2020 will be a pivotal year for Hutchison China MediTech (Chi-Med), and surufatinib will play a key part. The potential China launch of this, Chi-Med’s first wholly owned drug, is now expected within the next 12 months. The new drug application (NDA) for surufatinib in epNET (extra-pancreatic neuroendocrine tumours) was accepted by the Chinese regulator in November 2019, and there is the prospect of a second NDA filing for pancreatic NET (pNET) in the coming months. Further news flow is expected with the China Phase IIb/III biliary tract carcinoma (BTC) interim analysis in mid-2020, and initiation of the US/Europe Phase III registration study for NET in a similar timeframe. Reviewing our surufatinib assumptions and updating our model following the c$118m ADS offering lifts our valuation to $5.21bn ($37.73/ADS) or £4.01bn (580p/share).
Subject to timely review and approval by the regulator, surufatinib is on track for its first China launch in epNET in late2020, with Chi-Med expanding its China Oncology commercial infrastructure to 300-350 reps in anticipation. Filing in a second indication, pNET, is likely mid-2020 following the early stop of the SANET-p pivotal study for efficacy.
The pre-defined mPFS primary endpoint was met at the SANET-p planned interim analysis; full data is expected at a future scientific conference. For context, the Phase II study in NET (including both epNET and pNET patients) rendered a 19.4 month mPFS in pNET (n=41). Disclosed clinical data from the Phase II and the SANET-ep studies (ESMO 2019) indicate that surufatinib has broad efficacy across NET subtypes and could rival everolimus.
Surufatinib is being studied in multiple clinical trials as monotherapy and in combination with PD-1 inhibitors. A China Phase II combination with toripalimab began in January. Key upcoming catalysts include interim analysis of the China Phase IIb/III registration study in BTC (biliary tract carcinoma) in mid-2020; the FDA end-of-Phase II meeting for NET in H120; and potential initiation of the pivotal US/Europe Phase III in mid-2020.
We employ a DCF-based SOTP approach that includes a clinical pipeline rNPV. Revising our surufatinib assumptions in pNET and the recent ADS offering (assuming pro forma net cash of £258.7m) generates a valuation $5.21bn ($37.73/ADS) or £4.01bn (580p/share) vs $5.14bn ($38.55/ADS) or £3.95bn (593p/share) previously.