Zelgen Biopharma is an innovation-driven pharmaceutical company targeting multiple diseases, including tumors, hemorrhage and blood diseases, and liver and gallbladder diseases, with a focus on the R&D of new drugs. Relying on three technology platforms, the Company has developed a series of small- and large-molecule new drugs, with 16 more still in the R&D pipeline. Zelgen Biopharma has received approval for marketing its Donafenib for first-line treatment of hepatocellular carcinoma (HCC) and refractory differentiated thyroid cancer (DTC) indications. Sales are likely to increase continuously once Donafenib is included in China's national medical insurance catalog. The Company has submitted applications for marketing Jaktinib for treatment of myelofibrosis (MF) indications and the recombinant human thrombin, while the recombinant human thyroid-stimulating hormone (rhTSH) is currently in the stage of Phase III clinical trials. Zelgen Biopharma stands ready to enter the stage of commercializing new drugs from its extensive R&D pipeline. Several products currently being developed on the Company's leading multispecific antibody platforms have first-in-class (FIC) or best-in-class (BIC) potential. The Company's innovative large-molecule drugs in the R&D pipeline are also worth looking forward to. Based on the absolute valuation method of discounted cashflow (DCF), we estimate the Company's fair equity value to be Rmb16,789mn, corresponding to a target price of Rmb63, and initiate coverage with a "BUY" rating. An innovation-driven pharmaceutical company targeting multiple diseases with potential to commercialize several new products soon. Focusing on the R&D of new drugs for tumor, hemorrhage and blood disorders, hepatobiliary, and other major diseases, Zelgen Biopharma has successfully established bispecific and multispecific antibody platforms for the R&D and industrialization of small-molecule drugs and complex recombinant protein-based new drugs, including bispecific and trispecific antibodies. Based on these antibody platforms, the Company has developed a series of small-molecule and large-molecule drugs that are urgently need in clinical treatment of several diseases. There are also 16 more drugs in the Company's R&D pipeline. Zelgen Biopharma has received approval for marketing its Donafenib for first-line treatment of HCC and DTC indications. The Company has also submitted an application for marketing its Jaktinib for treatment of MF indications and rhTSH, which is in the stage of Phase III clinical trials. Zelgen Biopharma will soon enter the stage of commercializing new drugs from its extensive R&D pipelines. Donafenib: First Chinese-made oral targeted drug for HCC approved for marketing, with likely sales growth once included in China's national medical insurance catalog. According to Zelgen Biopharma's prospectus, HCC is a high-incidence cancer type, which accounts for 90% of more than 400,000 new cancer cases in China every year. As a deuterated form of Sorafenib, Donafenib has a different metabolic pathway, which features higher safety and efficacy. In Phase III clinical trials, Donafenib outperformed Sorafenib by head-to-head comparison, and was approved for marketing in Jun 2021. Thanks to excellent efficacy and safety, Donafenib was recommended as the first-line treatment of advanced HCC by the National Health Commission (NHC) and the Chinese Society of Clinical Oncology (CSCO) in their respective guidelines for the diagnosis and treatment of primary liver cancer. For treatment of HCC, professionals are exploring adjuvant therapies and transformation therapies using Donafenib in combination with programmed cell death protein 1 (PD-1), transarterial chemoembolization (TACE) and other means. Therefore, Donafenib is likely to become a new growth driver for Zelgen Biopharma. The Company continues to file for additional indications for the use of Donafenib beyond liver cancer. In Aug 2022, Donafenib was also approved for marketing for treatment of refractory DTC. There are also studies on expanding the use of Donafenib for treatment of biliary tract tumors, gastric cancer, and other indications. Donafenib generated sales revenue of Rmb302mn/217mn in 2022/1H23, respectively. With the inclusion of liver cancer indications in China's national medical insurance catalog in 2022 and the continuous study on expanding the use of Donafenib for multiple indications, the sales volume of Donafenib may increase further in the future, so the total addressable market (TAM) is worth looking forward to (our estimates show that the risk-adjusted peak sales revenue from Donafenib could reach Rmb2.4bn). Jaktinib: First Chinese-made Janus kinase (JAK) inhibitor applied for marketing, covering MF indications and with market potential for treatment of several autoimmune diseases (AD) indications. Zelgen Biopharma's prospectus shows that MF is a complex disease, and the number of new MF cases exceeds 60,000 in China every year. According to present guidelines for diagnosis and treatment, Ruxolitinib is the first-line treatment of spleen enlargement and constitutional symptoms in MF patients. Jaktinib boasts excellent Phase III clinical trial outcome. Compared to Ruxolitinib, the only imported drug of the same kind at present, Jaktinib has advantages in efficacy and safety (not head-to-head comparison). It is the first Chinese-made new drug that has succeeded in registered clinical trials for MF. As the new drug application (NDA) was submitted in Oct 2022, Jaktinib may be approved in 2023 for marketing. Meanwhile, Phase II clinical trials of Jaktinib for MF patients with relapses and intolerance of Ruxolitinib have been completed with excellent efficacy. Against this backdrop, Jaktinib may be approved for treatment of all MF indications. In addition, Phase III clinical trials