China Post Securities released a research report stating that SKB BIO (06990) is an innovative drug R&D company entering a harvest period as its clinical maturity advances. The firm forecasts company revenues of RMB 25/41/66 billion for 2026/2027/2028, representing year-over-year growth of 22%/64%/61%. The company's domestic commercialization is progressing smoothly, its ADC pipeline is advancing steadily, and with the support of Merck & Co., it has the potential to tap into overseas markets. This marks the first coverage by the firm, assigning a "Buy" rating.
Key viewpoints from China Post Securities are as follows:
Company Overview: Core Innovation Vehicle of the Kelun System; ADC Platform Sets Benchmark; Multiple Innovative Drugs Entering Reimbursement Harvest Period The company is a pioneer in developing Antibody-Drug Conjugates (ADCs), having accumulated over a decade of ADC R&D experience. It is also the first Chinese company to establish an ADC collaboration with a top-ten multinational biopharmaceutical corporation. The company has four major marketed products covering multiple oncology segments: 1) SKB264 (Jiatailai): for 2L+ Triple-Negative Breast Cancer (TNBC), 2L/3L EGFR-mutated Non-Small Cell Lung Cancer (NSCLC), and 2L+ HR+/HER2- Breast Cancer; 2) A166 (Shutailai): for 2L+ HER2-positive Breast Cancer; 3) A167 (Ketailai): for Recurrent or Metastatic Nasopharyngeal Carcinoma; and 4) A140 (Datailai): for Colorectal Cancer. The company possesses mature commercialization capabilities, further enhanced by National Reimbursement Drug List inclusion, significantly improving product accessibility.
Core Asset sac-TMT: Multiple Global Phase 3 Trials Intensify; Leveraging Merck to Tap Global Market sac-TMT is a cornerstone of Merck's ADC product matrix. It holds first-in-class potential in gynecological cancers, HR+ breast cancer, and 1L TNBC and EGFR wild-type NSCLC. It also offers differentiated treatment pathways for frontline TNBC and EGFR-mutant NSCLC, potentially benefiting a broader patient population. 1) Breast Cancer: sac-TMT is a potential best-in-class TROP2 ADC for HR+/HER2- BC. In 2L+ patients, it demonstrated a median Progression-Free Survival (mPFS) of 8.3 months with a Hazard Ratio (HR) of 0.35. Monotherapy or combination regimens also show promise for tackling 1L HR+/HER2- BC. For TNBC, sac-TMT has established itself as a 2L standard therapy, with encouraging Phase 2 data in 1L treatment, indicating potential for further validation in the global Phase 3 TroFuse-011 trial. 2) NSCLC: sac-TMT leads among TROP2 ADCs, precisely targeting EGFR-mutant NSCLC patients (later lines). It is rapidly advancing into frontline settings, with 1L combination regimens involving Keytruda being developed both domestically and internationally. Data from Lung01 further solidifies the complementary potential of this combination. 3) Others: In cancers lacking effective TROP2 ADC options, such as endometrial, gastric, cervical, and ovarian cancers, as well as in specific patient subgroups like PD-L1 low-expressing TNBC and pMMR endometrial cancer, sac-TMT has the potential to address unmet clinical needs.
Platform Strength Continuously Validated; Innovative Assets Gradually Realizing Global Value Since May 2022, the company has entered into four transactions with Merck & Co. involving ADC assets, including SBK264, SKB315, seven preclinical ADC projects, and SKB571, with a potential total deal value exceeding USD 11.8 billion. The firm believes that, considering the timeframe and transaction frequency, Merck's recognition of SKB BIO extends beyond the single asset SKB264 to an endorsement of its ADC platform capabilities. MK-3120, MK-2750, and MK-6204 have all entered global clinical stages. Non-Oncology Pipeline: The company's pipeline features diverse formats including monoclonal antibodies, bispecific antibodies, and ADCs, with ongoing advancements across multiple therapeutic areas.
Risk Factors: 1) Clinical development progress of innovative drugs may fall short of expectations; 2) Clinical trial data for innovative drugs may be disappointing; 3) Post-market sales performance of innovative drugs may not meet forecasts; 4) Geopolitical risks.