Core Viewpoint - The "International Lung Cancer Frontier and Innovation Forum" held in Shanghai highlighted the advancements in lung cancer treatment and provided a platform for Chinese innovative pharmaceutical companies to showcase their R&D capabilities, with a focus on the promising PD-L1 antibody-drug conjugate (ADC) HLX43 from Fuhong Hanlin [1][2]. Group 1: Company Overview - Fuhong Hanlin has successfully launched nine products, benefiting over 900,000 patients globally, and is recognized as a pioneer in the lung cancer treatment field [2]. - The company aims to leverage its innovative pipeline, particularly HLX43, to achieve breakthroughs in lung cancer treatment and expand its global presence [3][4]. Group 2: Product Highlights - HLX43 demonstrated broad efficacy without dependence on biomarkers, making it a potential "best-in-class" product for various lung cancer patients, regardless of their EGFR mutation status or PD-L1 expression levels [5][7]. - In clinical trials, HLX43 showed an objective response rate (ORR) of 48.6% in non-squamous NSCLC and 33.3% in squamous NSCLC, indicating its effectiveness in hard-to-treat patient populations [6][7]. - The drug also exhibited a high disease control rate (DCR) of 90.0% in patients with brain metastases, showcasing its ability to penetrate the blood-brain barrier [7][8]. Group 3: Market Potential and Strategic Positioning - The positive data from HLX43 has attracted attention from top investment institutions, with Goldman Sachs issuing a "buy" rating and setting a target price of HKD 100.70, indicating strong upside potential for the company [9][10]. - The company is positioned to transition from a biosimilar pioneer to a global innovative pharmaceutical player, with HLX43 as a key driver of its global pipeline [10][11]. Group 4: Future Outlook - The successful forum and HLX43 data release mark a milestone for Fuhong Hanlin, indicating that its "innovation-driven" strategy is yielding results and establishing its capability to produce globally competitive drugs [11]. - The anticipated expansion of HLX43's indications and continued clinical advancements are expected to solidify its role as a core growth driver for the company's future performance [11].

Core Insights - The "International Lung Cancer Frontier and Innovation Forum" held in Shanghai serves as a significant platform for discussing advancements in lung cancer treatment and showcases the R&D capabilities of local innovative pharmaceutical companies [1][2] - The company, Junshi Biosciences, presented its key innovative product, the PD-L1 antibody-drug conjugate (ADC) HLX43, which has garnered attention for its "high efficiency, low toxicity, and broad spectrum" data [1][2] Company Strategy - The CEO of Junshi Biosciences, Dr. Zhu Jun, emphasized the company's strategic vision in his keynote speech, highlighting lung cancer as the most prevalent malignant tumor globally and in China [2] - The company has successfully launched nine products, benefiting over 900,000 patients worldwide, and has introduced the world's first approved anti-PD-1 monoclonal antibody for first-line treatment of small cell lung cancer (SCLC) in nearly 40 countries [2][3] R&D Pipeline - Junshi Biosciences is focusing on a differentiated R&D platform and global integrated operational system to achieve breakthroughs in lung cancer treatment [3] - The PD-L1 ADC HLX43 is expected to overcome limitations related to PD-L1 expression levels and EGFR gene mutations, thus covering a broader patient population [3][4] HLX43 Data Highlights - The forum featured significant updates on HLX43's efficacy and safety for treating non-small cell lung cancer (NSCLC), combining data from Chinese Phase I and international Phase II studies [5][8] - HLX43 demonstrated a "biomarker-independent" broad efficacy, showing treatment effects across various patient demographics, including squamous and non-squamous NSCLC, regardless of EGFR mutation status or PD-L1 expression levels [8][10] Clinical Value - In difficult-to-treat patient populations, HLX43 achieved objective response rates (ORR) of 33.3% for squamous NSCLC and 48.6% for non-squamous NSCLC, addressing the pressing issue of immunotherapy resistance [10][11] - The drug also showed promising intracranial activity, with a 30.0% ORR and a 90.0% disease control rate in patients with brain metastases, indicating its potential for treating other solid tumors prone to brain metastasis [10][11] Market Recognition - Leading investment institutions, including Goldman Sachs, have recognized Junshi Biosciences' innovative transformation, issuing a "buy" rating with a 12-month target price of HKD 100.70, indicating strong potential upside [12][13] - The report highlights HLX43's dual potential as "first-in-class" and "best-in-class," with its global potential seen as a key driver for the company's valuation [12][13] Future Outlook - The successful forum and HLX43 data release mark a milestone for Junshi Biosciences, showcasing its capability to produce globally competitive innovative drugs [13] - The broad applicability and ability to address clinical challenges position HLX43 as a potential cornerstone product for the company, with expectations for significant market impact as clinical trials progress [13]

