【Company Research】InnoCare Pharma (9969 HK) – Orelabrutinib to initiate trial in multiple sclerosis in US

• Encouraging progress of Orelabrutinib (ICP-022). Orelabrutinib received approval from FDA to initiate a Phase II clinical trial treating Relapsing-Remitting multiple sclerosis patients (RRMS). This randomized, double-blind, placebo-controlled and multi-center phase II trial will be conducted in the US and several European countries, and is planned to enroll 160 patients. Recall that InnoCare has submitted NDAs to the NMPA of orelabrutinib for treatment of r/r-CLL/SLL and r/r-MCL in Nov 2019 and Mar 2020, respectively. We expect orelabrutinib to receive approvals from NMPA in 4Q20E, which will make it the third BTK inhibitor approved in China.

 

• Large potential in multiple sclerosis (MS) market. MS is an autoimmune, inflammatory disease of the central nervous system that is mediated by autoreactive B and T cells, and there is large unmet medical need for MS patients. According to the MS International Federation (MSIF), more than 2.8mn people around the world are affected by MS with around 500k in the US and around 1mn in EU. According to Frost & Sullivan (F&S), global market of MS drugs reached $23.0bn in 2018, and it is expected to reach $30.8bn by 2023E, representing a CAGR of 6.0%, where the US market accounted for about 70% of the global market and China accounted for about 2% of the global market.

 

• Orelabrutinib is potentially a best-in-class BTK inhibitor for MS. Although several classes of drugs are available for MS patients, substantial unmet medical needs remain for drugs with improvements in efficacy, safety and convenient dosing. Although three BTK inhibitors have been marketed in worldwide, none of them were approved for MS. Two BTK inhibitor candidates (Merck Serono’s evobrutinib and Sanofi/Principia’s SAR442168) have delivered good Phase II data in MS and has moved into Phase III trials. With a superior safety and potent efficacy profile, as well as good level of Brain Blood Barrier (BBB) penetration capability, we think Orelabrutinib has the potential to become a best-in-class BTK inhibitor for MS.

 

• Maintain BUY. Considering that Orelabrutinib’s trial in MS is still at early stage, we did not change our financial forecasts at the moment. We remain positive on orelabrutinib’s potential efficacy in MS. We maintain our DCF-based TP unchanged at HK$16.21 (WACC: 10.0%, terminal growth rate: 5.0%).