CMB International: Maintain "Buy" rating for AKESO (09926) with a target price of HK$182.12.

CMB International has released a research report stating that it maintains a "buy" rating on AKESO (09926) and believes that the HARMONi trial has shown a positive trend in overall survival (OS), further enhancing the bank's confidence in its frontline indication potential. The target price derived from the DCF valuation remains unchanged at HK$182.12 (WACC: 8.37%, perpetual growth rate: 4.5%). CMB International's main points are as follows: Summit has published the latest data from the HARMONi global clinical trial, which evaluated the efficacy of AK112 combined chemotherapy compared to chemotherapy alone in second-line third-generation EGFR-TKI-resistant NSCLC patients. The risk ratio of progression-free survival (PFS) in western patients is lower than that of Chinese patients, and the hazard ratio (HR) for the overall survival (OS) is also lower for the western population. Investors are concerned whether the data obtained in China for AK112 can be successfully extrapolated to the global market. However, the bank focuses more on the OS results and believes that the differences in OS between Chinese and western populations may be partially due to the shorter follow-up time for western patients (especially in Europe). It is noteworthy that a positive trend in OS was observed in longer follow-up beyond the final OS analysis. The North American patient group also showed strong OS performance. Currently, second-line EGFR mutation NSCLC treatment accounts for less than 5% of AK112's long-term sales potential, and the bank believes that the main value of AK112 in the NSCLC field lies in its frontline indications. The bank expects the results of the HARMONi-6 China frontline study to be announced at the 2025 ESMO conference, while further OS data from the HARMONi-2 study will be updated within the next six months (according to Summit's guidance). Chinese patients showed better PFS results In the main PFS analysis (n=345, median follow-up 22.3 months), the median PFS for AK112 combined chemotherapy was 6.8 months, compared to 4.4 months for chemotherapy alone (HR=0.52, p<0.001). Although the results support its approval in China, the bank believes that AK112's advantage in PFS may not be sufficient to constitute a significant competitive barrier, given the increasing competition in the EGFR-TKI-resistant treatment market (such as TROP2 ADC, HER3 ADC, and other emerging therapies). In the longer follow-up (median 29.7 months), the PFS HR slightly worsened to 0.57 (from 0.52), which may be due to the maturity of data for the western population. The PFS HR was 0.67 for North American and European patients, and 0.55 for Chinese patients. Improvement in OS in long-term follow-up In the final OS analysis (n=438, overall median follow-up 29.7 months, European and American patients with median follow-up of 9.2 months, data are not yet mature), the median OS for the AK112 combined chemotherapy group was 16.8 months, compared to 14.0 months for the chemotherapy alone group, with an HR of 0.79 (95% CI: 0.621.01, p=0.0570), slightly higher than the significance threshold required by the FDA for submitting biologic license applications (p=0.0448), but the overall trend in OS is positive. In a non-predefined longer follow-up (32.7 months), the Chinese cohort has been locked, with only western patients continuing follow-up (median follow-up 13.7 months for European and American patients), the median OS remained unchanged, but the OS HR improved to 0.78 (95% CI: 0.620.98), with a nominal p-value of 0.0332. Although the FDA will still primarily rely on predefined analysis results for review decisions, the bank believes that mature long-term OS data are crucial for evaluating the efficacy of western patients. Strong OS results in North American patients In the long-term follow-up, the OS HR for western patients is slightly lower than that of Chinese patients (0.84 vs 0.76), possibly still due to the shorter follow-up time, especially in the European population. Summit notes that compared to North American patients, the sample size and follow-up time for European patients are more limited. It is noteworthy that the OS performance of North American patients is encouraging, with an HR of 0.70, although the confidence interval is wide (0.381.30).