of Jaktinib for treatment of severe alopecia areata and AD (eg atopic dermatitis and ankylosing spondylitis) are well underway. There are a lot of chronic disease patients who need to administrate drugs for a long time, so Jacktinib may contribute to Zelgen Biopharma's long-term earnings (our estimates show that the risk-adjusted peak sales revenue from Jacktinib could reach Rmb2.2bn). Recombinant human thrombin: An exclusive Chinese-made product with excellent efficacy and safety. According to Zelgen Biopharma's prospectus, the existing local biological hemostatic agents for surgical operations in China mainly include thrombin extracted from human/animal blood sources, snake venom thrombin-like enzymes (SVTLEs) and fibrin sealant, among which the market share of snake venom thrombin was close to 80% in 2018. Currently, the global market share of Recothrom (a recombinant human thrombin), which is available in overseas markets, has reached 24%. Compared with commonly used heterologous bovine or porcine thrombin, recombinant human thrombin has higher purity and efficacy, is without allergy and infection risks, and features lower costs. According to the data released by Zelgen Biopharma at the European Association for the Study of the Liver (EASL) Congress, the hemostatic effect (not head-to-head) of the Company's recombinant human thrombin is equivalent to that of Recothrom, a foreign product approved for marketing. As the NDA was submitted in May 2022, Zelgen Biopharma's recombinant human thrombin may be approved in 2023 for marketing, and become the exclusive product in the field of its kind in China (our estimates show that the risk-adjusted peak sales revenue from recombinant human thrombin could reach Rmb2.2bn). rhTSH: Covering both diagnosis and treatment fields. Zelgen Biopharma's prospectus show that there are about 200,000 new cases of thyroid cancer every year, and the treatment options include excision, 131I radiotherapy and systematic drug therapy. It is necessary to maintain the concentration of thyroid hormone before 131I radiotherapy, while rhTSH can help avoid the adverse reactions caused by stopping the administration of thyroid hormone. The results of Phases I and II clinical trials show that the efficacy of Zelgen Biopharma's rhTSH is equivalent to that of stopping the administration of thyroid hormone. Moreover, the patients had a higher quality of life, with no one showing any symptom of hypothyroidism. For both diagnosis and treatment indications, Zelgen Biopharma's rhTSH is now in the stage of Phase III clinical trials. We expect that the experiment on auxiliary diagnosis of thyroid cancer indications will be completed in 2023. Bispecific and multispecific antibody platforms and innovative large-molecule drug R&D pipelines. GENSUN, a subsidiary of Zelgen Biopharma, owns three candidate drug R&D platforms (TriGen, CheckGen, and TGen), which are leading in the fields of trispecific antibody, immune checkpoint bispecific antibody and T cell immunity bispecific and multispecific antibodies. So far, the Company has developed a number of bispecific/trispecific antibodies: ZG005 (PD-1/TIGIT), ZGGS18 (VEGF/TGF-β), ZG006 (CD3/DLL3/DLL3), ZGGS15 (LAG-3/TIGIT) and ZGGS11 (CD3/TAA), which can be used for developing combination therapies for tumors through multidimensional tumor immunity and microenvironment regulation. Zelgen Biopharma's several innovative multispecific antibodies have the FIC or BIC potential, so they may become new drivers for the Company's future growth. Potential risks: Disappointing progress in the commercialization and sales of products; drug R&D speed missing expectations, or R&D failure; longer-than-expected drug review and time to market; innovative drugs failing to enter China's national medical insurance catalog in time, or larger-than-expected price drops due to medical insurance negotiations; intensified competition among drugs for the same indications; and unexpected changes in industry policies. Earnings forecast, valuation and rating: Zelgen Biopharma is an innovation-driven pharmaceutical company targeting multiple diseases, including tumors, hemorrhage and blood diseases, and liver and gallbladder diseases, with a focus on the R&D of new drugs. Relying on three technology platforms, the Company has developed a series of small- and large-molecule new drugs, with 16 more still in the R&D pipeline. Zelgen Biopharma has received approval for marketing its Donafenib for first-line treatment of HCC and refractory DTC indications. Sales are likely to increase continuously once Donafenib is included in China's national medical insurance catalog. The Company has submitted applications for marketing its Jaktinib for treatment of MF indications as well as the recombinant human thrombin; rhTSH is in the stage of Phase III clinical trials. Zelgen Biopharma stands ready to enter the stage of commercializing new drugs from its extensive R&D pipeline. We believe that Donafenib, Jacktinib, and recombinant human thrombin all have the potential to become heavyweight varieties each with a peak sales revenue of more than Rmb2bn. Several products currently being developed on the Company's leading bispecific and multispecific antibody platforms FIC or BIC potential. The Company's innovative large-molecule drugs in the R&D pipeline are also worth looking forward to. As Zelgen Biopharma has not entered the profitable period, we forecast its 2023E/24E/25E revenues to be Rmb615mn/1,282mn/2,079mn and corresponding EPS to be Rmb-1.33/-0.46/0.93. Based on the absolute valuation method of DCF, we estimate the Company's fair equity value at Rmb16,789mn, corresponding to a target price of Rmb63, and initiate coverage with a "BUY" rating.
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【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。
