【公司研究】亚盛医药 (6855 HK) – 细胞凋亡领域先锋

• Strong in-house R&D capability with global rights. Ascentage Pharma is a globally-focused, clinical-stage biotech company developing novel small molecule drugs mainly for oncology. It develops an in-house eight drug candidates with global rights, targeting the apoptosis pathway and next generation tyrosine kinase inhibitors (TKIs). As of Jun 2019, Ascentage Pharma was conducting 28 phase I or II clinical trials in China, US and Australia.

  

• Targeting key apoptosis pathways for cancer therapy with first or best in class potential small molecules. Apoptosis is a process of programmed cell death and the major intrinsic apoptosis pathways include the Bcl-2, IAP and MDM2-p53. The global first-in-class Bcl-2 inhibitor, venetoclax, was developed by AbbVie (ABBV US) and approved by FDA in 2016. Frost & Sullivan (F&S) estimates that global market for apoptosis targeting therapies to grow from US$0.3bn in 2018 to US$4.9bn in 2023E, driven by indication expansion of venetoclax and new drug launches. Ascentage Pharma is the only company with active clinical programs targeting all three known classes of key apoptosis regulators.

   

• HQP1351, a potential best-in-class third generation BCR-ABL TKI. Ascentage Pharma also develops next-generation TKIs that focus on clinically validated and approved targets, including HQP-1351 (a third generation BCR-ABL/KIT inhibitor), HQP8361 (a selective c-Met inhibitor) and APG-2449 (a FAK/ALK/ROS1 inhibitor). HQP1351 is a third generation BCR-ABL/KIT inhibitor for drug resistance in current TKI treatments (imatinib, dasatinib and nilotinib). In Phase I trial, it showed comparable efficacy and improved safety profile than ponatinib. HQP1351 is under a pivotal phase II trial for CML in China and expected to receive approval from NMPA in 2021E.

  

• Initiate BUY with TP of HK$45.8. The most advanced drug is HQP1351 in Pivotal Phase II trial and may be approved by NMPA in 2021E. APG-2575, APG-1252, APG-115 and APG-1387 are in Phase I trials and expected to launch in 2023-24E. We forecast drug sales to start in 2022E and apply risk-adjusted revenue to those drugs with different probability of success (PoS). We derive our target price of HK$45.8 based on an 8-year DCF valuation (WACC: 10.98%, terminal growth 3%).

 

• Catalysts: 1) positive outcomes of clinical trials, 2) earlier-than-expected product launch. Risk: undesirable results from clinical trials.