Top-line data from the pivotal China Phase III FALUCA fruquintinib monotherapy trial in 3L NSCLC (third-line non-small cell lung cancer), released November 2018, indicated the study missed its overall survival (OS) endpoint but met all secondary endpoints. Full data presented at the 2019 World Congress on Lung Cancer revealed median OS of 8.94 months for fruquintinib vs 10.38 months for placebo (p=0.0841). A post hoc sensitivity analysis suggested use of subsequent anti-tumour therapies following disease progression was likely to have contributed to this result. FALUCA data coupled to the rapidly evolving treatment landscape in NSCLC supports ChiMed’s decision to focus on development of fruquintinib in combination with PD-(L)1 checkpoint inhibitors; China Phase I combination studies have begun. However, the major near-term catalyst for fruquintinib remains commercial: potential NRDL inclusion in Q419 would provide strong impetus to China revenues.
Full FALUCA data showed median OS for fruqunitinib monotherapy was 8.94 months vs 10.38 months for placebo (hazard ratio 1.02, p=0.841). However, all secondary endpoints were met (p<0.001), including progression free survival (PFS: 3.68 months vs 0.99 months), objective response rate (ORR: 13.8% vs 0.6%), disease control rate (DCR: 66.7% vs 24.9%), and duration of response. Fruquintinib’s safety profile was consistent with Phase II.
Since FALUCA initiation in December 2015, several new drugs have been approved in China in NSCLC (ie osimertinib, anlotinib); their availability may have influenced the study result. For context, median OS was 6.3 months for placebo vs 9.6 months for anlotinib in the Phase III ALTER 0303 study in a similar NSCLC patient population. Subsequent therapies provided OS benefit to patients in both FALUCA arms but were received by a higher percentage of placebo patients. Post hoc sensitivity analysis showed that fruquintinib prolonged median OS vs placebo (7.00 months vs 5.06 months, HR 0.64, p=0.010) in patients who did not receive subsequent therapy.
Potential NRDL (National Reimbursement Drug List) inclusion in Q419 would significantly boost Elunate (fruquintinib) market penetration and future revenues. Over H218/H119, the drug generated $8.3m in royalty/manufacturing revenue for Chi-Med on c$13.1m of in-market China sales.
Our DCF-based SOTP model includes an rNPV of the clinical pipeline and generates a valuation of $5.14bn ($38.55/ADS) or £3.95bn (£5.93/share). We anticipate multiple clinical, regulatory, and commercial catalysts will unlock further value over the next 12 months.