Core Viewpoint - BeiGene's new drug, a BCL2 inhibitor named Baiyueda (sotoclisib), has officially launched in China, marking a significant advancement in treatment options for adult patients with chronic lymphocytic leukemia (CLL) and small lymphocytic lymphoma (SLL), as well as relapsed or refractory mantle cell lymphoma (MCL) [1] Group 1 - BeiGene's stock opened over 3% higher, reaching a price of 210.8 HKD with a trading volume of 16.78 million HKD [1] - The drug Baiyueda has commenced supply in 70 cities across China as of January 13 [1] - Multiple medical institutions nationwide have begun prescribing Baiyueda, allowing it to benefit patients with CLL/SLL and R/R MCL [1] Group 2 - Baiyueda received conditional approval from the National Medical Products Administration (NMPA) on December 30, 2025, based on positive results from clinical studies BGB-11417-201 and BGB-11417-202 [1] - The clinical results demonstrated significant remission benefits in treated CLL/SLL and R/R MCL patients, with good overall tolerability and safety [1]

Core Insights - The 44th JPMorgan Healthcare Conference (JPM 2026) took place from January 12 to 15 in San Francisco, focusing on biotechnology, biopharmaceuticals, and AI in medicine, serving as a significant investment and trading window for the global biopharmaceutical industry [2] Group 1: Market Reactions - Following the announcement of the JPM conference, both A-shares and Hong Kong stocks in the pharmaceutical sector saw a collective surge, with companies like Rongchang Biopharmaceutical, Hongbo Pharmaceutical, and Boji Pharmaceutical hitting the daily limit up in A-shares [2] - In Hong Kong, companies such as Cornerstone Pharmaceuticals, Qiming Medical, and Rongchang Biopharmaceutical also performed notably well [2] Group 2: Clinical Research and Innovations - A total of 24 domestic innovative pharmaceutical companies are set to showcase their clinical data at the JPM conference, with seven companies presenting in the main session, including WuXi AppTec and BeiGene [3] - BeiGene will discuss the progress of its core products, including the widely approved BTK inhibitor, Brukinsa, and its new BCL2 inhibitor, which is the first of its kind approved in China for treating certain lymphomas [3] - Ascentage Pharma will present advancements in its apoptosis pipeline, focusing on inhibitors targeting key proteins involved in cancer treatment [4] Group 3: Business Development and Collaborations - The JPM conference is expected to be a hotspot for business development (BD) transactions, with five BD deals already announced in January, showcasing China's leading position in various technological fields [6] - Rongchang Biopharmaceutical signed an exclusive licensing agreement with AbbVie for its new PD-1/VEGF dual-specific antibody drug, potentially worth up to $5.6 billion [6] - Yilian Biopharmaceutical reached a licensing agreement with Roche for its YL201 project, securing an upfront payment of $570 million and additional milestone payments [6] Group 4: AI in Pharmaceuticals - The rapid development of AI has made it a focal point for many innovative pharmaceutical companies, with firms like Hengrui Medicine and BeiGene integrating AI technologies into their drug development processes [5] - NVIDIA and Eli Lilly announced a $1 billion investment to establish a joint research lab in the San Francisco Bay Area to accelerate AI applications in the pharmaceutical industry [5]

