Core Insights - Innovent Biologics announced Phase 1 clinical data for IBI363, a first-in-class PD-1/IL-2α-bias bispecific antibody fusion protein, at the 2024 World Conference on Lung Cancer, focusing on its application in advanced non-small cell lung cancer (NSCLC) [1][4] Group 1: Clinical Data and Efficacy - As of August 2, 2024, 134 patients were enrolled in the study, with 95.5% having received prior PD-(L)1 immunotherapy. The overall objective response rate (ORR) was 20.8% and disease control rate (DCR) was 74.4% [1][3] - In the subgroup receiving 3 mg/kg Q3W, the ORR was 34.5% and DCR was 79.3%, with a notable 50% ORR and 88.9% DCR among patients with at least 12 weeks of follow-up [2][3] - The median progression-free survival (PFS) for patients treated with 1/1.5 mg/kg was 5.5 months, while the median PFS for the 3 mg/kg group has not yet been reached [3] Group 2: Safety Profile - IBI363 demonstrated a manageable safety profile, with 20.1% of patients experiencing treatment-related adverse events (TRAEs) of grade 3 or higher, and 6.0% discontinuing treatment due to TRAEs [3] - In the 3 mg/kg Q3W subgroup, 17.5% experienced TRAEs ≥ grade 3, and 5.3% discontinued treatment due to TRAEs, indicating consistency in safety across different dosage groups [3] Group 3: Future Directions - The company plans to continue investigating the long-term efficacy and safety of IBI363, as well as its potential in combination with other therapies and in different solid tumors [4] - Additional studies are underway to evaluate IBI363's effectiveness in treating cold tumors with low or absent PD-L1 expression, which could represent a significant advancement in NSCLC treatment [5][6] Group 4: Company Overview - Innovent Biologics, founded in 2011, focuses on developing high-quality biopharmaceuticals for various diseases, including cancer and autoimmune disorders. The company has launched 11 products and has multiple assets in clinical trials [7][8]

Investment Rating - The report gives a "Buy" rating for the company with a target price of HKD 58.05 [5] Core Views - The company has a strong R&D engine and commercialization capabilities, aiming for RMB 20 billion in revenue by 2027 [1] - The company has 11 approved products, with product revenue reaching RMB 3.8 billion in H1 2024, a 55% YoY increase [1] - The company is focusing on four key disease areas: oncology, cardiovascular & metabolic, autoimmune, and ophthalmology, with a diversified product pipeline [1] - The company expects to have nearly 20 approved products by 2027, targeting RMB 20 billion in domestic revenue [1] Oncology - The company has 9 approved oncology products, with 1 NDA submitted and 2 in key clinical stages [2] - Sintilimab (PD-1) sales reached RMB 2.75 billion in 2023, a 34% YoY increase, and is expected to maintain growth due to its inclusion in the national reimbursement drug list (NRDL) [2] - The company is developing next-generation IO therapies, including a global first-in-class PD-1/IL-2 bispecific antibody (IBI363), which has shown promising efficacy in Phase I trials [2] - The company is leveraging its "IO+ADC" dual strengths, with IBI343 (CLDN18.2 ADC) showing potential as a best-in-class ADC in gastric and pancreatic cancers [34] Metabolic and Cardiovascular - Mazdutide (GLP-1R/GCGR dual agonist) is the first GLP-1R/GCGR dual agonist to enter Phase III globally, with NDAs submitted for obesity and type 2 diabetes [3] - Mazdutide has shown significant weight loss and glycemic control in clinical trials, with potential to become a leading treatment for obesity and diabetes [44] - Tafolecimab (PCSK9 inhibitor) is the first domestically developed PCSK9 monoclonal antibody approved in China, with potential for inclusion in the NRDL in 2024 [49] Autoimmune and Ophthalmology - The company has a strong pipeline in autoimmune diseases, including IBI112 (IL-23p19 inhibitor) for psoriasis, which has shown best-in-class potential with a 12-week dosing interval [3] - IBI311 (IGF-1R inhibitor) is expected to be the first innovative drug for thyroid eye disease (TED) in China, with NDA submitted [3] Financial Projections - The company is expected to achieve revenues of RMB 8 billion, RMB 11 billion, and RMB 14.7 billion in 2024, 2025, and 2026, respectively, with YoY growth rates of 29%, 37%, and 34% [3] - Net profit is projected to turn positive in 2025, reaching RMB 121 million, and further increase to RMB 1.34 billion in 2026 [3] - The company's DCF valuation suggests a fair value of HKD 58.05 per share, with a market cap of HKD 94.7 billion [3]