Core Insights - The company announced key update data for its PD-L1 ADC (HLX43) for the treatment of non-small cell lung cancer (NSCLC) [1] Group 1: Study Overview - A total of 174 advanced NSCLC patients were included in the study as of October 22, 2025, with 89 patients receiving 2.0 mg/kg HLX43 and 85 patients receiving 2.5 mg/kg [1] - All patients had previously undergone platinum-based chemotherapy, with approximately 80% and over 30% having received immunotherapy and targeted therapy, respectively [1] Group 2: Efficacy Results - In squamous NSCLC patients (2 mg/kg, n=33), the objective response rate (ORR) was 33.3%, and the disease control rate (DCR) was 75.8% [1] - In non-squamous patients (2.5 mg/kg, n=35, including EGFR wild-type and EGFR mutations), the ORR increased to 48.6%, and the DCR reached 94.3% [1] - Among squamous NSCLC patients who had previously received docetaxel treatment (2 mg/kg, n=13), the ORR was 38.5%, and the DCR was 84.6% [1] - The company indicated that these results suggest significant potential for HLX43 in the population of lung squamous cancer patients who have failed docetaxel treatment [1]

Summary of Henlius Biotech (2696.HK) Conference Call Company Overview - **Company**: Henlius Biotech (2696.HK) - **Industry**: Biopharmaceuticals, focusing on innovative therapies and biosimilars - **Market Cap**: HK$35.9 billion / $4.6 billion [7] Key Points Strategic Transition - Henlius is evolving from a biosimilar company to a global innovative biopharma player, supported by: 1. An expanding pipeline led by HLX43, a potential best-in-class PD-L1 ADC for global pivotal studies [1][2] 2. A biosimilar franchise with upcoming product launches that could generate significant cash flow for R&D [1] 3. Proven capabilities in clinical operations, regulatory affairs, and biomanufacturing [1] Pipeline and Valuation - **HLX43**: - Estimated to generate risk-adjusted sales of **US$3.8 billion** by **2036**, contributing approximately **54%** to the company's valuation [2][21] - Significant opportunity in **2L EGFRwt non-squamous NSCLC** based on clinical readouts [2] - Expected to enter pivotal studies for various cancers, including cervical and colorectal [2] - **Valuation**: - Target price set at **HK$100.70**, indicating a **52.3% upside** based on a **10% discount rate** and **3% terminal growth rate** [3][26] - Risks include potential failure to realize global value through partnerships, clinical development risks, and increasing competition [3][31] Financial Projections - **Revenue Forecast**: - Projected revenues for 2024: **Rmb 5,724.4 million**, increasing to **Rmb 9,437.1 million** by 2026 [7][17] - EBITDA expected to rise from **Rmb 1,227.9 million** in 2024 to **Rmb 3,931.7 million** in 2026 [7][17] - **Earnings Per Share (EPS)**: - EPS forecasted to be **Rmb 1.51** in 2024, peaking at **Rmb 5.43** in 2026 before declining [7][17] Product Portfolio - **ADC Portfolio**: - HLX43 is the cornerstone asset with potential in various solid tumors [19][20] - Other assets include HLX10 (PD-1) and HLX22 (HER2), with ongoing clinical trials and approvals [19][20] - **Biosimilar Franchise**: - Established portfolio with global partnerships, expected to generate stable cash flow [21][22] - Key candidates include HLX15 (daratumumab), projected to contribute significantly to revenue [21] Market Position and Competitive Landscape - **Market Opportunity**: - HLX43 positioned as a competitive option in the PD-L1 ADC space, with a projected **US$3.8 billion** peak sales potential [32][38] - The US market is expected to contribute **50%** of global sales, with significant addressable patient populations [35][38] Risks and Challenges - Key risks include: 1. Failure to fully realize pipeline drug values through partnerships [3][31] 2. Clinical development risks associated with early-stage products [3][31] 3. Increasing competition in late-line solid tumors [3][31] 4. Challenges in attracting and retaining talent [3][31] Conclusion - Henlius Biotech is strategically positioned for growth with a robust pipeline and a strong focus on innovative therapies. The company is expected to leverage its biosimilar franchise to support its transition into a global biopharma player, despite facing several market and operational risks.

