Group 1 - The core viewpoint of the report is that the target price for Kangfang Biotech (09926) has been raised by 21.7%, from HKD 115 to HKD 140, while maintaining a "Buy" rating [1] - Key short-term catalysts include: 1) Overseas application and complete data publication of the HARMONi study; 2) Publication of the AK112-306 study at ESMO 2025; 3) Results of multiple product/indication health insurance negotiations in Q4 2025; 4) Progress of more early-stage projects like ADC [1] - The company is optimistic about the overseas approval prospects of Ivosidenib, with a clearer path for it to become a new generation I/O cornerstone drug, replacing PD-(L)1 single-target therapies [1] Group 2 - Cardunili's overseas development has initiated liver cancer research, with the recent approval of its third indication for first-line cervical cancer in the general population, and potential participation in health insurance negotiations later this year [2] - The company is starting a Phase II study of Cardunili in combination with Lenvatinib overseas, with expectations of seeing more assets registered and listed in the next 2-3 years [2] - The differentiated ADC development strategy is progressing well, with the first ADC (HER3) entering clinical trials and the first bispecific ADC AK146D1 completing its first patient enrollment [2]

Core Viewpoint - The investigation into the use of clinical research anti-cancer drugs by two patients in Chongqing has revealed significant issues regarding the recommendation and procurement of these medications, highlighting potential violations of medical ethics and regulations [1][5]. Group 1: Patient Cases - Patient Li was diagnosed with cervical cancer in June 2013 and underwent surgery, later receiving treatment at Chongqing University Cancer Hospital, where she was recommended to use the drug Cadonilimab after a positive PD-L1 test in August 2023 [2]. - Patient Tang was diagnosed with cervical cancer in June 2017 and, after a recurrence, was recommended to use Cadonilimab instead of the initially suggested Pembrolizumab due to cost considerations [2][4]. Group 2: Medical Professional Conduct - The investigation found that the doctor involved, referred to as Li, recommended Cadonilimab to both patients, which is within the scope of normal medical practice according to clinical guidelines [5]. - However, the doctor violated local regulations by recommending a sales representative to the patients, leading to disciplinary actions including warnings and suspension of prescription rights [5]. Group 3: Drug Procurement and Usage - Cadonilimab was approved for market sale on June 28, 2022, with a price of 13,220 yuan per unit, and patients could obtain it through various means, including self-purchase and charity programs [6][7]. - Both patients acquired a total of 70 and 90 units of the drug respectively, with a significant portion obtained through clinical research channels, raising concerns about the legitimacy of these sources [7]. Group 4: Clinical Research Drug Sources - The investigation revealed that the clinical research drugs obtained by the patients were marked as "for clinical research use" and were not part of any approved clinical trials at the hospitals involved [8][10]. - Sales personnel from the drug company were found to have forged documents to obtain these drugs, leading to regulatory scrutiny and potential legal consequences [8][9]. Group 5: Quality and Compliance of Drugs - The drugs used by the patients were confirmed to meet national quality standards, despite being labeled for clinical research, indicating compliance with production regulations [10][11]. - The investigation prompted a review of the management of clinical research drugs and the implementation of stricter regulations to prevent future violations [12].

