【Company Research】Antengene Corporation Limited (6996 HK) – Leading Asia-Pacific biopharmaceutical company developing first-in-class SINE compounds

• Robust and highly innovative pipelines. Antengene Corporation Limited (“Antengene”) has established a robust and highly innovative pipeline of 12 clinical and pre-clinical assets, including two late-stage clinical assets, four early-stage clinical assets and six pre-clinical stage assets. As of 31 Dec 2020, Antengene had 11 ongoing clinical trials and 4 clinical trials planned for initiation, and received 9 IND approvals in multiple jurisdictions across the APAC regions. Its core products include ATG-008 and ATG-010. Especially for ATG-010 (selinexor), it is the first and only SINE compound approved by the FDA for the treatment of multiple myeloma (MM) and diffuse large B-cell Lymphoma (DLBCL).

 

• Integrated platform from discovery to commercialization. Antengene’s R&D team members have extensive clinical development experience, including a proven track record in the development of drugs for the treatment of different types of lymphoma, leukemia and MM. The management team has extensive experience in the commercialization of oncology drugs in the APAC region. Antengene has assembled an experienced commercial team to ensure the successful commercialization of the drug candidates upon approval.  

 

• To enter into commercial phase. Antengene’s most advanced drug is ATG-010, which is expected to be approved by NMPA in 2022E, per our forecast. We also forecast ATG-008 and ATG-016 to receive NMPA’s approval in 2024E. We forecast drug sales to start from 2022E and expect risk-adjusted revenue of RMB160mn/ RMB486mn in FY2022E/ 23E. Antengene recorded net losses of RMB146mn/ RMB324mn in FY18A/19A. We expect it to continue incur net losses of RMB680mn / RMB810mn / RMB732mn in FY20E/21E/22E.

 

• Initiate at BUY with TP of HK$25.70. As a pre-revenue biotechnology company, Antengene relies on future cash flows from drug sales. We expect the Company to commercialize ATG-010, ATG-008 and ATG-016 in 2022E/24E/24E, respectively. To factor in the potential contribution from innovative drug pipelines, we use DCF model in valuing the Company. We derive our target price of HK$25.70 based on a 15-year DCF valuation (WACC: 11.1%, terminal growth rate: 2.0%).

 

• Risks: Competition; Delays in clinical development activities; Risks relating to extensive government regulation; Failure in protecting IP rights.