【Company Research】InnoCare Pharma (9969 HK) – Entering into commercial stage

14. Strong cash positioning. InnoCare’s attributable net loss shrank from RMB2,141mn in 2019 to RMB464mn in 2020, mainly due to RMB1,814mn fair value loss of convertible redeemable preferred shares in 2019 (vs RMB142mn fair value loss in 2020). R&D cost increased 89% YoY to RMB403mn in 2020. As of end-2020, InnoCare has established robust product pipelines with 1 commercial stage asset, 4 clinical stage assets and 8 IND-enabling stage assets. InnoCare completed HK IPO in 2020 and had RMB4.0bn cash on hand as of Dec 2020. Furthermore, in Feb 2021, InnoCare issued 210.5mn new shares to Hillhouse and Vivo Capital, and raised a total of HK$3.0bn net proceeds.

 

14. Entering into commercial stage with Orelabrutinib’s first NDA approval in China. In Dec 2020, Orelabrutinib (ICP-022) obtained NMPA’s approvals for treating r/r CLL/SLL and r/r-MCL, which has made Orelabrutinib the second-to-market domestic BTK inhibitor in China. CLL/SLL and MCL are the two major sub-types of NHL, accounting for approximately 8% of total NHL cases in China. Besides CLL/SLL and MCL, Orelabrutinib is also assessed for treatment of other types of NHLs, including WM (plan to file NDA in 1H22), MZL (pivotal trial to complete enrollment in 2H21), 1L CLL/SLL (Ph III ongoing), CNSL (Ph II ongoing), etc. in China. In addition to oncology, InnoCare is exploring the use of orelabrutinib for various autoimmune diseases. Orelabrutinib is being assessed in a Ph IIa trial for SLE and a global Ph II trial for MS in the US, Europe and China.

 

14. Well prepared for the commercialization of Orelabrutinib. The Company has appointed Mr. Xiaodong Jin (金肖东) as its Chief Commercial Officer (CCO) to lead commercial initiatives, who has more than 24 years’ solid experience in production commercialization in global pharmaceutical industry. InnoCare currently has a commercial team of over 150 members, covering more than 500 core hospitals in China. InnoCare plans to expand the commercialization team to 200 members covering over 900 of the top hospitals by the end of 2021.

 

14. Highly differentiated pipelines driven by inhouse R&D. Besides orelabrutinib, InnoCare has three clinical stage assets incl. potential best-in-class pan-FGFR inhibitor ICP-192, potential first-in-class FGFR4 inhibitor ICP-105 and 2nd-generation pan-TRK inhibitor ICP-723. For ICP-192, early efficacy data of the Phase I/II clinical trials are promising. Of the 12 patients with FGF/FGFR gene aberrations who had completed at least one tumor assessment, the ORR was 33.3% including 1 cholangiocarcinoma patient (8.3%) achieving CR and 3 patients (25%) with PR. The DCR was 91.7%.

 

14. Maintain BUY. Considering the approval of Orelabrutinib in Dec 2020, we expect it will contribute RMB116mn/RMB298mn of sales in 21E/22E. We rolled over our DCF based TP to FY21E of HK$21.71 (WACC: 9.12%, terminal growth rate: 5.0%).