Summary of BeOne Medicines FY Conference Call Company Overview - **Company**: BeOne Medicines (NasdaqGS:BGNE) - **Industry**: Biotechnology, specifically focused on oncology and cancer treatment Key Points and Arguments Financial Performance - BeOne achieved significant product revenue growth, GAAP profitability, and meaningful cash flow generation in 2025, fulfilling commitments made at the previous conference [4][32] - Generated over $350 million in free cash flow in Q3 2025 and has a solid balance sheet with over $4 billion in cash [32] Product Development and Pipeline - **BRUKINSA**: Became the number one BTK inhibitor in the U.S. and globally, setting a new standard for efficacy and safety in Chronic Lymphocytic Leukemia (CLL) treatment with six-year progression-free survival (PFS) and overall survival (OS) rates of 74% and 84%, respectively [4][9] - **Sonro**: Received breakthrough designation and priority review in the U.S. for relapsed Mantle Cell Lymphoma (MCL) and had four regulatory approval submissions in 2025 [4] - **Tisli-Zanny**: Positive results in first-line HER2-positive gastric cancer, showing clinically meaningful improvement over standard care [5] - **Pipeline Expansion**: Five new molecules entered clinical trials, and six assets achieved proof of concept across four modalities [5] Market Insights - The CLL market is currently valued at $12 billion and is expected to grow due to therapeutic innovations [5][36] - Continuous BTK therapy is currently dominated by three major players, with BeOne positioned as the number one player [37] Safety and Efficacy Comparisons - BRUKINSA demonstrated superior efficacy and a more favorable safety profile compared to Ibrutinib and Acala, addressing issues such as cardiac toxicity [9][16] - Fixed-duration therapies currently available have shown underwhelming efficacy and safety concerns, which may limit their adoption [17][19] Future Outlook - BeOne plans to continue its focus on innovation, with expectations for a milestone-rich 2026, including phase three data from the Brukinza-Mangrove trial and initial global launches for Sonro [26][32] - The company aims to redefine treatment paradigms in CLL with a combination of BRUKINSA and a more selective BCL-2 inhibitor, Sonrotoclax, which is expected to deliver on the promise of fixed-duration therapy [21][22] R&D Capabilities - BeOne has a large R&D team of approximately 4,800 people, making it one of the largest oncology-focused teams globally [26] - The company has a unique integrated in-house model for drug development, which enhances speed and efficiency compared to traditional CRO-based models [30] Additional Important Insights - The company emphasizes the importance of patient stories, such as that of Lynn, a CLL patient thriving on BRUKINSA, highlighting the human impact of their innovations [10][11] - BeOne's commitment to addressing unmet medical needs in both frontline and relapse settings is evident in their development of a first-in-class BTK CDAC for relapsed CLL [23][24] This summary encapsulates the critical aspects of BeOne Medicines' FY conference call, focusing on financial performance, product development, market insights, safety comparisons, future outlook, and R&D capabilities.

Company Performance & Financials - BeOne Medicines delivered significant product revenue growth, with a 43% increase in the first three quarters of 2025 [17] - BRUKINSA rapidly became the global BTKi leader, showing a 51% increase in approved indications [20] - The company's pipeline achieved proof of concept for 6 assets across 4 modalities and brought 5 new molecular entities (NMEs) to the clinic in 2025 [22] CLL Treatment Landscape & BRUKINSA - BRUKINSA demonstrates progression-free survival (PFS) superiority to ibrutinib, with a hazard ratio (HR) of 069 (95% CI: 055, 087), p-value: 00014 [53] - Recent competitor efficacy data does not indicate a change to the CLL treatment landscape, with Pirtobrutinib showing a HR of 0845 (95% CI: 0566-1262), p-value: 04102 [60] - In the ALPINE trial, Zanubrutinib had a lower rate of adverse events (AEs) leading to treatment discontinuation at 77% compared to ibrutinib at 130% [65] ZS (Zanubrutinib + Sonrotoclax) Regimen - ZS (Zanubrutinib + sonrotoclax) is poised to be a fixed duration regimen with a 91% undetectable minimal residual disease (uMRD) rate [74] - ZS showed a 100% 36-month PFS rate (at 30 months) [74] - The company is initiating a Phase 3 trial of ZS vs AV in 1L CLL in H1 2026 [101] Pipeline & Future Milestones - The company has approximately 8-10 new molecular entities (NMEs) per year in its pipeline [105] - BeOne is the only company with best-in-class foundational medicines across the three key mechanisms of action (MOAs) in CLL [99] - The company anticipates several milestones in H1 and H2 2026, including Phase 3 data for BRUKINSA+R vs BR in 1L MCL and a potential R/R MCL U S approval for Sonro [101]

