Recently, Huadong Medicine Co.,Ltd. (SZSE: 000963) announced that its wholly owned subsidiary Hangzhou Zhongmei Huadong Pharmaceutical had achieved positive topline results in the China Phase III clinical study of HDM1002 tablets (kavileron tromethamine tablets), a Class 1 innovative drug and oral small-molecule GLP-1 receptor agonist independently developed for weight management in overweight or obese populations, and had completed Pre-NDA communication and was about to formally submit a marketing application.
As a core innovative product in Huadong Medicine's endocrine and metabolic pipeline, the clinical progress and commercialization potential of HDM1002 have long been a focus of the capital market.
Based on the industry-standard risk-adjusted net present value (rNPV) model, and combined with publicly available clinical data, the competitive landscape of the sector, and commercialization expectations, we estimate the intrinsic value of this pipeline to provide the market with a reference valuation coordinate.
What is the core logic of the rNPV valuation?
The core logic of rNPV valuation is to discount the future full-lifecycle cash flows of a pipeline to the current point in time after multiple risk adjustments. The formula is: peak sales × probability of clinical success × discount factor. Peak sales = total target patient population × expected peak penetration rate × market share × annual treatment cost × clinical data quality coefficient × commercialization rights coefficient.
From the perspective of clinical success probability, the China Phase III registration clinical trial of HDM1002 for weight management in overweight or obese populations recently announced topline results, with all dose groups achieving all primary endpoints and key secondary endpoints at Week 44, continued weight loss effect with continued treatment, and further weight decline at Week 52, with no weight-loss plateau observed, while significant improvements were observed in multiple cardiovascular and metabolic indicators, a substantial reduction in liver fat content, and optimization of body composition, with safety and tolerability data consistent with the GLP-1 receptor agonist class and no new safety signals. At present, the product has completed Pre-NDA communication and is about to submit an NDA, so according to the industry-recognized grading standards for clinical success rates, the probability of clinical success is set at 0.70.
In terms of the total patient population, HDM1002 primarily covers overweight and obese populations who meet the indications for pharmacologic weight-loss treatment. According to the Report on the Status of Nutrition and Chronic Diseases of Chinese Residents and publicly available epidemiological data, the overweight and obesity rate among Chinese adult residents exceeds 50%, with the obese population at approximately 170 million; combined with clinical diagnostic and treatment indications, individuals with BMI ≥ 28 and comorbid metabolic complications, or simple obesity with BMI ≥ 30, have a clear long-term need for pharmacologic weight-loss treatment, corresponding to a total target patient population of approximately 40 million.
In terms of penetration rate, the peak penetration rate estimated here refers to the long-term steady-state penetration rate of oral small-molecule GLP-1 receptor agonists among domestic weight-loss target patients, and is used to measure the mature development stage of the sector as a whole. From the baseline of domestic weight-loss diagnosis and treatment, the standardized pharmacologic treatment rate for obese populations in China is still at a relatively low level, below 5%. Referring to the pathway of treatment rate improvement for mature chronic diseases such as diabetes in China, and combined with the popularization of awareness of weight-loss disease, improved medical insurance coverage, and the adherence advantage of oral dosage forms, in the long term the standardized pharmacologic weight-loss treatment rate of the target population is expected to rise to around 20%. From the perspective of category substitution space, the current domestic weight-loss drug market is still dominated by traditional products such as injectable GLP-1 formulations, accounting for more than 85%; oral small-molecule GLP-1, with its differentiated advantages of once-daily oral administration, convenient dosing, and high adherence, is expected to occupy about 50% of the weight-loss drug market under long-term steady state as domestic similar products are launched successively, prices decline, and clinical awareness increases. Combining the dual factors of treatment rate improvement and category substitution, the long-term steady-state peak penetration rate of oral small-molecule GLP-1 among domestic weight-loss target patients is approximately 10%.
In terms of market share, more than ten companies in China, including Hengrui Pharmaceuticals, Kelun Pharmaceutical, and Salubris, already have similar products in the oral small-molecule GLP-1 sector at different clinical stages, making it a red-ocean landscape of clustered competition among domestic innovative drugs. Taking into account HDM1002's leading advantage in clinical progress, Huadong Medicine's mature commercialization capabilities and channel coverage in the endocrine field, and also considering the launch pace of subsequent competitors and pricing competition pressure, a 15% market share assumption is assigned to HDM1002.
In terms of annual treatment cost, the current annual treatment cost of the original semaglutide injection for the weight-loss indication after medical insurance negotiation is about RMB 2,400; oral GLP-1 formulations usually carry a certain dosage-form premium due to convenient dosing and good adherence. Considering that HDM1002 is a domestic innovative oral small molecule with clear differentiated clinical value, and that it needs to adapt to the medical insurance payment system and the competitive market environment, its annual treatment cost after medical insurance negotiation following launch is expected to be about RMB 3,600.
From the perspective of clinical data quality, according to the Phase III clinical data disclosed by Huadong Medicine, in the randomized double-blind placebo-controlled trial (RCT) of HDM1002 for overweight or obesity, the 400 mg dose group showed an average weight reduction from baseline of 10.7% at Week 44 and a further reduction to 12.2% at Week 52, significantly superior to the placebo group, with the overall weight-loss effect reaching the advanced level of similar drugs and demonstrating differentiated advantages in metabolic improvement, liver fat reduction, and body composition optimization. Overall, HDM1002 adopts a standardized RCT trial design, and its efficacy reaches the advanced level of existing standard treatment, so the clinical data quality coefficient is taken as 0.80.
In terms of commercialization rights, HDM1002 is a Class 1 innovative drug independently developed by Huadong Medicine, with complete development, production, and commercialization rights in Greater China, and Huadong Medicine has a mature in-house commercialization team in the endocrine field, with no need to pay external sales royalties. According to the evaluation criteria, the commercialization rights coefficient is taken as 0.95.
Based on the above parameters, the peak annual sales of HDM1002 for the weight-loss indication in Greater China are approximately RMB 1.64 billion.
In terms of the discount factor, as a large pharmaceutical company that has already achieved product commercialization and possesses mature promotion capabilities, Huadong Medicine has overall pipeline risk lower than that of early-stage biotechs, corresponding to a discount rate of 12%. From the time dimension, HDM1002 is expected to be approved and launched around 2028, and innovative drugs usually need to go through a 5-7 year market ramp-up period after launch to reach sales peak, so peak sales are expected around 2034, about 8 years from the current point in time. Calculated according to the compound discount formula, the discount factor is approximately 0.40.
Combined with the 0.70 probability of clinical success, the final risk-adjusted net present value (rNPV) of HDM1002's weight-loss indication pipeline in Greater China is approximately RMB 460 million.
Disclaimer: The data in this article, such as peak sales and risk-adjusted net present value, are model-based estimation results based on public information and a series of subjective assumptions, and are only used to demonstrate the valuation logic. They do not represent official forecasts of Huadong Medicine Co.,Ltd., nor do they constitute any investment advice. Key parameters such as clinical success rate, penetration rate, market share, and annual treatment cost are all subject to significant uncertainty, and actual results may differ materially from the estimated values. Investors should make independent judgments and bear investment risks themselves.
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