Introduction to this report:
The company is a leading domestic ADC drug, and the core varieties have entered the harvest period one after another. The TROP2 ADC SKB264 has the best potential in its class in the world. Backed by MSD, the market potential is huge. Covered for the first time, an increase in holdings rating is given.
Key points of investment:
Covered for the first time, an increase in holdings rating is given. The company has an industry-leading drug development technology platform, particularly ADCs. It has built a rich pipeline of innovative drug research and development, and its core products have entered the harvest period at an accelerated pace. The estimated revenue for 2024-2026 is 1.181/1.574/2.361 billion yuan. Combining the absolute valuation method and the relative valuation method, the target price was HK$198.43 per share. Covered for the first time, a “gain” rating was given.
ADC is the industry leader in oncology, and the SKB264 shows best-in-class potential. ADC drugs have precise treatment characteristics, are expected to lead clinical upgrades and iterations of traditional chemotherapy, and have become the trend for a new generation of anti-tumor drugs in the industry. TROP2 ADC has both the potential to treat pan-cancer types and excellent ADC drug compatibility, and has become a new star in a new generation of broad-spectrum anti-tumor drugs.
The company's lucansastuzumab (SKB264) is a domestically produced TROP2ADC with the fastest development progress, and has differentiated advantages in drug structure design and clinical data compared to overseas competitors, making it potentially the best product of its kind in the world.
Backed by MSD, it spans the two major markets of breast cancer and lung cancer. The company's various ADC pipelines cooperate closely with global pharmaceutical giant MSD. Among them, SKB264 has become MSD's key asset in the field of oncology, and 10 key clinical trials have been initiated one after another. The clinical layout of SKB264 at home and abroad focuses on the two core areas of breast cancer (including TNBC, HR+HER2-BC) and non-small cell lung cancer (including EGFR-TKI resistance and wild frontline treatment), and also includes stomach cancer, urothelial cancer, endometrial cancer, etc., and is expected to become a next-generation “blockbuster” for the treatment of pan-cancer types. We expect domestic sales of SKB264 to reach more than 4 billion yuan, and the sales share from overseas markets is expected to reach more than 2 billion yuan.
Core varieties are entering the harvest period one after another, and there are plenty of potential catalysts. (1) The first indication for SKB264, 3L+ TNBC, is expected to be approved for marketing in China, and EGFR-TKI-resistant NSCLC, the first indication in the field of lung cancer, is expected to be approved for marketing in China in 2025; (2) the nasopharyngeal cancer indication of the PD-L1 monoclonal antibody is expected to be approved for marketing in 2024H2; (3) HER2 ADC A166, the first indication 3L+ HER2+ BC is expected to be approved for marketing in 2025; (4) Cetuximab is expected to be approved for marketing in 2025; (4) Cetuximab is expected to be approved for marketing in 2025 Approved for marketing; (5) The RET inhibitor A400 is expected to be declared for NDA in 2024 and approved for marketing in 2025.
Risk warning. Risk of clinical trials falling short of expectations; risk of failure in drug development; risk of falling short of expectations in marketing and sales.