Summary of the Conference Call on Innovative Drug Investment Industry Overview - The innovative drug sector is expected to benefit significantly from business development (BD) transactions, with total transaction value exceeding $100 billion in 2025, leading to a projected revenue increase of approximately 6 times for Chinese innovative drug companies as the industry enters a growth phase [1][3] - China has become one of the most efficient countries globally in transitioning from preclinical confirmation (PCC) to proof of concept (POC), supported by high-quality clinical resources and efficient development capabilities [1][6] Key Companies and Products - **BeiGene**: Expected global sales of its product, Zanubrutinib, to reach $3.7 billion in 2025, potentially increasing to $4.5-5 billion by 2027, setting a benchmark for other companies [1][7] - **Innovative Drug Companies to Watch**: Recommendations include BeiGene, Kelun-Biotech (partnered with Merck), Innovent Biologics (partnered with Takeda), and Kintor Pharmaceutical, along with high-potential companies like Eucure Biopharma and Sinopharm [1][8] Investment Logic and Trends - The primary investment logic for 2026 in innovative drugs is "de-risking," emphasizing certainty in clinical, regulatory, commercial, and financial aspects of companies [2] - The innovative drug market is characterized by high volatility, necessitating the establishment of target market capitalization ranges and effective cost dilution or accumulation strategies [2] Clinical Data and Emerging Fields - Significant clinical data releases are anticipated in 2026 from major academic conferences such as the Morgan Conference, ACR, ASCO, and ESMO, which will impact stock prices of related companies [1][11] - Emerging fields to focus on include In vivo CAR technology and oncology products like AZ's datopotamab and Kintor's product [1][12][13] De-risking Strategies - De-risking strategies involve reducing research and development risks as pipelines advance, with success rates increasing significantly from preclinical to clinical stages [5] - Companies should secure quality assets through regulatory channels and maintain strong cash reserves to ensure project continuity [5] Market Dynamics and Future Outlook - The innovative drug market is at a critical inflection point, with many companies approaching breakeven and profit margin improvement, presenting investment opportunities [9] - Key factors for selecting innovative drug investments include the quality of POC data, consistency of overseas market data, and the operational advantages of companies [10] Conclusion - The innovative drug sector in China is poised for substantial growth, driven by efficient development processes and a strong pipeline of promising products. Investors are encouraged to focus on companies with established market presence and those entering critical development phases, as they are likely to yield significant returns in the evolving landscape of the pharmaceutical industry [21]

Investment Rating - The report indicates a positive investment outlook for the pharmaceutical sector, with the overall performance of the Shenwan Pharmaceutical and Biological Index increasing by 7.8% during the week, outperforming the Shanghai Composite Index which rose by 3.82% [2][3]. Core Insights - The pharmaceutical sector's overall valuation stands at 30.6 times earnings, ranking 10th among 31 Shenwan primary industries [5]. - The report highlights significant developments in the long-term care insurance system transitioning from pilot programs to full establishment during the 14th Five-Year Plan, with coverage reaching nearly 300 million people and fund expenditures exceeding 100 billion yuan by the end of 2025 [11]. - Notable advancements in drug commercialization include the launch of Novo Nordisk's oral GLP-1 weight loss drug Wegovy in the U.S., with monthly costs ranging from $149 to $299 for self-paying patients [13][14]. - Moderna has submitted a New Drug Application (NDA) for its seasonal flu vaccine mRNA-1010, showing promising efficacy results in clinical trials [15]. - Arrowhead has reported positive mid-stage results for its RNAi therapies ARO-INHBE and ARO-ALK7, demonstrating significant reductions in visceral and liver fat [16][17]. - GSK's hepatitis B drug Bepirovirsen has shown statistically significant functional cure rates in its Phase III trials [18]. - Recent approvals for innovative drugs in China include BeiGene's BCL-2 inhibitor and Sanofi's APOC3 siRNA drug, which addresses familial chylomicronemia syndrome [19][21]. Summary by Sections Market Performance - The Shenwan Pharmaceutical and Biological Index increased by 7.8%, ranking 6th among 31 Shenwan primary industries [2][3]. - Various sub-sectors showed positive growth, with medical devices and medical outsourcing leading with increases of 10.8% and 11.1%, respectively [5]. Industry Dynamics - The long-term care insurance system is set to expand significantly, with a focus on providing care for the elderly and disabled [11][12]. - The report emphasizes the importance of innovation in drug development, particularly in RNAi therapies and small nucleic acid drugs, which are gaining traction in clinical settings [16][18]. Company Developments - Significant partnerships and collaborations are highlighted, such as the $8.88 billion research collaboration between Insilico Medicine and Servier focusing on oncology [20]. - The report notes the successful commercialization of several new drugs, including BeiGene's and Sanofi's recent approvals, which are expected to impact market dynamics positively [19][21]. - The establishment of new companies and subsidiaries, such as the brain-computer interface subsidiary by Xinwei Medical, indicates a strategic shift towards innovative technologies in healthcare [22].

