Can AKESO, which once suffered a flash crash, turn the tables with a head-to-head competition against K Drug?

On May 31, AKESO (9926.HK) announced that its PD-1/VEGF bispecific antibody Yivoxi monoclonal antibody injection (referred to as "Yivoxi") won in a Phase 3 clinical trial for first-line treatment of locally advanced or metastatic non-small cell lung cancer (NSCLC) with positive PD-L1 expression compared to the monoclonal antibody Pembrolizumab (referred to as "K drug").

This means that Yivoxi has become the world's first and only drug to demonstrate significantly better efficacy than the K drug in a Phase 3 head-to-head clinical trial.

As soon as the market opened on May 31, AKESO's stock price surged by 37.03%, finally redeeming itself.

Previously, market doubts arose about the future sales potential of Yivoxi due to a slight decline in the Phase 3 clinical data compared to Phase 2 data.

This "head-to-head" victory undoubtedly proves to the market the promising sales prospects of Yivoxi.

Head-to-Head Victory

Clinical data of innovative pharmaceutical companies are important factors affecting stock price trends.

In the early hours of May 31, AKESO announced that the PD-1/VEGF bispecific antibody Yivoxi won in a head-to-head Phase 3 clinical trial against the K drug for first-line treatment of NSCLC.

The research data showed that in the intention-to-treat population, the Yivoxi group significantly prolonged progression-free survival (PFS) compared to the K drug group, with a risk ratio significantly better than expected.

Yivoxi thus became the world's first and only drug to demonstrate significantly better efficacy than the K drug in a Phase 3 head-to-head clinical trial.

"Evaluating Yivoxi against Pembrolizumab in a randomized double-blind Phase III study yielded significantly positive results, strongly demonstrating the clinical and commercial value potential of Yivoxi globally. AKESO and our overseas partner Summit Therapeutics are confident and hopeful about the successful Phase III clinical trials of Yivoxi globally, which is expected to change the global treatment landscape in lung cancer," said Xia Yu, Chairman of AKESO.

As early as December 2022, AKESO had licensed the development and commercialization rights of Yivoxi in the United States, Canada, Europe, and Japan to Summit (SMMT.O), while AKESO could receive an upfront payment of $500 million and a total transaction amount of up to $5 billion based on registration milestones.

The recognition of this upfront payment income allowed AKESO to achieve profitability for the first time in 2023, with a net profit of up to 2.231 billion yuan in the current period.

Therefore, the market is paying close attention to the sales prospects of Yivoxi, as every move in its clinical data relates to AKESO's future performance potential.

With the victory of Yivoxi over the K drug, the market is eagerly anticipating how much market share it can capture from the K drug.

As the world's best-selling drug, the global sales of the K drug in 2023 have already reached $25 billion, which means that even capturing a small percentage of the market share would still result in substantial revenue Currently, AKESO is still conducting Phase 3 studies comparing the efficacy of Ivosidenib combined chemotherapy with Toripalimab in first-line treatment of squamous non-small cell lung cancer (sqNSCLC) with BeiGene (688235.SH), as well as a global multicenter Phase 3 study comparing Ivosidenib combined chemotherapy with K drug combined chemotherapy in first-line treatment of sqNSCLC.

Multiple Flash Crashes

Since last year, AKESO's stock price performance has been volatile.

At the end of May 2023, due to the significant decline in the stock prices of "Three Kang" 18A companies listed on the Hong Kong Stock Exchange, including Kangning Jerui (9966.HK) and Kangnuoya (2162.HK), market sentiment dragged AKESO's stock price down by more than 10% in a single day.

Similarly, on May 24th this year, AKESO experienced another flash crash as its clinical data on Ivosidenib was questioned, with an intraday drop of over 40%.

On that day, AKESO announced that Ivosidenib had been approved for listing by the China National Medical Products Administration, with indications for combination chemotherapy for the treatment of locally advanced or metastatic nsq-NSCLC with EGFR mutations after treatment with epidermal growth factor receptor (EGFR) tyrosine kinase inhibitors (TKIs).

However, this news did not boost AKESO's stock price, but instead led to a significant drop due to market doubts about the performance of Ivosidenib data.

The Phase 3 data showed that among 322 patients with EGFR-TKI-treated advanced EGFR-mutant NSCLC, after a median follow-up of 7.89 months, the median PFS was 7.06 months, ORR was 50.6%, and ≥Grade 3 TEAE occurred in 61.5% of patients in the experimental group. In contrast, the previous small-sample Phase 2 clinical data showed an ORR of 68.4%, a median PFS of 8.5 months, and a ≥Grade 3 TEAE rate of 51.2%.

In simple terms, the median PFS of Ivosidenib in Phase 3 clinical trials is lower than that in Phase 2, leading the market to interpret that the efficacy of Ivosidenib is questionable.

On that day, AKESO's management urgently held an investor conference to clarify the market's misunderstanding of the clinical data, pointing out that the median PFS is not the gold standard of clinical trials, but rather the risk ratio. A lower risk ratio indicates better treatment efficacy, while a risk ratio closer to 1 indicates less significant treatment efficacy.

In the clinical trial, Ivosidenib's risk ratio was 0.46, while the risk ratio of Toripalimab combined with Bevacizumab combined chemotherapy was 0.506. Based on this, Ivosidenib's treatment efficacy is superior to Toripalimab combined with Bevacizumab combined chemotherapy.

With the victory in this head-to-head trial, the market expects Ivosidenib to have better commercial performance.

It is worth mentioning that in December 2022, AKESO announced plans to list on the Sci-Tech Innovation Board, but there have been no new developments to date.

As its products gradually achieve commercialization, the market continues to pay attention to whether AKESO will have plans to proceed with an A-share listing in the future