Core Viewpoint - The recent downturn in the Hong Kong innovative drug market has shifted investor focus towards the core value of pharmaceutical companies, with Fuhong Hanlin being a notable beneficiary of this trend, experiencing significant stock price increases and financial returns [1][2][3]. Group 1: Company Overview - Fuhong Hanlin, established in 2010, initially focused on developing biosimilars targeting blockbuster original drugs, covering areas such as oncology and autoimmune diseases [2]. - The company has achieved substantial financial returns early on, with total revenue of 2.8 billion yuan and a net profit of 390 million yuan in the first half of this year [3]. Group 2: Product Pipeline and Strategy - Fuhong Hanlin is shifting its focus towards innovative drugs as its biosimilar business matures, which is seen as a crucial path for overcoming growth ceilings [5]. - The company’s core innovative drug pipeline includes the PD-1 drug, H drug, which has shown promising results in clinical trials for gastric cancer and is expected to generate significant global sales [7][8]. Group 3: Market Expansion and Clinical Development - H drug is projected to reach global sales of 5 billion USD, with a focus on expanding into the U.S. market after initial approvals in Southeast Asia and the EU [8][9]. - The company aims to establish a clinical development capability that spans from clinical trials to product registration and GMP production, enhancing its competitiveness in the U.S. market [9]. Group 4: Innovative Approaches and Future Directions - Fuhong Hanlin is exploring differentiated indications based on clinical needs, particularly in areas where competitors have failed, such as perioperative treatment for gastric cancer [10][11]. - The company emphasizes the importance of addressing unmet clinical needs and adapting to regulatory environments to successfully penetrate local markets [12]. Group 5: Research and Development Investments - Fuhong Hanlin is investing heavily in its research pipeline, including a PD-L1 ADC drug, HLX43, which aims to address limitations of existing therapies and has shown promising early clinical results [14][15]. - The company is also developing HLX22 for HER2-positive advanced gastric cancer, with significant investment aimed at improving patient outcomes and expanding market potential [16].

Core Viewpoint - Goldman Sachs has initiated coverage on Junshi Biosciences (02696) with a "Buy" rating and a 12-month target price of HKD 100.70, representing a 52.3% upside from the recent closing price of HKD 66.10 [1] Group 1: Company Transformation - Junshi Biosciences is strategically transitioning from an early pioneer in biosimilars to a global innovative biopharmaceutical company, supported by three key factors [1] - The expansion of its pipeline is led by its core asset HLX43, which is expected to become a best-in-class PD-L1 antibody-drug conjugate (ADC) and is preparing for global pivotal clinical studies [1] - The biosimilar segment has two new products set to launch in global markets, which will be commercialized through established international partnerships, generating significant cash flow to support further R&D investments [1] Group 2: HLX43 Valuation Driver - HLX43 is identified as the primary valuation driver, with Goldman Sachs projecting risk-adjusted sales of USD 3.8 billion by 2036, contributing approximately 54% to the company's valuation [2] - Among the various cancer types HLX43 targets, second-line EGFR wild-type non-squamous non-small cell lung cancer (2L EGFRwt NSCLC) shows the most clear and significant commercialization potential, with early data from ASCO/WCLC meetings and further validation expected by year-end [2] - Additional proof-of-concept data is anticipated within the next 12 months to support HLX43's exploration in cervical cancer, esophageal cancer, and colorectal cancer [2] - HLX43 has the potential for global collaboration with international pharmaceutical companies, aligning with Junshi Biosciences' strategic focus on unlocking core innovative global value [2]

