Kelun Biopharm's sac-TMT Highlighted at Merck's ASCO Meeting, Significant Growth Potential Ahead

Overview

This report analyzes Kelun Biopharm's performance at Merck's ASCO meeting, particularly focusing on the Phase III clinical trial data and market opportunities for its sac-TMT (sacituzumab tirumotecan). The report concludes that sac-TMT has the potential to become a core drug for various cancer treatments and highlights the company's attractive valuation.

Core views

The report emphasizes that Merck highly evaluated sac-TMT during the ASCO investor event as one of the most competitive ADCs for advanced tumor treatment. TroFuse-005 global Phase III clinical trials demonstrated an overall survival (OS) benefit for sac-TMT over chemotherapy in endometrial cancer patients. Additionally, Merck confirmed that its PD-1/VEGF bispecific antibody MK-2010 is ready to enter Phase III clinical trials and suggested it might be combined with sac-TMT. Based on these positive results, the report maintains an overweight rating with a target price of HKD 535.

Analysis framework

The report evaluates key information from Merck's ASCO meeting, combining Kelun Biopharm's clinical trial data and market potential to provide a favorable assessment of sac-TMT. It discusses sac-TMT's efficacy across different tumor types and its market prospects, emphasizing its advantage as a marker-independent ADC. Furthermore, the report highlights Kelun Biopharm's deep collaboration with Merck, which is expected to accelerate product validation.

Methodology notes

• Valuation MethodDCF Discounted Cash Flow

  A DCF model is used to evaluate Kelun Biopharm's enterprise value, assuming a market risk premium of 6.6% and a risk-free rate of 3.8%

  The DCF model predicts future cash flows and discounts them to their present value to assess the company's intrinsic value, considering long-term growth expectations and risks.

• Company Fundamentals & Financial FrameworkFree cash flow analysis

  The report estimates Kelun Biopharm's free cash flow until 2033, assuming terminal growth rates and weighted average cost of capital (WACC)

  Free cash flow analysis evaluates the company's cash flow after paying operating expenses and capital expenditures, helping assess financial health and investment potential.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Kelun Biopharm (6990.HK)

  Benefiting from the successful development and marketing of sac-TMT

  Strengths

  Strong ADC research capabilities, deep collaboration with Merck

  Weaknesses

  R&D risks including the possibility of clinical trial failure

  Comparison

  Compared to competitors like Dato-DXd and Trodelvy, covers a broader range of indications

  Risks

  Regulatory risks, geopolitical risks, R&D risks, competition risks, financial risks, intellectual property risks

Key data

• Target Price535.00 HK$Calculated based on DCF valuation model
• Current Price403.60 HK$As of June 2, 2026
• Implied Upside/Downside32.56%Upside relative to current stock price

Impact & implications

The report suggests that the successful development of sac-TMT will significantly enhance Kelun Biopharm's market position and drive substantial revenue growth. Particularly in areas of high unmet need such as endometrial cancer, sac-TMT could become a standard treatment option. Moreover, Kelun Biopharm's deep collaboration with Merck will offer more R&D and commercialization opportunities.

Risks

• Changes in regulatory policies may increase compliance challenges
• Geopolitical risks such as trade disputes, tariffs, or sanctions may impact cross-border collaborations
• Clinical trial failures could result in lost R&D investments and damage to reputation
• Emergence of new competitors or superior treatment options could erode market share

What to watch

• Publication of subsequent clinical trial data
• Progress in collaboration between Merck and Kelun Biopharm
• Regulatory approval status globally, especially in the U.S., EU, and Japan