【Company Research】JHBP (CY) Holdings Limited (6998 HK) – A biopharmaceutical company focusing on oncology and autoimmune therapies

• Strong pipelines focusing on oncology and autoimmune diseases. JHBP (CY) Holdings Limited (Genor) has been strategically focusing on major therapeutic areas with substantial unmet medical needs in oncology, autoimmune and other chronic diseases. The Company’s key drug candidates include GB491 (lerociclib), a differentiated oral CDK4/6 inhibitor; GB221, a novel HER2 monoclonal antibody (mAb) drug candidate; geptanolimab (GB226), a novel PD-1 mAb drug candidate; GB492, a stimulator of interferon genes (STING) agonist expected to exert synergistic effects in combination with GB226; GB242, an infliximab (Remicade) biosimilar; and GB223, a highly promising receptor activator of nuclear factor-kB Ligand (RANKL) mAb drug candidate.

 

• Integrated R&D platform. Genor has successfully built up the necessary capabilities of a fully-integrated biologic platform company. These capabilities are currently housed in four main functional platforms: research, clinical development, CMC, and business development. The Company has been developing drug candidates targeting pathways with blockbuster potentials, encompassing top three oncology targets and five out of the ten bestselling drugs globally.

 

• Drug sales to start from 2021E. Genor’s most advanced drugs include GB226, GB221 and GB242. GB226 is expected to be approved by NMPA in 2021E, and GB221 and GB242 are expected to be approved by NMPA in 2022E. We also forecast GB223 to receive NMPA’s approval in 2023E. GB491 and GB492 were expected to launch in China by 2024E. We forecast drug sales to start from 2021E and expect risk-adjusted revenue of RMB643mn/ RMB882mn/ RMB1,895mn in FY2022E/23E/24E. We expect Genor to continue incur net losses of RMB699mn/RMB580mn/RMB405mn in FY20E/21E/22E and expect net profit to break even in 2024E.

 

• Initiate at BUY. As a pre-revenue biotechnology company, Genor relies on future cash flow of drug sales. We derive price target of HK$26.49 based on a 10-year DCF model (WACC: 11.1%, terminal growth rate 2.0%).

 

• Catalysts: NMPA approval of GB226 (PD-1) in 2021E. NDA submission of GB221 (HER2) and GB242 (TNF-α) in 2021E.

 

• Risks: Failure in obtaining regulatory approval for drug candidates; Competition from peers; Failure in protecting intellectual property rights.