【Company Research】Shanghai Henlius Biotech, Inc. (2696 HK) – Expecting five NDA approvals within two years

• On 13 Jun, Henlius held an R&D info-day in Shanghai. The Company aims to provide world-class quality biological drug with affordable price. To date, Henlius has already owned one marketed product (HLX01), two NDA-submitted compounds (HLX02, HLX03), and three to-submit NDAs (HLX04, RA indication of HLX01, HLX10). We expected the Company to expand its pipeline portfolio thanks to its strong in-house R&D capacity.

 

• Expecting 5 new approvals by end 2021E. On 31 May, the Company announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has adopted a positive opinion, recommending marketing authorization for biosimilar HLX02 (Herceptin biosimilar). Previously in Apr, Henlius’ biopharmaceutical manufacturing facility of HLX02 in Xuhui, Shanghai, has received EU’s GMP approval. We expect HLX02 to receive EU MAA approval for commercialization in 3Q20E. In addition, we forecast HLX02 to receive approvals from NMPA in 2H20E. We also expect HLX03 (Humira biosimilar) to receive approvals from NMPA by the end of 2020E. In addition, we expect Henlius to file NDAs to the NMPA for HLX04 (Avastin biosimilar) and HLX01 (RA indication) by 2020E. HLX10 (PD-1 mAb) may submit NDA for its first indication, MSI-H/MMR solid tumor, by 2020E.

 

• Rich innovative pipelines supported by comprehensive in-house R&D platforms. Henlius has developed rich bio-innovative pipelines with 22 clinical trials in progress, including nine Phase 3 trials. Core innovative pipelines include HLX10 (PD-1, Ph 3), HLX07 (EGFR biobetter, Ph 1b/2), HLX22 (HER2 innovative, Ph 1), HLX55 (c-MET innovative, Ph 1), HLX56 (DR4 innovative, Ph 1). Henlius also established state-of-the-art bi-specific antibody development platform with three bi-specific antibody candidates in pre-clinical phase. The Company actively involves in development of anti-COVID-19 drugs with two candidates in pre-clinical phase, including HLX71 (S1 protein), and HLX70 (S1 protein).

 

• TP remained unchanged at HK$57.21. Our TP of HK$57.21 is based on 11-year risk-adjusted DCF valuation (WACC: 10.03%, terminal growth rate: 3.0%). We like Henlius for its rich biological pipeline and strong in-house R&D capability.

 

• Catalysts: 1) Earlier-than-expected launch of products in pipeline, 2) stronger-than-expected sales from newly launched product, 3) positive outcome of clinical trial data.