REMEGEN(9995.HK)：A PIONEER BIOPHARMA IN INNOVATIVE ADC AND FUSION PROTEIN MEDICINES-格隆汇

机构：招银国际
研究员：Jill Wu/Andy Wang

A pioneer biopharma with rich innovative pipelines. RemeGen has developed a robust pipeline of more than 10 drugs/candidates, including 7 clinical-stage assets targeting over 20 indications. Since its inception in 2008, RemeGen has transformed from a biotech company into a fully integrated biopharma with two innovative biological drugs launched in China, telitacicept (RC18) and disitamab vedotin (RC48). The Company is one of the few Chinese biotech companies that have successfully marketed two internally developed innovative biological drugs.
RC18 is potentially best-in-class for SLE treatment. RC18 was approved for the treatment of SLE in China in Mar 2021, becoming the second innovative biologic drug for SLE in China over the past 60 years. RC18s China Ph3 trial in SLE showed overwhelmingly strong efficacy, with the RC18 arm achieving 82.6% SRI- 4 response rate, vs 38.1% in the control arm, indicating a significant response rate increase of 44.5% (P<0.001). A cross-trial comparison shows belimumab only had 9.4% increase in SRI-4 response rates in its China pivotal trial. Compared to other drugs or drug candidates at late-stage of development targeting SLE indication, RC18 demonstrated the best efficacy with a well-tolerated safety profile. RemeGen is evaluating RC18 in late-stage trials for multiple autoimmune diseases with limited treatment options, including SLE (Ph3 in China, the US and Europe), IgAN (Ph3 in China and Ph2 in the US), pSS, MG, RA, etc. We expect RemeGen to partner with an MNC pharma for the global development and commercialization of RC18.
RC48 is the first-to-market domestic ADC drug. RC48, an anti-HER2 ADC, was approved in Jun 2021 for third-line or later treatment of GC in China, becoming the first-to-market domestic ADC. In Dec 2021, RC48 was further approved for UC treatment in China. RemeGen aims to bring RC48 to front-line treatment with multiple Ph3 trials for UC, BC and GC ongoing or planned in China and globally.
Compared with other anti-HER2 ADC drugs like DS-8201 and T-DM1, RC48 distinguished itself by targeting differentiated indications, especially UC, and favorable safety profile. HER2-Low tumors, as observed in BC, GC, UC, BTC and NSCLC, generally do not respond to trastuzumab or T-DM1, and remain large underserved markets. RemeGen, partnered with Seagen, is strategically developing RC48 for HER2-low tumors, with a number of trials in both HER2-high and low UC/BC ongoing in China and the US.
Initiate at BUY with TP of HK$79.13. Supported by the growing commercialization capabilities, we expect RemeGens product sales to ramp up fast in the coming years, with RC18 and RC48 being the major revenue drivers due to the increasing patient demands and indication extensions. We derive our target price of HK$79.13 based on a DCF valuation (WACC: 10.25%, terminal growth rate: 3.0%).
Near-term catalysts: Sales ramp-up; data readout of RC18 in SLE (China Ph3), IgAN (US Ph2) and pSS (China Ph2); NRDL indication extension of RC48; RC18 out licensing.