Core Insights - Innovent Biologics has announced updated results from a pivotal Phase 2 clinical trial of Dupert® (fulzerasib) for advanced non-small cell lung cancer (NSCLC) with KRAS G12C mutation, presented at the 2024 World Conference on Lung Cancer [1] - Fulzerasib has received approval from the NMPA in August 2024 for treating adult patients with advanced NSCLC harboring the KRAS G12C mutation who have received at least one systemic therapy [1][2] - The clinical trial showed a confirmed objective response rate (ORR) of 49.1% and a disease control rate (DCR) of 90.5%, with a median progression-free survival (PFS) of 9.7 months [1] Company Overview - Innovent Biologics is a leading biopharmaceutical company founded in 2011, focusing on developing high-quality medicines for various diseases, including cancer and autoimmune disorders [3] - The company has launched 11 products and has multiple assets in various stages of clinical trials, including 3 new drug applications under regulatory review [3] - Innovent collaborates with over 30 global healthcare companies, enhancing its research and development capabilities [3] Product Details - Fulzerasib is a novel, orally active KRAS G12C inhibitor designed to target the GTP/GDP exchange, leading to tumor cell apoptosis and cell cycle arrest [2] - The KRAS G12C mutation is prevalent in various cancers, including 15-20% of lung cancers, making it a significant target for treatment [2] - The drug has received Breakthrough Therapy Designation from the CDE of China's NMPA for treating advanced NSCLC and colorectal cancer patients with KRAS G12C mutation [2]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HK$61.98, reflecting a potential upside of 42% from the current price of HK$43.50 [2][4][8]. Core Insights - The company is expected to achieve a revenue CAGR of approximately 30% from 2024 to 2026, driven by strong market demand for its products [2][3]. - The company reported a significant increase in product revenue for 1H24, reaching RMB 3.81 billion, a year-on-year growth of 55.1% [2][6]. - The gross margin for 1H24 was 84.1%, an increase of 1.8 percentage points compared to the previous year, attributed to rising sales and decreasing production costs [2][3]. - The company has multiple key products in the cardiovascular and metabolic (CVM) fields awaiting approval, which are considered crucial for future growth [2][3]. Financial Summary - The company's revenue is projected to grow from RMB 6,206 million in 2023 to RMB 12,948 million by 2026, with a gross profit increasing from RMB 5,070 million to RMB 10,667 million over the same period [1][12]. - The net profit is expected to turn positive by 2025, reaching RMB 1,004 million, and further increasing to RMB 2,508 million by 2026 [1][12]. - The earnings per share (EPS) is forecasted to improve from a loss of RMB 0.66 in 2023 to a profit of RMB 1.61 by 2026 [1][12]. Valuation Analysis - The report employs a two-stage DCF valuation method, resulting in a target price of HK$61.98, which corresponds to a 2025 enterprise value/revenue multiple of 7.7x, significantly higher than the comparable company average of 4.0x [8][9]. - The WACC used in the valuation is 10.2%, with a perpetual growth rate of 3% [8][9].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The report highlights strong growth in product sales and a significant narrowing of adjusted LBITDA. The total revenue for the first half of 2024 reached 39.52 billion CNY, representing a year-on-year increase of 46.3%, with product revenue at approximately 38.11 billion CNY, up 55.1% year-on-year. The company reported a loss of 3.93 billion CNY, compared to a loss of 1.39 billion CNY in the same period of 2023. Adjusted LBITDA was 1.61 billion CNY, down from 2.67 billion CNY in 2023, marking a 39.9% reduction in losses [3] Summary by Sections Financial Performance - In the first half of 2024, adjusted R&D expenses were 12.94 billion CNY, compared to 8.26 billion CNY in the same period of 2023. Adjusted selling expenses were 18.51 billion CNY, accounting for 46.8% of revenue, a decrease of 2.8 percentage points year-on-year. The adjusted gross margin was 84.1%, up from 82.3% in the same period of 2023, due to increased sales volume and improved production efficiency [3][4] Product Development - The company announced that its KRAS G12C inhibitor, Daberit®, received NMPA approval for use in adult patients with advanced non-small cell lung cancer (NSCLC) with KRAS G12C mutations. This is the first KRAS G12C inhibitor approved in China and marks the company's 11th product [3] Future Growth Prospects - The company has a robust pipeline with 11 approved products and 3 new products in the NDA stage. Six additional product applications are currently under review. The company aims to commercialize 20 products by 2027, targeting sales revenue of 20 billion CNY [3][4] Profit Forecast - The company is projected to have a net profit of -6.05 billion CNY in 2024, followed by 3.04 billion CNY in 2025 and 10.22 billion CNY in 2026, with year-on-year growth rates of 41%, 150%, and 236% respectively. The long-term development outlook is positive, leading to the maintenance of the "Buy" rating [3][4]

