20230510-招银国际-诺诚健华-B-09969.HK-Eyes_on_next_steps_of_orelabrutinib_for_MS_6页_896kb

Summary of InnoCare Pharma (9969 HK) Report Analysis

• Financial Performance: InnoCare reported total revenue of RMB189mn in Q1 2023, driven by orelabrutinib sales of RMB151mn (which decreased QoQ due to COVID-19 and Chinese New Year but showed YoY growth of +44%). Cost efficiencies improved, with selling, R&D, and admin costs as a percentage of product sales decreasing to 57%, 93%, and 24% from 78%, 112%, and 32% in FY22. R&D costs fell to RMB141mn vs. RMB164mn in Q4, and the net loss narrowed to RMB12mn from RMB52mn. The company has RMB8.9bn cash, supporting operations and R&D for multiple years.

• Drug Development: Orelabrutinib is advancing with positive Phase 2 MS trial data released in March 2023, with Phase 2 data planned for end-May and potential Phase 3 initiation pending FDA decisions. The drug was approved for r/r MZL in China and is under regulatory review for MCL in the US. Other trials include Ph2 for SLE and ITP, with data expected in 2023.

• Company Outlook: Analyst maintains a BUY rating with unchanged target price of HK$10.84 (24.3% upside). Key risks include FDA decisions on BTK inhibitors and competition.

• Key Metrics: Cash reserves RMB8.9bn, revenue target estimates up to RMB2.44bn in FY23E, and DCF valuation sensitivity based on WACC and terminal growth rate.