Core Viewpoint - Goldman Sachs has initiated coverage on Junshi Biosciences (复宏汉霖) with a "Buy" rating and a 12-month target price of HKD 100.70, representing a 52.3% upside from the recent closing price of HKD 66.10 [1] Group 1: Company Transformation and Pipeline Expansion - Junshi Biosciences is strategically transitioning from an early player in the biosimilar space to a global innovative biopharmaceutical company, supported by three key factors [1] - The pipeline expansion is led by the core asset HLX43, which is expected to become a best-in-class PD-L1 antibody-drug conjugate (ADC) and is preparing for global pivotal clinical studies [1] - The biosimilar segment has two new products set to launch in global markets, which will be commercialized through established international partnerships, generating significant cash flow to support further R&D investments [1] Group 2: HLX43 Valuation and Market Potential - HLX43 is identified as the primary driver of valuation, with projected risk-adjusted sales reaching USD 3.8 billion by 2036, contributing approximately 54% to the company's valuation [2] - Among the various cancer types HLX43 targets, the second-line EGFR wild-type non-squamous non-small cell lung cancer (2L EGFRwt NSCLC) shows the most clear and significant commercialization potential, with early data expected to be validated by year-end [2] - Additional proof-of-concept data is anticipated within the next 12 months to support further exploration of HLX43 in cervical cancer, esophageal cancer, and colorectal cancer [2] - HLX43 has the potential for global collaboration with international pharmaceutical companies, aligning with Junshi Biosciences' strategic focus on unlocking core innovation value globally [2]

Core Insights - The TNF-α inhibitor market is experiencing rapid growth due to the increasing prevalence of autoimmune diseases and the urgent treatment needs of a large patient population [1][5][12] - In China, the market penetration rate of TNF-α inhibitors was only 0.31% in 2018, compared to 13.36% in the U.S., indicating significant growth potential for the industry [1][5] - The market size for TNF-α inhibitors in China is projected to reach 16.3 billion yuan in 2024, representing a year-on-year increase of 25.4% [1][5] TNF-α Inhibitor Industry Overview - TNF-α inhibitors are targeted biological agents that reduce inflammation and immune activation, primarily used for various autoimmune diseases [4][5] - The development of TNF-α inhibitors began in the 1990s, with the first drug, Infliximab, approved in 1998, marking the start of a new era in treating autoimmune diseases [4][5] Current Market Status - The TNF-α inhibitor market is expanding rapidly, attracting numerous domestic pharmaceutical companies, which has led to increased market penetration and growth [1][5] - The leading TNF-α inhibitors in the market include Adalimumab, Etanercept, and Infliximab, with Adalimumab holding a market share of 48.83% [6][7] Competitive Landscape - The TNF-α inhibitor industry is characterized by a dominance of foreign pharmaceutical companies, with local companies like Innovent Biologics and Junshi Biosciences rapidly gaining market share [7][9] - The competition is intensifying as more companies enter the market, leading to price reductions and increased pressure on profit margins [12] Future Trends - Future developments in the TNF-α inhibitor market will focus on improving therapeutic efficacy and reducing side effects through structural modifications and personalized treatment approaches [10][11] - The industry is expected to see increased competition, with many companies entering the market, leading to potential market consolidation as some may exit due to pricing pressures [12] - There is a growing opportunity for domestic companies to expand into international markets, particularly in North America and Europe, where demand for TNF-α inhibitors is rising [13]

