In 1H2020, Co. reported an adjusted loss of RMB232mn, mainly reflecting the R&D spending of RMB544mn
Co. expects NDA submission of sugemalimab (CS1001, PD-L1 antibody) for 1L sq- and nsq-NSCLC in 4Q20E
We think CStone is still a laggard play in biotech space. Maintain BUY and rNPV-based TP unchanged at HKD19.83
1H20remains in net loss position
CStone reported narrowed 1H20 adjusted loss of RMB232mn (RMB276mn in 1H19), excluding the share-based payment expenses (RMB96mn vs. RMB130mn in 1H19) and the fair value change from the conversion of preferred shares (nil vs. RMB756mn in 1H19). Such loss was primarily due to hefty R&D expenses (RMB544mn vs. RMB384mn in 1H19).
Sugemalimabeyes on first NDA filing to NMPA in 4Q20
E Co. target to submit Sugemalimab’s NDA in China for 1L NSCLC in 4Q20E. The potential NDA filing is based on CS1001-302 ph3 study (n=480), which covered both treatment-naive sq- and nsq-NSCLC patients. Interim analysis shows that CS1001 plus chemo improved mPFS versus chemo alone (7.8 vs. 4.9mo, HR 0.50), with consistent well-tolerated safety profile. We think Co.’s strong progress and clinical capability deserve a rerating towards valuation of peers with similar clinical progress in PD-1/L1 space.
More catalyststo watch
Co. flagged multiple catalysts for rest of 2020: 1) one marketing approval of Ivosidenib (IDH1) for r/r AML in Taiwan; 2) two TKI NDA submissions: Pralsetinib (RET) for 2L RET NSCLC in China and Ivosidenib (IDH1) for r/r AML in Singapore; 3) pivotal trial data readout for sugemalimab (PD-L1) for Stage III NSCLC registrational trial data in 4Q20-1Q21. Mgmt. also expects roof-sealing of its manufacturing facility (100k sq.m.) in Suzhou with a planned capacity of 26kL for macromolecule biologics and 1bn tablets/capsules for small molecule drugs.
Maintain BUY, rNPV-based TP unchanged at HKD19.83
Co. is at the forefront of transformation from a clinical-stage biotech to a multi-product commercial-stage biotech. We maintain BUY rating with TP unchanged at HKD19.83 on CStone’s leading clinical stage I/O backbone candidates, extensively experienced in-house clinical team, and strong BD capabilities.