Investment Rating - The report maintains an "Outperform" rating for Innovent Biologics with a target price adjusted to HKD 67.8 per share [9][17]. Core Insights - Innovent Biologics reported strong revenue growth in H1 2024, with total revenue reaching RMB 39.5 billion, a 46.3% increase year-on-year, and product revenue of RMB 38.1 billion, up 55.1% [3][14]. - The company's gross margin improved to 82.9%, reflecting operational efficiency enhancements, while R&D expenses increased by 51.6% to RMB 14.0 billion, accounting for 35.4% of revenue [3][14]. - The report highlights the successful sales performance of key products, including Tyvyt (PD-1 inhibitor) and several biosimilars, contributing to the revenue growth [4][14]. Financial Performance - For H1 2024, the company reported a net loss of RMB 3.9 billion, compared to a loss of RMB 1.4 billion in the same period last year [3][14]. - Adjusted LBITDA for the period was RMB 1.6 billion, a decrease of 39.9% from RMB 2.7 billion in the previous year [3][14]. - As of June 30, 2024, the company had cash and short-term financial assets totaling RMB 101.1 billion [3][14]. Product Pipeline and Growth Potential - The oncology pipeline is rich with catalysts, including the recent NMPA approval of Fulzerasib (KRAS G12C) and expected approval of IBI344 (ROS1) in H2 2024 [5][15]. - Upcoming clinical data updates for several early-stage products are anticipated, including IBI363 (PD-1/IL-2 α-bias) and IBI343 (CLDN18.2 ADC) [5][15]. - The non-oncology field is also progressing, with NDA submissions for Mazdutide (GLP-1R/GCGR) and Teprotumumab (IGF-1R) expected to bolster future revenue [5][16]. Revenue Forecast - Revenue forecasts for 2024-2026 have been adjusted to RMB 78.6 billion, RMB 102.5 billion, and RMB 133.9 billion, respectively, reflecting year-on-year growth rates of 26.7%, 30.3%, and 30.7% [9][17]. - The company is projected to achieve profitability by 2026, with a net profit attributable to shareholders of RMB 760 million [9][17].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price raised to HKD 55.40 [3][4]. Core Insights - The company reported a strong sales performance in the first half of 2024, with a year-on-year revenue increase of 46.3% to RMB 3.95 billion, driven by a 55.1% increase in pharmaceutical sales [2][3]. - Despite a significant increase in net loss by 182.1% to RMB 390 million, this was attributed to the absence of a one-time tax refund from the previous year and an increase in R&D expenses [2]. - Revenue forecasts for 2024-2026 have been adjusted upwards, with a projected CAGR of 26.4% from 2023 to 2026 [3]. Summary by Sections Revenue and Profit Forecasts - The revenue forecast for 2024 has been slightly increased by 0.04%, with 2025 and 2026 revenue estimates raised by 4.4% and 5.9% respectively [3][6]. - The company expects a revenue CAGR of 26.4% from 2023 to 2026, driven by growth in existing and new products [3]. Product Pipeline - The core product, Dabu, continues to see increased indications, with a revenue increase of 45.6% in the first half of 2024, amounting to USD 239 million (approximately RMB 1.68 billion) [3]. - New products launched post-2020 have significantly contributed to revenue, with their share rising from 26.6% in 2021 to 58.8% in the first half of 2024 [3]. - The recently launched Dabot will contribute to revenue in the second half of the year, targeting a significant market in non-small cell lung cancer [3]. Financial Metrics - The company’s total revenue is projected to reach RMB 8.318 billion in 2024, RMB 10.437 billion in 2025, and RMB 12.538 billion in 2026, with respective growth rates of 34.0%, 25.5%, and 20.1% [7]. - The net loss is expected to decrease from RMB 729 million in 2024 to RMB 400 million in 2026, indicating a path towards profitability [7]. Valuation - The updated DCF model reflects an increase in the target price from HKD 51.05 to HKD 55.40, based on the upward revision of net profit forecasts for 2025-2026 [3][4].

