Co. recently marked steady clinical and regulatory progress,which should partly cushion the negative impact from Lipusu risk
Lurbinectedin was granted accelerated approval by FDA for 2LSCLC, supporting its clinical and commercial outlook in China
We kept SOTP-based TP at HKD7.7 unchanged. Noting currentrisk/reward （8x/7x 20E/21E PER） remains attractive, maintain BUY
Steady R&D progress
　　 Luye has recently achieved multiple clinical and regulatory progress, 1） LY03011（rivastigmine transdermal single-day patch） received market approval by NMPA,for the treatment of mild to moderate Alzheimer's disease. We think LY03011could leverage on Co.’s growing CNS sales capability to achieve quick salesramp-up. We learned the multi-day patch is under review by MAA and Co. targetsto commence sales in multiple overseas market over 2021-24E. 2） LY01008（avastin biosimilar） received BLA acceptance by NMPA and eyes for approval in2021E. We think the potential approval should forge some cushion against Co’sLipusu risk, despite bevacizumab space getting crowded; 3） LY03005 （AnsofaxineER） and LY03004 （Risperidone ER microsphere） are on track going throughregulatory approval process, as per mgmt. We think those steady R&Dprogresses show Co’s effort to diversify its pipeline risk.
　　 Lurbinectedin provides new option for 2L SCLC
The FDA’s accelerated approval was based on a single-arm ph2 study（NCT02454972, n=105） for 2L SCLC patients. Results showed 35% ORR（95%CI, 26-45%） and 5.3mo mDoR （95% CI, 4.1-6.4mo）， with an acceptablesafety profile. Despite lower incidence （~15% of lung cancer）， SCLC is generallymore serious, with a 3-27% 5yr survival rate, as per the American Cancer Society.
　　The approval offers a new choice to current limited available treatment option forpatients with disease progression after receiving platinum-based chemotherapy.
　　Luye licensed in the asset from PharmaMar in Apr 2019 and plans to start clinicaltrials in China soon.Maintain BUY and SOTP-based TP unchanged at HKD7.7
We kept our SOTP-based TP at HKD7.7. We think Luye is on track to deliver itsR&D with its rich late-stage pipeline, which should support 3-5 new drugs launcheach year during 2020-21E, including Rotigotine ER and Ansofaxine ER, whichshould have blockbuster potential. The Co. currently trades at an attractive 8x/7xFY20E/21E PER, still within the lowest quantile in its historical PER band.Maintain BUY.