【Company Research】Ascentage Pharma (6855 HK) – Collaboration with MSD for development of APG-115

On 6 Jul, Ascentage announced it has entered into a clinical collaboration with MSD (MRK US, NR) to evaluate the combination of APG-115 (MDM2-p53 inhibitor) with KEYTRUDA® (pembrolizumab, a PD-1 inhibitor) for advanced solid tumors, marking the second collaboration with an MNC within the past month. We maintain BUY with unchanged TP at HK$70.7.

 

  • APG-115 combined with pembrolizumab for advanced solid tumors. Initially, Ascentage and MSD will cooperate in a Phase Ib/II clinical trial evaluating the combination of APG-115 and pembrolizumab for several solid tumors including NSCLC, melanoma, UC, liposarcoma, MPNST and ATMm/Tp53wt tumors (NCT03611868). The Phase II portion of this study has already started in the US which is planned to enroll 80 patients.

 

  • Promising results of Phase Ib trial published in ASCO 2020. APG-115 is a selective inhibitor of the MDM2-p53 PPI, which can block MDM2-p53 PPI to resume p53 tumor suppression activity. Pre-clinical data had already showed positive activity in improving pro-inflammatory cytokines production in T cells, enhancing CD4+ T cell activation and increasing PD-L1 expression in tumor cells. Combination with PD-1 blockade also exhibited enhanced antitumor activity in different tumor models. Importantly, in ASCO 2020, results of the phase Ib trial demonstrated that APG-115 in combination with pembrolizumab is well-tolerated, with encouraging anti-tumor effects in several tumor types. As the first MDM2-p53 inhibitor entered into clinical stage in China, APG-115 is also under a Phase I trial for solid tumors and a Phase Ib trial for AML and MDS in China.

 

  • Solid pipelines endorsed by MNCs. Last month, Ascentage announced clinical collaboration of APG-2575 (Bcl-2 inhibitor) with AstraZeneca (AZN US, NR)’s acalabrutinib for r/r CLL/SLL. PoC data of venetoclax + ibrutinib make such combination (Bcl2 + BTK) with large potential in NHL. Ascentage’s clinical collaboration with MNCs has proved the Company’s strong R&D capabilities and solid pipeline quality.

 

  • Maintain BUY with unchanged TP at HK$70.7. We remain long-term positive on the Company given its excellent clinical execution and advanced R&D ability. Considering APG-115 is still in early clinical trials, we forecast APG-115 to start commercialization in 2024E. Maintain BUY with unchanged TP at HK$70.7 based on an 8-year DCF valuation (WACC: 10.98%, terminal growth of 3.0%).
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