Core Viewpoint - The article discusses the investigation into the use of clinical research anti-cancer drugs by two patients in Chongqing, highlighting the actions taken by health authorities and the implications for medical practices and drug distribution in the region [1]. Group 1: Basic Situation - Patient Li was diagnosed with cervical cancer in June 2013 and underwent surgery, later receiving treatment at Chongqing University Cancer Hospital. In August 2023, her condition relapsed, leading to the recommendation of the drug Cadonilimab by her doctor [2]. - Patient Tang was diagnosed with cervical cancer in June 2017 and also underwent surgery. In January 2024, she was recommended to use Cadonilimab after her condition relapsed [2]. Group 2: Investigation and Handling - The investigation revealed that the doctor recommended Cadonilimab to both patients, which was a legitimate treatment option according to clinical guidelines. However, the doctor also violated ethical guidelines by recommending a sales representative to the patients [3][5]. - The investigation found that the doctor had informed the patients about potential risks associated with the drug, which has a 1.7% incidence of immune-related pneumonia [4][5]. Group 3: Drug Acquisition - Cadonilimab was approved for sale in June 2022 at a price of 13,220 yuan per unit. Patients could obtain it through self-purchase, charity programs, or clinical trials. Both patients acquired the drug through a combination of self-purchase and free clinical research supplies [6][7]. - The drug was included in the national medical insurance directory as of January 2025, reducing the out-of-pocket cost for patients to between 300 and 1,000 yuan per unit [7]. Group 4: Clinical Research Drug Sources - The investigation revealed that the clinical research drugs obtained by the patients were improperly sourced, with evidence of forgery by sales personnel from the drug company to acquire these drugs [8]. - The pharmacies involved were found to be in violation of drug management regulations by storing and distributing clinical research drugs without proper authorization [9]. Group 5: Drug Quality Verification - The drugs used by the patients were confirmed to be produced according to national standards, and no quality issues were found with the Cadonilimab they received [10]. Group 6: Investigation of Clinics - The clinic where the patients received treatment was found to have engaged in improper practices, including the use of forged prescriptions. The clinic faced penalties and was ordered to rectify its practices [11]. - Following the incident, health authorities initiated a comprehensive review of medical quality and ethical standards to prevent similar occurrences in the future [11].

Group 1 - The core viewpoint is that the company is optimistic about the overseas approval prospects of Ivosidenib (依沃西) for treating 2L+ EGFRm NSCLC, as the treatment options are limited and the efficacy in the HARMONi study is significantly better than current chemotherapy regimens [1] - The company has initiated multiple Phase III studies in mainland China this year, covering large patient populations with limited treatment options, including first-line colorectal cancer, first-line pancreatic cancer, and PD-(L)1 resistant NSCLC [1] - The broad indication layout and the high efficacy with low toxicity characteristics of Ivosidenib are gradually clarifying its path to becoming a new generation I/O cornerstone drug, potentially replacing PD-(L)1 single-target therapies [1] Group 2 - The company has recently received approval for the third indication of Cadonilimab (卡度尼利) for first-line cervical cancer in the entire population and is expected to participate in the medical insurance negotiations in the second half of the year [2] - An overseas Phase II study of Cadonilimab in combination with Lenvatinib for second-line liver cancer, following treatment failure with Atezolizumab and Bevacizumab, is being initiated [2] - The differentiated ADC development strategy is progressing well, with the first ADC (HER3) entering clinical trials and the first bispecific ADC AK146D1 completing its first patient enrollment [2] Group 3 - Key short-term catalysts include: 1) Overseas submission and complete data release of the HARMONi study; 2) Presentation of the AK112-306 study (head-to-head against Tremelimumab for 1L squamous NSCLC) at ESMO 2025; 3) Results of medical insurance negotiations for multiple products/indications in Q4 2025, including Cadonilimab for first-line gastric cancer and cervical cancer, Ivosidenib for first-line PD-L1+ NSCLC, AK101, and AK102; 4) Advancement of more early-stage projects such as ADCs [3]

Group 1 - The top three companies with the highest short positions are WuXi AppTec (22.57%), CATL (17.76%), and COSCO Shipping Holdings (14.27%) [1][2] - The companies with the largest absolute increase in short positions are Alibaba Health (4.45%), China Liansu (2.54%), and Hong Kong Travel (2.02%) [1][2] - The companies with the largest absolute decrease in short positions are Far East Horizon (-1.62%), ZhongAn Online (-1.55%), and Rongchang Biologics (-1.32%) [1][3] Group 2 - The latest short position data shows that WuXi AppTec has 87.35 million shares, CATL has 27.69 million shares, and COSCO Shipping Holdings has 411 million shares [2] - Alibaba Health's short position increased from 6.97% to 11.42%, while China Liansu's increased from 0.61% to 3.15% [2] - Far East Horizon's short position decreased from 4.43% to 2.82%, and ZhongAn Online's decreased from 7.43% to 5.88% [3][4]

