liver cancer, and lung cancer. 1) First-line treatment of gastric cancer has reached the main OS end point and SNdA has been submitted; 2) first-line treatment of cervical cancer has reached the main end point of PFS and is promoting SNdA; 3) Phase III clinical trials for adjuvant treatment of hepatocellular carcinoma after surgery; 4) Phase III clinical studies on first-line treatment of non-small cell lung cancer with negative PD-L1 expression are ongoing; 5) Cardonil combined with VEGFR2 monoclonal Gastric cancer that progresses after D-1/L1 treatment Phase III clinical studies have also begun.
AK112 (evosi, PD-1/VEGF): In August 2023, the first NDA for evosimab was accepted by the CDE and given priority review. Evosi currently has 6 phase III clinical studies underway. Of these, 2 are international multi-center phase III clinical studies led by partner Summit Therapeutics. Of these, 4 are phase III clinical studies head-to-head with PD-1 monoclonal antibodies. According to partner Summit's official website, AK112's overseas clinical HARMON1 (eGFRM+ 2L+ NSCLC) program was completed in the second half of 2024.
Abundant tumor research and development pipeline: 1) Annick? (Piamprid, PD-1) was approved in 2023 for first-line treatment of squamous non-small cell lung cancer, and the marketing application for Piampril's first-line drug for nasopharyngeal cancer was also accepted; 2) AK117 (raifalimab, CD47). In September 2024, the global multicenter phase II clinical trial application for treatment of high-risk myelodysplastic syndrome (MDS) with AK117 combined with azacitidine for the initial diagnosis of high-risk myelodysplastic syndrome (MDS) was approved by the FDA. 3) AK109 (pluximab, VEGFR2) lays out multiple major indications after PD-1 progression; 4) AK129 (PD-1/LAG3), AK130 (TIGIT/TGF-beta), AK131 (PD-1/CD73), and AK132 (Claudin18.2/CD47) have all entered the first phase and completed the first patient administration.
The non-oncology sector has increased its layout: The company has increased its layout in the non-oncology field, and two products have already been declared for listing. The NDA for AK102 (PCSK9) was accepted by the NMPA in June 2023; AK101 (IL-12/IL-23) was NMPA accepted by the NDA in August 2023 for the treatment of moderate to severe plaque psoriasis. AK111 (IL-17) completed psoriatic phase III enrollment in August 2023. (AK120, IL-4Rα) completed Phase II clinical enrollment for moderate to severe atopic dermatitis in March 2023.
Profit forecasting and valuation: The company has a rich pipeline, a reasonable hierarchy, and authorized products to go overseas, and we believe it will enter a period of rapid growth in performance in the next 2-3 years. The estimated 24-26 revenue is $2,843, 47.89, and $7.22 billion, and net profit of -$3.15, 5.62, and $1,469 million. Continue to be optimistic about the company's development and maintain a “buy” rating.
Risk warning: risk of clinical development failure, risk of deteriorating competitive landscape, risk of sales falling short of expectations, industry policy risk, etc.