Everest Medicines' VELSIPITY® Approval in Hong Kong: A Strategic Leap in a Growing UC Market

Everest Medicines (1952.HK) has marked a pivotal milestone with the approval of VELSIPITY® (etrasimod) in Hong Kong for adults with moderately to severely active ulcerative colitis (UC). This third regional nod within its licensed territory (after Macau and Singapore) positions the company as a leader in addressing a rapidly expanding therapeutic need. With China’s UC patient population projected to double by 2030, VELSIPITY’s entry into Hong Kong—leveraging the “Hong Kong and Macau Medicine and Equipment Connect” initiative—opens doors to the Greater Bay Area’s lucrative market. Below, we analyze the investment implications of this approval, market dynamics, and Everest’s financial trajectory.

Market Context: UC as a Growth Catalyst

The approval arrives amid a growing UC market in China, where patient numbers surged from 600,000 in 2022 to an expected 1 million by 2030. Driven by urbanization, lifestyle changes, and improved diagnostics, the China UC treatment market is projected to reach US$272 million by 2025 (from US$246 million in 2022), growing at a 3.3% CAGR. This expansion is further fueled by unmet medical needs: current therapies like biologics (e.g., anti-TNF agents) and immunosuppressants often fall short in mucosal healing and convenience.

VELSIPITY’s unique mechanism—as a selective S1P receptor modulator targeting subtypes 1, 4, and 5—addresses these gaps. Its once-daily oral administration, rapid onset of action, and inclusion in the AGA Living Clinical Practice Guideline as a first-line higher-efficacy treatment for treatment-naïve UC patients underscores its competitive edge. This positioning aligns with a 52.2% global share of oral therapies in UC treatment, making VELSIPITY a strong contender in a market dominated by injectable or infused alternatives.

Financial Performance: Strong Growth, But Challenges Remain

Everest’s 2024 results highlight remarkable progress:
- Revenue: Soared to RMB706.7 million (US$102 million), a 461% YoY increase, exceeding its RMB700 million guidance.
- Profitability: Achieved commercial-level profitability for the full year, with a 25% improvement in non-IFRS net loss and an 83% gross margin.
- Key Drivers:
- NEFECON® (for IgA nephropathy) generated RMB353 million, a 1,581% YoY rise, after its inclusion in China’s National Reimbursement Drug List (NRDL) in 2025.
- XERAVA® (antibiotic) contributed RMB353 million, up 256%, due to efficacy against drug-resistant pathogens.

However, Q4 2024 saw a widened net loss of RMB1,041 million, reflecting high R&D investments (RMB556 million projected for 2025) and operational scaling costs. Despite this, cash reserves of RMB1.6 billion provide a solid foundation for growth.

Pipeline Momentum and Strategic Expansion

Beyond UC, Everest’s pipeline reinforces its growth potential:
1. VELSIPITY® Expansion:
- NDAs submitted in Taiwan and South Korea, with local production capacity of 50 million tablets annually secured via its Jiashan factory.
- Aiming to enter mainland China through preferential policies, capitalizing on its 50.6% market share in the global UC treatment sector.

1. Clinical Pipeline Highlights:
2. EVER001 (BTK inhibitor): Phase 1b/2a data showed 81-91% clinical remission rates in autoimmune diseases, with 2025 follow-up results expected.
3. Zetomipzomib (immunoproteasome inhibitor): Phase 2a data in autoimmune hepatitis (AIH) due in H1 2025.
4. EVM14 (mRNA TAA vaccine): IND cleared in the U.S., targeting oncology indications.

These advancements, combined with partnerships (e.g., with Calliditas Therapeutics for Nefecon), underscore Everest’s focus on high-unmet-need areas like nephrology, oncology, and autoimmune disorders.

Risks and Competition

While Everest’s strategy is compelling, challenges persist:
- Competitor Landscape:
- Established players like AbbVie (ABBV), Takeda (TAK), and local firms like Connect Biopharma are advancing therapies (e.g., CBP-307, amiselimod).
- Biologics (e.g., vedolizumab) and JAK inhibitors (e.g., filgotinib) remain dominant, requiring VELSIPITY to demonstrate long-term efficacy and cost advantages.

• Financial Risks:
• Despite 2024’s success, 2025 EPS estimates remain negative (-USD1.48), though a turnaround to +USD0.04 in 2026 is projected.
• Reliance on a few key products (NEFECON, XERAVA, VELSIPITY) heightens revenue concentration risk.

Investment Outlook

Everest Medicines’ approval in Hong Kong is a strategic win, capitalizing on unmet needs in UC and positioning it for Greater Bay Area penetration. With a 3.3% CAGR in the China UC market and RMB1.6 billion in cash, the company is well-equipped to scale its pipeline.

Key Takeaways for Investors:
1. Revenue Growth: 2025 revenue is projected to hit USD1.54 billion (118% YoY growth), with 2026 estimates rising to USD2.28 billion.
2. Valuation: Analysts’ price targets range from HKD25–HKD70, with an average of HKD49.72. Current stock price (HKD49) aligns with this midpoint, suggesting fair valuation but upside potential if 2026’s 102.7% growth materializes.
3. Risk Mitigation: Diversification into oncology (e.g., Trodelvy™) and autoimmune pipelines reduces dependency on UC alone.

Conclusion

Everest Medicines stands at a pivotal juncture. The VELSIPITY® approval in Hong Kong is a critical step in capturing a fast-growing UC market, while its robust pipeline and financial flexibility position it for sustained growth. Despite near-term losses, the company’s 2026 EPS turnaround and strategic regional expansion—backed by a USD272 million UC market in 2025—make it a compelling play on Asia’s rising healthcare demands. Investors should monitor execution risks but remain optimistic about Everest’s long-term trajectory in a sector primed for innovation.

Final Note: As of April 2025, Everest’s stock trades near analyst consensus, with upside tied to clinical data reads and commercial uptake of its lead assets.