Investment Rating - The report maintains a positive outlook on the innovative drug sector, expecting significant revenue growth and potential profitability for several companies in the first half of 2025 [3][8]. Core Insights - The innovative drug sector is projected to see revenue growth of at least 40% year-on-year for companies such as BeiGene, Innovent Biologics, and others, driven by the commercialization of core products [3][8]. - The Pharma sub-sector is expected to experience a revenue growth rate of 10-15% for companies like Hansoh Pharmaceutical and China Biologic Products, while others may see growth of 5-10% [3][8]. - The medical services sector is anticipated to have a revenue growth of 15-20% for companies like GuoShengTang, with a focus on mergers and acquisitions [3][8]. Summary by Sections Innovative Drugs - Companies expected to achieve over 40% revenue growth in 1H25 include BeiGene, Innovent Biologics, and others, primarily due to the commercialization of key products [3][8]. - Some companies, such as BeiGene and Innovent Biologics, are likely to reach profitability due to increased sales volume [3][8]. - The report highlights that companies like Hutchison China MediTech may see significant profit growth due to asset disposals [3][8]. Pharma - The impact of centralized procurement is gradually diminishing, allowing for continued innovation and transformation within the sector [3][8]. - Companies projected to achieve 10-15% revenue growth include Hansoh Pharmaceutical and China Biologic Products, while others like 3SBio and United Laboratories may see 5-10% growth [3][8]. Medical Services - GuoShengTang is expected to have a revenue growth of 15-20% in 1H25, with ongoing attention to domestic and international acquisition activities [3][8].

Investment Rating - The report assigns a "Buy" rating to the company 康方生物 (9926 HK) with a target price raised to HKD 140.00, indicating a potential upside of 29.3% from the current price of HKD 108.30 [2][12][13]. Core Insights - The company is advancing multiple indications for its drug 依沃西, with a significant focus on I/O and ADC strategies, which are expected to differentiate its offerings in the market [2][7]. - The report highlights the promising overseas approval prospects for 依沃西, particularly for its application in treating 2L+ EGFRm NSCLC, as the efficacy shown in the HARMONi study surpasses existing chemotherapy options [7]. - 康方生物 is also initiating several Phase III studies in mainland China for various cancers, indicating a broadening of its therapeutic scope [7]. - The report anticipates a peak sales adjustment for 依沃西 in China to RMB 7.1 billion [7]. - The company is starting overseas development for 卡度尼利, with a recent approval for a new indication in first-line cervical cancer, and plans for a Phase II study in second-line liver cancer [7]. - The ADC development strategy is gaining traction, with the first ADC (HER3) entering clinical trials and the first bispecific ADC AK146D1 completing patient enrollment [7]. - The report emphasizes the rich pipeline of catalysts, including upcoming data releases and negotiations for multiple products in Q4 2025 [7]. Financial Overview - The company’s projected revenues for 2025 are estimated at RMB 3,506 million, with a significant growth trajectory expected in subsequent years, reaching RMB 8,053 million by 2027 [6][15]. - The net profit is projected to recover to RMB 402 million in 2025, with further increases anticipated in the following years [6][15]. - The report notes a substantial year-to-date stock price increase of 78.42% [4]. - The company’s market capitalization stands at approximately HKD 97.08 billion [4]. Valuation Model - The DCF valuation model indicates an equity value of RMB 114,241 million, translating to a per-share value of HKD 140.00 [9]. - The report reflects adjustments in revenue forecasts, with a decrease in expected revenues for 2025 and 2026 compared to previous estimates [8]. Market Position - 康方生物 is positioned within the biotechnology sector, focusing on innovative therapies that leverage both I/O and ADC technologies, aiming to capture new market opportunities [2][12]. - The report suggests that the company’s strategic initiatives and product pipeline could lead to sustained long-term value creation [7].

