Strong capabilities in AR-related diseases. Kintor Phamarceutical Limited(Kintor) is a clinical-stage novel drug developer in China focused on theproprietary R&D of potential first-in-class and best-in-class drugs for cancersand other androgen receptor-related (AR-related) diseases. Its leading drugcandidate, Proxalutamide, is a potential best-in-class drug undergoing phaseIII clinical trials in China and phase II clinical trials in the US for metastaticcastration-resistant prostate cancer (mCRPC). Kintor has four clinical-stagedrug candidates, including Proxalutamide (GT0918, 普克鲁胺) in phase IIItrials, Pyrilutamide (KX-826, 福瑞他恩) and ALK-1 (GT90001) in phase II trials,and Detorsertib (GT0486, 迪拓賽替) in phase I trials. Kintor also has one INDstagedrug candidate, GT1708F, as well as several pre-clinical drugcandidates.
　　Kintor’s portfolio of drug candidates addresses major cancer types andother AR-related diseases with large market potential. According to theFrost & Sullivan (F&S) Report, prostate cancer was the second fastestgrowing cancer among major cancer types in China in terms of the growth rateof new cases from 2014 to 2018, and breast cancer was the most commontype of cancer in women globally in 2018. Meanwhile, the population of malepatients aged 30 to 70 with androgenetic alopecia, an AR-related disease,reached over 92.8mn in China and 31.1mn in the US in 2018, respectively,according to F&S.
　　Drug sales to start from 2021E. The most advanced drug is Proxalutamidewhich we believe will be approved by NMPA in 2021E. We also forecastPyrilutamide and ALK-1 to receive NMPA’s approvals in 2022E and 2024E,respectively. To factor in the risks in drug development, we apply differentprobability of success (PoS) to our sales forecasts and expect risk-adjustedrevenue of RMB104mn/ RMB382mn/ RMB1,006mn in FY2021E/22E/23E. Weforecast net losses of RMB405mn / RMB312mn / RMB91mn inFY20E/21E/22E and expect RMB213mn net profit in 2023E.
　　Initiate at BUY. We expect Kintor to commercialize the first product,Proxalutamide in 2021E and its future cash flows will rely on the successfulcommercialization of pipeline drugs. Therefore, we use DCF method to valuethe Company and we derive TP of HK$27.6 based on 10-year risk-adjustedDCF model (WACC: 11.8%, terminal growth rate: 2.0%).
　　Risks: Delay in pipeline progress; Competition from peers.