2023-01-06
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- Akeso demonstrates there is little-to-no first mover advantage in biotech. Transition into biopharma requires patience and preparation;
- Akeso’s first, test-water mAb has achieved Rmb500mn in first year sales, its 2nd, main focus BsAb is hitting the market with the 3rd BsAb on its way. Its 100% in-house pipeline is highly differentiated;
- We rate the stock Buy, with a TP of HK40.
Akeso licensed its first, PD-1 mAb (Monoclonal Antibody) Penpulimab to SinoBio (1177 HK, NR) but accounting-wise booked the whole product sales, which exceeded Rmb500mn in its first year of sales. Akeso’s 2nd, PD-1/CTLA4 BsAb (Bispecific Antibody), Cadonilimab, will be sold by the company alone. It received NMPA approval in June 2022. We expect Penpulimab to achieve peak sales of Rmb882mn in 2025 but Cadonilimab to achieve peak sales of Rmb2.2bn in 2028. Akeso will have two mini-blockbusters (>Rmb1bn in annual sales).
Focus on BsAb paid off with first global PD-1/L1 BsAb
Founded in 2012 from a veteran team both abroad and locally, Akeso stayed as a biotech for a long time. In 2015, Akeso licensed out its CTLA4 mAb, AK107, to Merck for US$200mn. Our research found the first clinical trial for Cadonilimab started in 2017, abroad. Now Cadonilimab is the first approved BsAb in China, the 6th BsAb, the 3rd oncology BsAb and the first PD-1/L1 BsAb globally.
Strong late-stage pipeline safeguards the path to biopharma
After Cadonilimab, Ivonescimab (AK112), a PD-1/VEGF BsAb, Ebronucimab (AK102), a PSCK9 Inhibitor and Ebdarokimab (AK101), an IL-12/23 mAb, are in or near Phase III. Akeso has no biosimilar or license-in in its pipeline.
License out can be both a bonus and a cushion
Akeso’s cash level is low but it has a first class pipeline with proven track record of out licensing. We currently factor in no license out revenue at all but believe it can act both as positive catalyst or cash cushion for the stock.
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