20210301-招银国际-先声药业-02096.HK-FDA_approved_trilaciclib_for_chemotherapy-induced_myelosuppression_4页_847kb

Summary of Simcere Pharmaceutical Group (2096 HK)

Core Content

Simcere Pharmaceutical Group (2096 HK) is a Chinese pharmaceutical company with a focus on transitioning from generic drugs to innovative therapies. The company has made notable progress in developing and commercializing innovative drugs, including the approval of trilaciclib for chemotherapy-induced myelosuppression by the FDA and Sanbexin for neuroprotection by the NMPA. These developments position Simcere as a key player in the China healthcare sector, with a growing portfolio of innovative drug candidates.

Key Products and Clinical Data

• Trilaciclib (COSELA):

  • Approved by the FDA in February 2021 for the treatment of extensive-stage small cell lung cancer (ES-SCLC).
  • The first and only myeloprotection therapy designed to be administered prior to chemotherapy.
  • In January 2021, Simcere obtained IND approval from the NMPA for Phase I clinical trials in China.

• Sanbexin (edaravone dexborneol):

  • Approved by the NMPA in August 2020.
  • Positive Phase 3 trial results published in STROKE, showing a significantly higher proportion of patients achieving good functional outcomes (modified Rankin Scale score ≤1) at 90 days post-randomization (67.18% vs. 58.97%).
  • Added to the National Reimbursement Drug List (NRDL) in March 2021.

Drug Development Pipeline

• Simcere has nearly 50 drug candidates in various stages of development.
• Orencia (abatacept injection) and Sanbexin were launched in 2H20.
• KN035, a subcutaneously injectable anti-PD-L1 monoclonal antibody, is a potentially first-to-market candidate, with an NDA filed in China in December 2020 for MSI-H solid tumors.

Financial Performance and Valuation

• Revenue is projected to grow from RMB1,004mn in 2019 to RMB1,453mn in 2022E, with a CAGR of 13.1%.
• Net profit is expected to increase from RMB1,004mn in 2019 to RMB1,453mn in 2022E.
• Target price remains at HK$13.84, based on a 10-year DCF valuation with a WACC of 10.4% and terminal growth rate of 2.0%.
• DCF per share is estimated at HK$13.84.
• Current price is HK$8.10, implying a potential upside of +70.85%.

Financial Ratios and Performance

• Gross margin has remained stable around 82-83%.
• Net margin has increased from 15% in 2020E to 18% in 2022E.
• ROE is expected to rise from 13.6% in 2020E to 20.5% in 2022E.
• Current ratio has improved from 0.8 in FY19A to 3.2 in 2022E.
• ROA is projected to increase from 7.0% in 2020E to 12.9% in 2022E.

Risks

• Lower-than-expected sales from key products.
• Slower-than-expected R&D progress in innovative drug development.

Shareholding and Market Data

• Major shareholders include Simcere Pharmaceutical Holding (45.85%), Arting Global (23.26%), and Fortune Fountain Investment (4.64%).
• Market capitalization is HK$21,130 million.
• Average 3-month total return is HK$16.23 million.
• 52-week high/low is HK$11.68/HK$7.65.
• Total issued shares are 2,609 million.

Analyst Ratings and Recommendations

• CMBIS maintains a BUY rating with an unchanged target price of HK$13.84.
• The 12-month price performance shows a positive trend.
• Sensitivity analysis indicates that the target price is relatively stable across different WACC and terminal growth rate assumptions.

Conclusion

Simcere Pharmaceutical Group is progressing in its shift toward innovative drug development, with notable regulatory approvals and positive clinical data. Financial performance is expected to improve, supported by a growing portfolio and a strong valuation model. However, the company faces risks related to product sales and R&D timelines, which could impact its growth trajectory.