Events:

Recently, the company released updated data on the safety and efficacy of the Phase I clinical study of EGFRxHER3 bispecific antibody ADCBL-B01D1 for the treatment of patients with locally advanced or metastatic breast cancer, including triple-negative breast cancer (TNBC), HR+/HER2- breast cancer, and HER2+ breast cancer, at the 2024 SABCS Congress.

OPINION:

BL-B01D1 had a cORR of nearly 50% in the late-line treatment of all three subtypes of breast cancer, with no ILD events. As of September 30, 2024, 162 patients were enrolled in the Phase 1 study of BL-B01D1 for the treatment of breast cancer, with a median follow-up of 11.6 months:1)TNBC
:
　　　 The cORR was 34.1%, the mDOR was 11.5 months, and the mPFS was 5.8 months. For patients who had received 1-2 prior lines of chemotherapy, the cORR was 50.0%, the mDOR was 11.5 months, and the mPFS was 6.9 months. 2) HR+/HER2- BC: cORR of 37.7%, mDOR of 7.4 months, and mPFS of 7.0 months. For patients who had received 1 to 2 prior lines of chemotherapy, the cORR was 45.7%, the mDOR was 7.1 months, and the mPFS was 8.3 months; 3) HER2+ BC: cORR of 47.5%, mDOR of 7.4 months, and mPFS of 7.0 months. In terms of safety, the most common grade 3 and above TRAEs were anemia (41.4%), leukopenia (42.6%), neutropenia (52.5%), thrombocytopenia (26.5%), one drug-related death (febrile neutropenia) was observed, and no interstitial lung disease (ILD) was observed.

We believe that this update verifies the dominant position of BL-B01D1 in the rear line HR+BC, and we will pay attention to the OS data of TNBC in the future. Based on the preliminary results of Phase 1 breast cancer on SABCS in 2023, the Company has initiated Phase 3 clinical trials of HR+ BC (primary endpoint PFS) and TNBC (PFS/OS dual endpoint) in 2024. We believe that this update further validates the PFS benefits of BL-B01D1 for HR+ BC. HR+ BC accounts for 60-70% of breast cancer, with about 250,000 new patients in China every year, ET+CDK4/6i is the preferred first-line treatment for advanced disease, and other targeted drugs (SERD, AKTi, etc.) are used alone or in combination with ET in the second line, and chemotherapy or Gilead SG (Trop2 ADC, mPFS 5.5 months) can be used for third-line and above treatment.

Among the 77 patients treated with HR+/HER2- BC with BL-B01D1, the median number of pre-sequence lines was 3, 65% were treated with CDK4/6i, 83% were chemotherapy-latest, the cORR was 37.7%, and the mPFS was 7.0 months (up from 5.5 months for Gilead SG). In addition, the safety profile of the BLB01D1 was good, and no ILD was observed.

In 2025, we will focus on the data readout of the overseas Phase 1 clinical trial of BL-B01D1 and the initiation of the first overseas Phase 3 clinical trial. 1) Domestic progress: The company has initiated 7 phase 3 registration clinical trials of BL-B01D1 for multiple solid tumors in China, and is expected to complete phase 3 clinical trials for nasopharyngeal cancer or esophageal cancer in 2025 and submit a marketing application; 2) Overseas progress: The overseas Phase 1 clinical trial of BL-B01D1 is progressing smoothly, and the data is expected to be read out in 2025; In addition, BMS expects to initiate the first overseas registration Phase 3 clinical trial in 2025; 3) Data catalysis: Phase 2 data of BL-B01D1 in combination with osimertinib in the first-line treatment of EGFR-mutant NSCLC are expected to be readout at 25H1.

Investment Advice:

We use the DCF method and the NPV method to calculate the average of the two and calculate the target market capitalization of RMB107.6 billion, corresponding to a stock price of RMB268.33, and maintain a "buy" rating.

Risk Warning

: The R&D of innovative drugs is less than expected: there is a risk that the clinical development of the drug cannot be successfully or timely completed, and regulatory approval and commercialization cannot be obtained;

Risk of policy changes in the pharmaceutical industry: If the business strategy cannot be adjusted in time to adapt to the changes in market rules and regulatory policies brought about by the reform of the medical and health system, the company's operation will be adversely affected;

Macro environmental risks: The company has R&D centers in China and the United States, and the uncertainty of the future international political, economic and market environment may have a certain adverse impact on the company's overseas business operations.