Another blockbuster launch highly likely; with peak sales of RMB2-2.8bn byDBe。    As of today, public database indicated that Hengrui had filed for new drugapplication (NDA, marketing and manufacturing approval) for pyrotinib. In ourrecently published deep dive report for Hengrui pipeline, we estimated peak salesopportunity of RMB2-2.8bn for this compound. We spoke with managementrecently, and anticipate that the indications oncologists would use in practicewould include mBC and mGC (gastric), while there is a reasonable likelihoodfor adjuvant therapy, just like neratinib. We remind investors that Herceptin hada run rate of RMB2.2bn by YE16, with PRDL coverage in 15provinces. WhileHerceptin price had 53% price cuts in China recently, we still believe high endof our estimates (RMB2.8bn) for pyrotinib is achievable as P2data might becomparable to that of neratinib, but much better than lapatinib.。    Phase I data reported at SABCS 2015; phase 2data to be reported at SABCS2017.Pyrotinib is a novel small molecule irreversible pan-ErbB receptor TKI (tyrosinekinase inhibitor), similar to neratinib. ORR of 53% and DCR of 81% were reportedfrom a phase I dose finding study with 382L or above mBC patients in China. PFSwas 35-40weeks. The MTD was 480mg while grade III diarrhea was observed,similar to AE profile of neratinib. While the company has not articulated details ofphase 2study, we believe the NDA was based on a phase ? study (CTR20150279)with 128patients that compared pyrotinib/capecitabine vs. lapatinib/capecitabinein 2L her2+ mBC. We noticed that there is an ongoing phase 3study with exactlythe same design. As such, we believe this might be the requirement from CFDAthe pyrotinib were to gain CFDA approval based on P2data. Lastly, the companyindicated that P2data would be presented in December.。    US strategy; changes to our model。    Management indicated that pyrotinib is in phase I study in US. However thetarget indication for future development is NSCLC with her 2mutation, differentfrom China pathway. It is estimated that 2-3% of the NSCLC patients have her2mutation according to the company. For our model, we increase revenueestimates to RMB300/900m from RMB100/450m respectively for 2019/2020aswe now expect approval in 2H18vs. 1H19before. Our EPS estimates increased0.9% and 1.7% for 2019/2020respectively. TP is unchanged; reiterate Buy.。

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