MORGAN STANLEY RESEARCH
Alphamab Oncology: Modest Cash Burn in 2H20; Multiple Milestones Expected in the Year Ahead - March 24, 2021 GMT (14 pgs/ 589 kb)
Wu, Sean Morgan Stanley Asia Limited
Hu, Yolanda
Tam, Laurence
Ding, Ethan
Yan CFA, Alexis
Alphamab's 2H20 R&D and G&A expenses both came below our estimates, with a modest cash draw-down of ~Rmb235mn. Looking ahead, management is eyeing PD-L1 approval by 3Q and more catalysts/data readouts from its bispecific pipeline.
Recap of 2H20 financials: R&D expenses increased 78% YoY with further progress in clinical and preclinical programs. Management expects R&D expenses to nearly double in 2021 from the 2020 level (Rmb331mn). G&A expenses declined 60% YoY in 2H, as no further share-based compensation was incurred for pre-IPO share options in 2020. Both R&D and G&A expenses came below our estimates. Total operating cash burn was ~Rmb235mn in 2H (or ~Rmb390mn in 2020). Cash balance (including time deposits) was Rmb2.0bn at year-end, vs. bank borrowings of Rmb209mn, and management expects that existing cash can support the company's operations until end-2022. That said, the company is considering raising more capital by the end of this year.
An expanding PD-L1 program: The onsite inspection for the KN035 BLA (2L MSI-H/dMMR solid tumors) is scheduled for end-April, and management expects official approval in 80 business days after that (i.e., in 3Q), based on the CDE's standard practice. In addition, the company and its partner 3DMed are running over 10 clinical programs for KN035 in China, Japan, and the US, including five pivotal studies in China for indications not commonly pursued by other domestic PD-(L)1 players (10). With commercialization in China backed by Simcere's strong sales force and potential out-licensing opportunities in ex-China market, management thinks the ramp-up and long-term value of KN035 should be substantially higher than market expectations.
Abundant catalysts from an underappreciated bispecific pipeline: Four pivotal trials of KN046: 1L squamous non-small cell lung cancer (s-NSCLC; full enrollment and interim readout in late 2021 or early 2022), ≥2L thymic carcinoma (full enrollment in 2021), and another two trials to be initiated this year, for PD-(L)1-refractory NSCLC and 1L pancreatic cancer, respectively. 2-3 IND submissions: JSKN003 (bispecific HER2 ADC based on KN026), KN052 (PD-L1/OX40 bispecific) and KN062 (bispecific antibody for COVID-19). The company is targeting multiple data readouts at this year's medical conferences (8), as well as more co-development/out-licensing deals for KN035 and KN026.