Fast growing oncology market in China
According to Frost & Sullivan, China’s oncology drug sales grew from RMB83bn in 2013 to RMB139bn in 2017, representing a CAGR of 13.7%. It is expected to further grow to RMB654bn in 2030 at a CAGR of 12.6% from 2017, mostly attributable to the growing cancer patient base, and the greater availability of new immuno-oncology therapies and targeted therapies in China.
Robust oncology-focused pipeline, with abundantimmuno-oncologyand molecularly targetedcandidates
CStone Pharmaceuticals （hereafter referred to as “Company”） has built an oncology-focused pipeline with a strategic emphasis on immuno-oncology （IO） combination therapies. With 14 assets, including three clinical stage IO backbone candidates （PD-L1, PD-1 and CTLA-4 antibodies）， Company’s pipeline has both the scale and mix to develop one of the largest oncology combination therapy portfolios among Chinese biotech companies. To complement IO backbone drug candidates, Company has licensed in four molecularly targeted compounds to explore the possibility of combo-therapies as well as mono-therapy.
Efficient clinical executionand collaborative research platform
CStone has an extensively experienced in-house clinical team led by a visionary founder who has overseen many large clinical research programmes in an MNC pharma. Company has collaborated with renowned third-parties （WuXi Biologics （2269 HK, BUY, TP HK$112.9）， WuXi AppTec （2359 HK, BUY, HK$112）， Agios （AGIO US, NR） and Blueprint （BMPC US, NR）） to develop a collaborative innovative R&D platform.
Estimated rNPV-based TP of HK$19.8
Our TP consists of the rNPV of Ivosdenib （CS3010, AG-120）， Avapritinib （CS3007, BLU-285）， PD-L1 mono and combination therapy, RET inhibitor （CS3009, BLU-667）， and FGFR4 inhibitor （CS3008, BLU-554）， but not any other molecules. We believe that Company should start generating revenue of RMB221mn/RMB343mn/RMB924mn in 2020E-2022E, but will continue to incur losses over that period.