Investment Rating - The report maintains an investment rating of "Outperform" with a rating of A [5] Core Insights - The report highlights the significant performance of domestic new drugs showcased at the ESMO 2025 conference, with several companies presenting excellent clinical data [3][21] - The report emphasizes the importance of academic conferences as key catalysts for the innovative drug sector, particularly mentioning ESMO, ASCO, and WCLC as critical events for Chinese pharmaceutical companies [20] Weekly New Drug Market Review - From October 20 to October 26, 2025, the top five gainers in the new drug sector were: - 欧康维视 (+8.87%) - 君圣泰 (+8.21%) - 诺思兰德 (+7.07%) - 友芝友 (+4.42%) - 海创药业 (+3.73%) - The top five losers were: - 康宁杰瑞 (-17.72%) - 北海康成 (-14.42%) - 创胜集团 (-14.29%) - 宜明昂科 (-13.40%) - 来凯医药 (-12.40%) [16][17] Recommended Focus Stocks - The report suggests focusing on several stocks with potential catalysts, including: 1. Products with high overseas volume certainty after MNC certification: - PD-1 upgraded product: 三生制药 - GLP-1 asset: 联邦制药 - ADC assets: 科伦博泰, 百利天恒 2. Potential heavyweights for overseas MNC authorization: - PD-1 upgraded products: 康方生物, 信达生物 - Breakthroughs in autoimmune fields: 益方生物, 中国抗体 - Innovative target ADC: 复宏汉霖, 石药集团 3. Stocks likely to benefit from medical insurance negotiations and commercial insurance innovative drug directories: - Beneficiaries of medical insurance directory: 恒瑞医药, 康诺亚, 迈威生物, 智翔金泰, 海创药业 - Beneficiaries of commercial insurance innovative drug directory: 药明巨诺, 科济药业 [2][20] New Drug Approval and Acceptance - This week, four new drug or new indication applications were approved, and five new drug or new indication applications were accepted in the domestic market [9] - A total of 46 new drug clinical applications were approved, and 31 new drug clinical applications were accepted [10] Key Domestic Market Events - 信达生物 announced a global strategic partnership with Takeda to accelerate the development of new generation tumor immunotherapy and antibody-drug conjugate therapies [11] - 康宁杰瑞 and 石药集团 announced that their HER2 bispecific antibody-drug conjugate JSKN003 received breakthrough therapy designation from the CDE [11] - 和黄医药 presented clinical data for HMPL-A251 at the AACR-NCI-EORTC conference [11] Key Overseas Market Events - 罗氏 received FDA approval for Gazyva/Gazyvaro for the treatment of active lupus nephritis in adult patients [12] - Electra Therapeutics announced that its therapy ELA026 received breakthrough therapy designation from the FDA and PRIME qualification from the EMA [12] - 安斯泰来 announced that the FDA accepted its supplemental biologics license application for the antibody-drug conjugate Padcev in combination with Keytruda [12]

Investment Rating - The report maintains a positive outlook on the pharmaceutical sector, indicating an "Overweight" rating for the industry, suggesting it is expected to outperform the overall market [32]. Core Insights - The report highlights that the Shenwan Pharmaceutical and Biological Index increased by 0.6% this week, while the Shanghai Composite Index rose by 2.9% and the Wind All A (excluding financials and petrochemicals) increased by 3.7% [4][6]. - The pharmaceutical sector's overall valuation stands at 30.4 times earnings, ranking 9th among 31 Shenwan primary industries [4][8]. - Significant collaborations and clinical trial results were reported, including a $11.4 billion global strategic partnership between Innovent Biologics and Takeda Pharmaceutical, which includes a $1.2 billion upfront payment [5][13]. - Key clinical trial results presented at the 2025 ESMO conference showed promising outcomes for several drugs, indicating advancements in treatment efficacy for various cancers [14][18][19]. Market Performance - The report details the performance of various sub-sectors within the pharmaceutical industry, with notable increases in medical devices (+0.2%), medical consumables (+1.7%), and medical research outsourcing (+5.5%), while traditional Chinese medicine and other biological products saw declines [4][8]. - The report also notes that 99 A-share pharmaceutical companies released their Q3 2025 earnings, with a total revenue of 94.15 billion yuan, reflecting a 1.3% year-on-year increase [20][22]. Key Events - The report mentions that Bairui Tianheng has passed the Hong Kong Stock Exchange hearing and is in the process of listing its H-shares [12]. - The report emphasizes the importance of the 2025 ESMO conference, where several companies presented significant clinical data, enhancing their market visibility and potential investment attractiveness [14][17][18]. Company Recommendations - The report recommends focusing on innovative drug sectors and companies with improving performance in medical devices and upstream sectors, including companies like Hengrui Medicine, Changchun High-tech, and Mindray Medical [5][20].