Investment Rating - Maintain "Recommend" rating [1][3] Core Views - Revenue growth driven by strong demand for innovative product portfolio and effective commercialization strategy, with product revenue increasing by 55.1% YoY to 3.811 billion CNY [2] - Operating efficiency improved with product sales expense ratio decreasing by 5.9 percentage points and administrative expense ratio decreasing by 4.9 percentage points [2] - EBITDA loss narrowed by 39.9% to 160 million CNY, with potential to achieve EBITDA breakeven next year [2] - Solid foundation in oncology with PD-1 approved for seven indications and included in the national reimbursement drug list [2] - CVM pipeline commercialization expected to materialize soon, with 11 commercialized products and expanding reimbursement coverage [2] - Early-stage pipeline is rich with multiple innovative molecules showing positive data, including IBI363, IBI343, and IBI389 [3] - Revenue forecasts for 2024-2026 are 8.133 billion, 10.867 billion, and 13.595 billion CNY, with net profit turning positive in 2025 [3][5] Financial Performance - 2024 H1 revenue reached 3.952 billion CNY, a 46.3% YoY increase [2] - R&D investment in 2024 H1 was 1.294 billion CNY, with cash on hand at 10.112 billion CNY [2] - Gross margin expected to remain stable at 80.76% in 2024, increasing to 85.22% by 2026 [5][6] - Net profit forecasted to turn positive in 2025 at 53 million CNY, with significant growth to 818 million CNY in 2026 [5][6] Pipeline and Commercialization - Oncology: PD-1 remains a cornerstone product with seven approved indications, and new drugs like Tareltinib (ROS1) expected to be approved soon [2] - CVM: Masdutide for weight loss and type 2 diabetes, and Teprotumumab for thyroid eye disease have submitted NDAs [2] - Autoimmune: Piconibart (IL-23p19) plans to submit NDA within the year [2] - Early-stage pipeline includes IBI363 (PD-1/IL-2a), IBI343 (CLDN18.2 ADC), and IBI389 (CLDN18.2/CD3) showing promising results in clinical trials [3]

Investment Rating - Buy (Maintained) [1] Core Views - The company's revenue is expected to grow rapidly, with projected revenues of 7.9 billion, 10.3 billion, and 13.2 billion RMB for 2024, 2025, and 2026 respectively [4] - The company's net profit is forecasted to turn positive in 2025, reaching 436.85 million RMB, and further increasing to 1.16 billion RMB in 2026 [1] - The company's EPS is expected to improve significantly, from -0.37 in 2024 to 0.27 in 2025 and 0.71 in 2026 [1] Financial Performance - In the first half of 2024, the company achieved revenue of 3.95 billion RMB, a 46.3% year-on-year increase [2] - The company reported a net loss of 390 million RMB in the first half of 2024, with product revenue reaching 3.81 billion RMB, a 55.1% increase [2] - The company's revenue growth is driven by the strong performance of Tyvyt® (sintilimab injection) and other products, as well as the accelerated growth of new products [2] Product Pipeline - The company has launched one new innovative drug, expanding its commercialized products to 11 [3] - Six NDAs are under review by the NMPA, including IBI344 (taletrectinib, ROS1) for first-line and second-line indications, and IBI362 (mazdutide) for weight management and type 2 diabetes [3] - IBI344 (taletrectinib) is expected to be approved in the second half of 2024, and IBI112 (IL-23p19) is expected to submit an NDA [4] Key Data Updates - The company will present updated Phase 1 data for its global first-in-class PD-1/IL-2α-bias in lung cancer treatment at WCLC [4] - Key clinical data for IBI354 (HER2 ADC) in HER2-positive solid tumors will be presented at ESMO [4] - Multiple clinical data updates for Tyvyt® (sintilimab injection) are expected at upcoming conferences [4] Financial Metrics - The company's revenue growth rate is projected to be 27.34% in 2024, 30.87% in 2025, and 28.06% in 2026 [1] - The company's net profit growth rate is expected to be 171.51% in 2025 and 166.12% in 2026 [1] - The company's ROE is forecasted to improve from -5.13% in 2024 to 3.54% in 2025 and 8.60% in 2026 [1]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 60 [2][4]. Core Insights - The company's revenue for 1H24 reached RMB 39.5 billion, representing a year-on-year increase of 46.3% and a quarter-on-quarter increase of 12.8%. Product revenue specifically was RMB 38.1 billion, up 55.1% year-on-year and 16.5% quarter-on-quarter, aligning with previous announcements [3]. - The adjusted non-IFRS net loss for 1H24 was RMB 1.6 billion, a reduction of 15.9% year-on-year and 50.6% quarter-on-quarter, which was better than both the report's and market's expectations [3]. - The strong growth in product revenue is attributed to the robust performance of Tyvyt and three biosimilars, as well as the successful launch of new products like Sapitinib and Huiranzhuo [3]. - The company aims for EBITDA breakeven by 2025 and projects a revenue target of RMB 20 billion by 2027, with an expected revenue growth of approximately 30% in the second half of 2024 [3]. Financial Performance Summary - For 2022, the company reported revenue of RMB 4.56 billion, which increased to RMB 6.21 billion in 2023, and is projected to reach RMB 8.58 billion in 2024, reflecting a year-on-year growth of 36.2% [7]. - The adjusted net loss is expected to narrow from RMB 515 million in 2023 to RMB 328 million in 2024, with a return to profitability projected in 2025 with a net profit of RMB 1.7 billion [7]. - The gross margin is expected to improve to 83.0% by 2024, up from 81.7% in 2023 [9]. Research and Development Pipeline - The company is advancing its R&D pipeline, with key updates expected at upcoming conferences regarding IBI363 and other assets [3]. - The management has indicated that the sales efficiency of the oncology pipeline will improve, leading to a decrease in sales and administrative expenses in the second half of 2024 and beyond [3].