Core Viewpoint - The Hong Kong Innovative Drug ETF (159567) has shown significant growth in both share volume and fund size since its inception, indicating strong investor interest in the innovative drug sector [1]. Group 1: Fund Performance - As of July 9, 2024, the Hong Kong Innovative Drug ETF (159567) closed with a gain of 1.08% and a trading volume of 2.352 billion yuan [1]. - The fund's share volume increased by 419.87% from 3.95 million shares at the end of 2023 to 20.55 million shares by July 8, 2024 [1]. - The fund's size grew by 749.27%, from 378 million yuan at the end of 2023 to 3.209 billion yuan by July 8, 2024 [1]. Group 2: Liquidity and Trading Activity - Over the last 20 trading days, the cumulative trading amount for the ETF reached 42.082 billion yuan, with an average daily trading amount of 2.104 billion yuan [1]. - Since the beginning of the year, the ETF has recorded a total trading amount of 100.143 billion yuan over 124 trading days, averaging 808 million yuan per day [1]. Group 3: Fund Management - The current fund manager, Ma Jun, has managed the Hong Kong Innovative Drug ETF since its inception on January 3, 2024, achieving a return of 56.11% during the management period [1]. Group 4: Top Holdings - The ETF's top holdings include WuXi Biologics (11.47%), BeiGene (10.87%), and Innovent Biologics (9.60%), among others, indicating a focus on leading companies in the innovative drug sector [2]. - The fund's holdings are diversified across several key players in the biotechnology and pharmaceutical industries, with significant positions in companies like China Biologic Products and CSPC Pharmaceutical Group [2].

Core Viewpoint - 康方生物 is positioned to lead the next generation of tumor immunotherapy with its innovative dual-antibody platform and strong pipeline of products [1][2][3] Group 1: Company Overview - 康方生物 focuses on developing innovative antibody drugs, utilizing its ACE platform and Tetrabody technology to support over 20 pipelines [1] - The company achieved a significant milestone with the approval of AK104, the world's first PD-1/CTLA-4 dual antibody, in 2022 [1] - 康方生物 has a robust cash position of 7.3 billion RMB in 2024, which supports the commercialization of its pipeline [1] Group 2: Product Pipeline and Market Potential - AK112 has outperformed K drug in head-to-head trials and is expected to become a cornerstone product in the global immuno-oncology market, with peak revenue projections of 17.1 billion RMB by 2035 [2] - AK104 is the only approved PD-1/CTLA-4 dual antibody, with ongoing clinical trials expanding its indications, including cervical and gastric cancers [3] - The company anticipates rapid revenue growth from AK104 and AK112, with projected revenues of 3.67 billion, 5.34 billion, and 7.24 billion RMB for 2025-2027 [4] Group 3: Financial Projections and Valuation - The valuation of 康方生物 is projected at 160 billion HKD based on the potential of AK104 and AK112, with domestic revenue estimated at 3x PS and overseas at 15x PE [4] - The FCFF model indicates a target price of 163.33 RMB, suggesting significant upside potential compared to the closing price on July 7, 2025 [4]

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Insights - The company is positioned as a leader in the dual antibody sector, spearheading a new era in immuno-oncology with its innovative products, particularly AK104 and AK112, which are nearing commercialization [8][13]. - The revenue forecast indicates significant growth, with projected revenues of 3.672 billion, 5.342 billion, and 7.240 billion CNY for 2025, 2026, and 2027 respectively, reflecting a strong upward trajectory [1][24]. - The company has a robust cash reserve of 7.344 billion CNY, which supports ongoing research and development efforts [29]. Summary by Sections Company Overview - The company focuses on developing innovative antibody drugs and has established a comprehensive drug development platform, ACE, with over 20 product pipelines [13][14]. - It has successfully launched the world's first dual immune checkpoint inhibitor, AK104, for cervical cancer in June 2022, and is expanding its product offerings [13][14]. Financial Performance - The company reported total revenue of 2.124 billion CNY in 2024, with a significant increase in product sales revenue to approximately 2.002 billion CNY, marking a year-on-year growth of 24.88% [24][25]. - The gross profit margin remains high at 86.39%, indicating strong profitability relative to industry standards [25][28]. Product Pipeline - AK104 is the only approved PD-1/CTLA-4 dual antibody globally, with multiple indications approved and ongoing clinical trials for additional cancers [33][34]. - AK112 is also positioned to challenge existing therapies, with promising clinical trial results and a strong market potential [8][19]. Market Position and Future Outlook - The company is expected to achieve a market valuation of 160 billion HKD based on the anticipated revenues from its core products [8]. - The report projects a target price of 163.33 CNY per share, indicating a potential upside from the current market price [8].