【Company Research】InnoCare Pharma (9969 HK) – Well prepared for the first product commercialization

• Orelabrutinib (ICP-022) to be approved in 4Q20E. InnoCare has submitted NDAs of orelabrutinib for treating r/r-CLL/SLL and r/r-MCL in Nov 2019 and Mar 2020, respectively. We expect orelabrutinib to receive approvals from NMPA for treatment of r/r CLL/SLL and r/r MCL in 4Q20E, which will make it the third BTK inhibitor approved in China. Orelabrutinib is also under clinical trials for WM, DLBCL, FL, MZL and CNSL in China. The registrational Phase II trial of WM may be completed in 4Q20E. Additionally, the Company has completed first patient recruitment in a combinational basket trial with MIL-62, a next generation CD20 antibody. InnoCare has also received approval from the NMPA to initiate a Phase III trial of Orelabrutinib as a first-line treatment for CLL/SLL.

 

• Well prepared for commercialization. In Jun 2020, InnoCare announced the appointment of Mr. Xiaodong Jin as Chief Commercial Officer (CCO), who has more than 24 years’ solid experience in production commercialization in global pharmaceutical industry (Sanofi, Abbott and Novartis). As of Aug 2020, InnoCare already had over 40 sales and marketing personnel on board. By orelabrutinib’s NDA approval, InnoCare aims to have a sales and marketing team of 120 to 140 personnel covering over 300 nationally leading oncology hospitals. Should Orelabrutinib be included in the NRDL, InnoCare will expand the commercialization team to 200 personnel covering over 800 top hospitals.

 

• Expanding pipeline portfolio. ICP-192 (pan-FGFR inhibitor) had first patient dosed in phase II clinical trials for Urothelial Cancer (UC) and Cholangiocarcinoma (CCA) in Jun 2020 and Jul 2020, respectively. ICP-723, a second-generation pan-TRK inhibitor, received IND approval from the NMPA in May 2020. The Company plans to submit IND application of ICP-332 (TYK2 inhibitor) to the NMPA early next year. The Company disclosed two new IND-stage pipeline assets, including ICP-490, a CRL4^CRBN-E3 ligase complex modulator and ICP-189, a potent oral allosteric inhibitor of SHP2. InnoCare aims to submit the IND applications of ICP-490 and ICP-189 in 2H21E.

 

• Drug sales to start from 2021E. We forecast drug sales to start from 2021E and expect risk-adjusted revenue of RMB106mn/ RMB274mn/ RMB553mn in FY2021E/22E/23E. We also forecast ICP-192 and ICP-105 to receive NMPA’s approval in 2023E and 2024E, respectively. Considering the global rights of these above-mentioned drug candidates, we expect meaningful sales from the US market from 2024E. By applying different probability of success (PoS) to drug candidates, we forecast a net loss of RMB549mn/RMB341mn/RMB168mn in FY2020E/21E/22E and expect net profit to break even in 2023E.

 

• Maintain BUY. We maintain our DCF-based TP unchanged at HK$16.21 (WACC: 10.0%, terminal growth rate: 5.0%).