JPMorgan lowers Akeso stock price target due to US regulatory concerns

JPMorgan analysts lowered Akeso Inc's (9926:HK) price target to HK$99.00 from HK$110.00, maintaining an Overweight rating, after the stock declined due to regulatory uncertainty in the U.S. stemming from Summit's inability to file a biologics license application for ivonescimab. The probability of success for ivonescimab in the U.S. was reduced by 10% in their model due to low maturity of overall survival data in non-Asian patients. Separately, analysts view Bristol-Myers Squibb's collaboration with BioNTech on a PD-L1xVEGF bispecific antibody as validation of the potential of this drug class.

Analysis

JPMorgan analysts have revised their price target for Akeso Inc. (9926:HK) downwards to HK$99.00 from HK$110.00, although they have maintained an Overweight rating on the stock. This adjustment follows an approximate 10% decline in Akeso's share price on Monday, a stark contrast to the Hang Seng Index's modest 0.5% dip. The primary driver for this reassessment is heightened regulatory uncertainty in the United States concerning Akeso's key drug candidate, ivonescimab. This uncertainty stems from Summit Therapeutics' inability to file a biologics license application (BLA) for ivonescimab, despite positive progression-free survival and overall survival data from the HARMONi study. A critical factor cited is the low maturity of overall survival data specifically within non-Asian patient cohorts, which has led JPMorgan to reduce its probability of success forecast for ivonescimab in the U.S. market by approximately 10%. Despite these U.S.-specific challenges, the maintenance of the Overweight rating signals continued underlying confidence in Akeso's broader prospects. Separately, the recent collaboration between Bristol-Myers Squibb (BMY) and BioNTech (BNTX) to co-develop BNT327, a PD-L1xVEGF bispecific antibody, is viewed by analysts as a significant validation for this class of immuno-oncology drugs. This development suggests strong industry belief in the therapeutic potential of such agents, potentially benefiting from BMY's extensive development and commercialization capabilities.

Key Decisions for Investors

• Investors should note the maintained Overweight rating on Akeso (9926:HK) by JPMorgan, which suggests long-term optimism despite the near-term U.S. regulatory challenges and a reduced price target to HK$99.00.
• Carefully monitor updates on ivonescimab's U.S. regulatory pathway, particularly the maturation of overall survival data in non-Asian patients, as this is a key determinant for its U.S. market approval and valuation.
• Consider the Bristol-Myers Squibb/BioNTech collaboration as a positive signal for the PD-(L)1xVEGF bispecific antibody class, which could provide a long-term tailwind for Akeso's ivonescimab, assuming eventual resolution of current U.S. filing issues.
• Evaluate Akeso's current valuation following the recent stock decline, weighing the identified U.S. regulatory risks against the drug's potential in other markets and the validated promise of its drug class.