Promising efficacy of SKB264+A167 in 1L NSCLC. SKB264 (Q3W)+A167
(PD-L1)'s 15.4 months of mPFS in 1L NSCLC was much better than the SoC - 9.0 months mPFS of Keytruda+chemo in KEYNOTE189 and 9.7 months mPFS of tislelizumab+chemo in RATIONALE304. SKB264's Ph3 dose of Q2W could deliver even better efficacy, in our view. SKB264 (Q2W) +A167 also showed strong potential in PD-L1 negative NSCLC, with 63.2% ORR and 82.2% 6-mo PFS rate. Since Trodelvy+Keytruda delivered 13.1 months of mPFS in 1L NSCLC (TPS ≥50%), and Dato-DXd+Keytruda showed an mPFS of 11.1 months in its TROPION-Lung02 trial in 1L NSCLC, we see the BIC potential of SKB264 in NSCLC. With Trodelvy and Dato-DXd missing the OS endpoints in Ph3 trials for 2/3L NSCLC, we think SKB264 will enjoy a better positioning in the global TROP2 ADC market.
Expect SKB264's wide indication coverage in NSCLC. SKB264
demonstrated more tolerable safety profiles than its peers, with <1% patients discontinuing SKB264 due to TRAE vs Dato-DXd's 29% and Trodelvy's 17% TEAE-related discontinuation rate. SKB264 is also free from the concern of severe ILD. We see the potential of SKB264+ PD-(L)1 to replace the current 1L NSCLC SoC upon the validation in Ph3 trials. MSD has already started/registered 5 global Ph3 trials of SKB264 in NSCLC. We expect Kelun Biotech and MSD to initiate additional Ph3 trials of SKB264+A167/Keytruda in 1L NSCLC without AGAs (both in PD-L1 TPS>1 and <1) in China/globally, which will provide a significant upside for SKB264's global commercial value, in our view.
Solid Ph3 results of SKB264 in 3L+ TNBC to support the approval in
China. SKB264 demonstrated 43.8% ORR and 5.7 months of mPFS in the Ph3 trial for 3L+ TNBC, which were better than the 35% ORR and 5.6 months mPFS of Trodelvy in Ph3 ASCENT study, and much better than the 32% ORR and 4.4 months mPFS of Dato-DXd in a Ph1 study. Additionally, SKB264 had lower rate of grade ≥3 TRAEs from neutropenia (32% vs 51%) compared to Trodelvy. The Ph3 results of SKB264 in 3L+ TNBC support its current BLA in China (filed in Dec 2023 with priority review). Kelun-Biotech has started a Ph3 China trial of SKB264 in 1L TNBC, and MSD has registered a global trial of SKB264 + Keytruda in adjuvant TNBC.
Maintain BUY. Given the promising data of SKB264 in 1L NSCLC and in late- line TNBC, we are more confident about SKB264's global development and the approval in China. We raise our DCF-based TP from HK$200.77 to HK$246.13 (WACC: 10.31%, terminal growth rate: 4.0%).