The antibody technology platform has been certified by the world's top pharmaceutical companies. The company is a clinical biomedical company, mainly developing antibody therapy for autoimmune diseases and tumors. We believe that the company has outstanding R & D platforms in 18A Biopharmaceuticals, including HCAb, HBICETM (immune cell bridge) and H2L2 platform. Cases include the preclinical project CLDN18.2 xCD3 immune cell bridge heavy chain double chain antibody, which was granted to AstraZeneca PLC with a total size of US $350 million in April this year, as well as 50 + global biomedical industry and academic collaboration, and 200 + internal and external projects based on platinum platform. We believe that the company's solid transformation research and preclinical data are the key to authorizing overseas pharmaceutical companies, and we will continue to obtain cash flow through these cooperation and licensing to support the next generation of pipeline research and development.
Commercialization is expected to begin with 2H23. Two advanced asset bartolizumab (HBM9161, for autoimmune rare diseases such as myasthenia gravis) and HBM9036 (for xerophthalmia) are currently in phase III and are expected to be read out in 2H22-1Q23 and approved for sale as soon as 2023. Based on the good phase II clinical data and the similarity between the overall phase III clinical design and phase II clinical design, we believe that the phase III clinical success rate of Bartolizumab is high based on the FcRn targeted by Bartolizumab. It is estimated that the indication space of Bartolizumab is more than 10 billion RMB, and the domestic space of myasthenia gravis alone can reach 3.6 billion RMB, and it is expected that the risk-adjusted peak of Bartolizumab will approach 700 million RMB. Tenalcip has a huge market potential, with a sales scale of US $3 billion in the overseas dry eye market. at present, more than 1.3 million patients have received various treatment schemes in China, but the stock of moderate and severe xerophthalmia patients is more than 80 million. With the advantages of rapid effect and definite evidence of efficacy, Tenercept will continue to infiltrate people with higher ability to pay, and is expected to reach a risk-adjusted peak of 800 million.
Early pipelines are potentially the best hot targets. HBM4003 (ADCC enhanced CTLA4 McAb), we believe that the regulatory T cell clearance mechanism is the right way to open CTLA-4. HBM4003 is expected to expand the treatment window with heavy chain and ADCC enhanced design. Early clinical data show that single drug and combined use of PD-1 monoclonal antibody in the treatment of advanced melanoma has better anti-tumor activity and safety than the first generation CTLA4 monoclonal antibody. HBM7008 is FIC's B7-H4 x 4-1BB dual antibody therapy for solid tumors. The company's innovative R & D philosophy is reflected by the leading research and development progress (entering the clinic at a similar time with global biotechnology companies such as AstraZeneca PLC, Pfizer Inc, Genmab and Seagen) and the differentiation of molecular models (B7-H4 is not an agonist at other clinical stages). We believe that the company's immune cell bridge and other double antibodies and ADC platform will continue to shine.
For the first time, it was given a "better than the market" rating, with a target price of HKD 8.03. We forecast the cash flow of the company's FY22-32 and use the risk-adjusted discounted cash flow (DCF) model to value the company. The model assumes WACC 11.8% (market risk premium 12%, historical Equity Beta 0.978), because the predicted future cash flow is mainly contributed by two products currently in phase III clinical, and phase III pipelines generally give WACC 11-13%. The sustainable growth rate is 2.0%, because the company's dual anti-platform technology has been verified and endorsed by big pharmaceutical companies.
Profit Forecast:
We expect the company's FY22-24 risk-adjusted revenue (mainly royalties and milestone payments) to be US $40 million, US $810 million and US $120 million, respectively. We expect the company to generate core operating income in FY23 due to the listing of HBM9161 and HBM9036, and to make a net profit of $42 million on FY27. It is expected that the company will continue to invest a lot of money in future research and development to promote a number of large clinical indications of HBM4003, as well as early antibody pipelines. We estimate that the R & D cost of FY22-24 is US $112 million, US $50 million and US $110 million, respectively. The decrease in FY23 R & D cost is mainly due to the absence of phase III clinical trials. With $216 million in cash reserves as of FY21 and $100 million in bank financing expected in 22-23, we think the cash flow will be sufficient to last until the end of 24. Sales / share peaks (not risk-adjusted) are expected as follows:
HBM9161 (FcRn) is expected to reach a risk-adjusted peak of 697 million in 2029. The market success rates of GO and MG for the two indications are 50% and 70%, respectively. 2H22 readout data are currently under way for phase III clinical trials.
HBM9036 (TNF- α), which is expected to reach a risk-adjusted peak of 800 million in 2032, with a listing success rate of 70%, is currently undergoing phase III clinical trials.
HBM4003 (CTLA-4) is expected to reach a risk-adjusted peak of 1.245 billion in 2032. The market success rate of advanced melanoma / advanced non-small cell lung cancer / advanced liver cancer / G3 neuroendocrine tumor or cancer is 60%, 30%, 40%, 25%, respectively.
Risk hints: the risk that the penetration rate of chronic disease is not as ideal, the risk of new drug R & D approval, the risk of technical iteration, the risk of persistent loss and the risk of unable cash dividend in the short term.