The stock price of ALPHAMAB-B (09966) has experienced two flash crashes in a year, with a sharp decline of 30%. It is trapped by its star product.

On November 14th, the stock price of ALPHAMAB-B (09966) experienced a collapse, with nearly HKD 200 million of funds fleeing within the first half hour of trading and the company's stock price plummeting by 30% within one hour. According to previous communication in a conference call by KJC, it is determined that the Phase III registered clinical trial KN046-303, which combines PD-L1/CTLA-4 dual targeting KN046 with albumin-bound paclitaxel and gemcitabine as first-line treatment for advanced pancreatic cancer, may be unblinded this week. Considering that the stock price of KJC had experienced a significant drop in May this year due to the unsuccessful unblinding of a clinical trial, the market can hardly help but link the current stock price crash with the upcoming KN046-303 clinical trial results, which are crucial for the commercialization of KJC's products and future valuation trends. Will there be another large-scale capital flight? On May 19th of this year, KJC announced that its core product, PD-L1/CTLA-4 dual targeting KN046 for the treatment of advanced squamous non-small cell lung cancer, did not achieve statistical significance in overall survival (OS) temporarily and therefore failed to complete the unblinding successfully. As a result, KJC's stock price plunged by 14% on that day. However, even before the announcement of the failed unblinding, on May 18th, KJC's stock price had already plummeted by 18%, with a trading volume of HKD 415 million. Such selling off of stocks by large amounts of capital prior to the announcement raised questions among many investors about the existence of "asymmetric information," leading to further panic in the market and a nearly 50% drop in the company's stock price within a month. It is not difficult to understand the panic among investors on November 14th, as they were concerned about a recurrence of the large-scale capital flight on May 18th. Both the macro market and the company's clinical-related news did not show any significant negative information, and KJC also issued a statement claiming to be unaware of the stock price volatility. In the face of unknown negative news, the panic sentiment in the market continued to escalate after lunchtime. It can be observed that although KJC's stock price stabilized at a decline of around 20% after lunch, the trading volume and value continued to increase. As of 2 p.m. on November 14th, the daily trading volume of KJC had exceeded 48 million shares, with a trading value close to HKD 480 million. This volume level was higher than that of May 18th, reflecting further amplified panic sentiment among investors. For KJC, currently, only one PD-L1 product is not enough to support its valuation in the current domestic PD-(L)1 competitive market. In November 2021, KJC's PD-L1 monoclonal antibody KN035 was approved in the domestic market. At that time, about 10 domestic PD-(L)1 drugs had already been approved for market launch, and the products of leading companies had started to approach a sales threshold of 2 billion. However, even so, KN035 only achieved a sales value of 567 million yuan in its first complete sales year in 2022, and it is expected to reach the threshold of 1 billion. According to the previous 2023 mid-term financial results released by KJC, the company's revenue recorded 136 million yuan, a year-on-year increase of 154.7%; the net loss decreased significantly from 147 million yuan in the same period of the previous year to 39.86 million yuan, a 72% reduction. The company's income mainly comes from drug sales and royalty fees, totaling 117 million yuan. The reason why KN035 has achieved significant sales is that it is the world's first subcutaneously injectable PD-L1 inhibitor, which can be administered in 30 seconds, greatly saving time and medical resources for both patients and healthcare providers. It is safe and stable at room temperature, making the administration process easier and significantly reducing administration time. However, subcutaneous injection does not have high technological barriers. As the PD-1/PD-L1 field becomes more crowded, the administration route has become a direction for major companies to consider. For example, in August this year, the China Drug Evaluation Center announced that the application for the Phase 2b study of toripalimab subcutaneous injection had been officially submitted for clinical trial. As an improved new drug application, it extends the subcutaneous injection formulation of PD-1 drugs. In addition, several domestic companies, including Betta Pharmaceuticals and Tianjin Chase Sun Pharmaceutical, are also exploring oral administration of PD-1/PD-L1 drugs. On the other hand, against the backdrop of homogenization and price wars in the domestic PD-(L)1 market, as well as the pressure to negotiate price reductions in medical insurance, it will become increasingly difficult for KN035 to break through the sales threshold. As other similar administration routes begin to appear in the market, the sales advantage of KN035 may be further weakened, inevitably resulting in a collapse of its future sales prospects. This also means that KJC will be unable to support its future valuation growth solely with this product. Developing a blockbuster for pancreatic cancer treatment is the key to "breakthrough." Investors are concerned about the clinical results of KN046 because, in addition to KN035, it is currently the most promising product in KJC's pipeline and is closest to reaching the market. Pancreatic cancer indication is the biggest highlight of KN046, and if the subsequent trial data is positive, KN046 may become a potential star drug in the pancreatic cancer market. From a market perspective, there is a significant pain point and gap in pancreatic cancer treatment globally. As the recognized "king of cancers" in the global academic community, about 90% of pancreatic cancers are pancreatic ductal adenocarcinoma (PDAC), which is difficult to detect, progresses rapidly, and has a high mortality rate. Approximately 80% of pancreatic cancers are already in the advanced stages when they are diagnosed. Currently, the prognosis for locally advanced or metastatic pancreatic cancer is extremely poor, with a 5-year survival rate of only 3-5%. The options for patients who are not eligible for surgical treatment are very limited. Currently, the main treatment for pancreatic cancer is chemotherapy, with liposomal irinotecan (Onivyde) being the only second-line therapy available. According to data from the European Society for Medical Oncology in September 2022, in a controlled trial of Onivyde, a total of 298 patients who failed first-line treatment were included, and the primary endpoint was met. The data showed that the median overall survival in the treatment group was 7.39 months, compared to 4.99 months in the control group. The median progression-free survival in the treatment group was similar to the control group. Therefore, the potential success of KN046 in treating pancreatic cancer is highly anticipated, as it addresses a significant unmet need in the market.(mPFS) stands for 4.21 months and 1.48 months, respectively.In this market context, if KN046 can successfully secure pancreatic cancer, it is expected to become a "global hit". The increase in the company's stock price from HKD 6 to HKD 13 since August this year is partly attributed to market speculation. However, the recent sharp decline in stock prices has raised doubts among investors about whether KN046 can be successful again. However, currently, there is not enough publicly available information to determine whether KN046-303 is delayed unblinding or unblinding failure. Therefore, the significant drop in stock prices on the 14th may be more of a result of market panic. As for whether there is a so-called "information asymmetry" in the current market, investors can only make judgments based on subsequent public information disclosure.