1H22 results slightly miss our forecast
Jacobio Pharmaceuticals Group (Jacobio) announced 1H22 results: Revenue fell 3% YoY and 41.2% HoH to Rmb56mn (slightly below our expectation), and net loss reached Rmb128mn, slightly worse than we expected due to lower-than-expected milestone payment from AbbVie.
Trends to watch
Clinical trials on combined therapy of SHP2 inhibitor JAB-3312 and KRAS inhibitor for the treatment of NSCLC progressing smoothly at home and abroad. In May 2022, Jacobio completed the first patient administration for the Phase-1/2a clinical trial on JAB-3312 and JAB-21822 (the firm’s self-developed KRAS G12C inhibitor) combined therapy in China. In July 2022, it completed global Phase-I dose escalation clinical trial on JAB-3312 and Sotorasib combined therapy in July 2022. The firm plans to conduct Phase-2a dose expansion clinical trial on JAB-3312 and KRAS G12C combined therapy for the treatment of untreated non-small-cell lung cancer (NSCLC) in China in 4Q22. We are upbeat on the treatment of KRAS-mutated NSCLC using combination of SHP2 inhibitor and KRAS inhibitor, and on the overseas market potential of JAB-3312.
Encouraging results of Phase-1 clinical trial on JAB-21822 for the treatment of KRAS G12C-mutated NSCLC. Data from ASCO shows that overall objective response rate (ORR) of JAB-21822 for the treatment of KRAS G12C-mutated NSCLC reached 56.3% (18/32) and disease control rate (DCR) was 90.6% (29/32). The Phase-II dose expansion clinical trial on JAB-21822 for the treatment of KRAS G12C-mutated NSCLC has already started in China, and the firm expects key experiments to begin in 2H22. We are upbeat on the treatment of KRAS G12C-mutated NSCLC using JAB-21822. Moreover, Jacobio expects to file an investigational new drug (IND) application for the first-of-its-kind pan-KRAS inhibitor in 2023.
New projects such as iADC, P53 and PARP7 to boost future growth. In addition to existing projects in the pipeline, Jacobio is also embarking on new projects such as JAB-26766 (PARP7 inhibitor), JAB-30300 (P53 Y220C inhibitor) and the platform for immune-stimulatory antibody drug conjugates (iADC). As of June 30, 2022, the company had Rmb1.47bn of cash and bank balance, which we think should suffice for funding for R&D and operating capital over the next few years.
Financials and valuation
Given that the milestone payment for AbbVie is slightly lower than we expected, we trim our 2022 core business revenue forecast by 50% to Rmb200mn and our 2023 revenue forecast is unchanged. Considering the launch of new clinical trials, we expect R&D expenses to increase. We revise down our 2022 and 2023 net profit forecasts from -Rmb316mn and -Rmb433mn to -Rmb356mn and -Rmb505mn.
We maintain OUTPERFORM and cut DCF-based TP by 34.6% to HK$6.54 (mainly considering recent correction of pharmaceutical sector), offering 51.0% upside.
Risks
New product launches and clinical trials disappoint; industry competition intensifies.