Investment Rating - The report maintains a positive outlook on the pharmaceutical industry, indicating a "Buy" rating based on recent market performance and emerging opportunities in innovative drug development [2][3]. Core Insights - The pharmaceutical sector saw a significant increase, with the Shenwan Pharmaceutical and Biological Index rising by 7.8%, outperforming the Shanghai Composite Index, which increased by 3.82% [2][3]. - The report highlights the ongoing commercialization of innovative drugs, including the oral GLP-1 medication Wegovy by Novo Nordisk, and the successful clinical trials of various RNAi therapies [11][13][18]. - The establishment of a comprehensive long-term care insurance system in China is expected to enhance the healthcare landscape, potentially benefiting the pharmaceutical sector [11][12]. Market Performance - The Shenwan Pharmaceutical and Biological Index ranked 6th among 31 Shenwan first-level sub-industries, with various sub-sectors showing positive growth, such as medical devices (+10.8%) and medical research outsourcing (+11.1%) [2][5]. - The overall valuation of the pharmaceutical sector stands at 30.6 times earnings, ranking 10th among 31 Shenwan first-level industries [5][10]. Recent Key Events - The report notes the successful approval and commercialization of several new drugs, including BeiGene's BCL-2 inhibitor and Sanofi's APOC3 siRNA drug, which address significant medical needs [20][22]. - Collaborations in drug development are highlighted, such as the $8.88 billion partnership between Insilico Medicine and Servier focusing on oncology [21]. - The report emphasizes the potential of the brain-computer interface industry, with companies like Mindray Medical and Lepu Medical making strides in this area [24]. Investment Opportunities - The report suggests focusing on domestic innovative drug companies and CROs, particularly those involved in the development of small nucleic acid drugs and brain-computer interface technologies [2][11]. - Specific companies to watch include Tigermed, WuXi AppTec, and Innovent Biologics, which are positioned to benefit from the recovery of the innovative drug sector [2][11].

Group 1 - The A-share and Hong Kong stock markets showed strength on January 12, with the innovative drug concept experiencing fluctuations after several days of rebound; the Hang Seng-Hushen-Hong Kong Innovative Drug Selected 50 Index fell by 0.63% at the time of reporting, while stocks like CSPC Pharmaceutical Group, BeiGene, and Boteng Co., Ltd. saw slight increases [1] - Since the beginning of 2026, as of the close on January 9, the Hang Seng-Hushen-Hong Kong Innovative Drug Selected 50 Index has rebounded over 10% cumulatively [1] - The Tianhong Innovative Drug ETF (517380) was actively traded, with a transaction amount exceeding 40 million yuan and a premium rate of 0.78% at the time of reporting; it has seen continuous capital inflow, accumulating over 170 million yuan from January 7 to 9 [1] Group 2 - According to Zhongtai Securities, it is recommended to focus on three dimensions for investment in 2026: "innovative drugs and their industrial chain, demand recovery and operational turning points, and AI+" [2] - Continuous attention should be paid to the AI+ theme, the positive catalysts from the JPM conference in the innovative drug sector, and the potential for exceeding annual performance forecasts or clearing turning point opportunities [2]

Core Insights - The approval of Zeshuo Pharmaceutical's injection of human thyroid-stimulating hormone beta (Zesuning) marks a significant milestone as it becomes China's first innovative product approved for precise assessment post-surgery for differentiated thyroid cancer [1][2] - The Chinese innovative drug industry is experiencing robust growth, with multiple new drugs receiving approval since the beginning of 2026, including innovative drugs from companies like Hengrui Medicine and BeiGene [1][2] - The National Medical Products Administration (NMPA) is enhancing support for innovative drugs, focusing on new mechanisms and targets, and aims to facilitate the "China first launch" of innovative drugs [3][4] Company Developments - Hengrui Medicine's innovative drug, the dual-specific antibody fusion protein Ruilafuzumab α injection, has been approved as the world's first anti-PD-L1/TGF-βRII dual-specificity antibody fusion protein for advanced gastric cancer [1][2] - BeiGene's innovative drug, Sotorasib tablets, has received conditional approval for treating chronic lymphocytic leukemia/small lymphocytic lymphoma and is the first and only BCL2 inhibitor approved for treating mantle cell lymphoma in China [2] - The approval of multiple innovative drugs reflects a significant increase in the number of innovative drugs approved in China, with 76 approved in 2025, surpassing the 48 approved in 2024 [2] Industry Trends - Approximately 20 major new drugs are expected to receive approval in 2026, covering various therapeutic areas such as oncology, infectious diseases, rare diseases, autoimmune diseases, and neurological disorders [3] - The Chinese innovative drug industry is transitioning from a follower to a competitor, with many domestic companies accelerating the development and market entry of groundbreaking innovative drugs [2][3] - The NMPA is implementing reforms to enhance the drug approval process, including the introduction of a data protection system for drug trials and a market exclusivity system for pediatric and rare disease medications [4][5] Policy Support - The NMPA is set to provide comprehensive support across the entire chain of communication, clinical trials, registration, and review processes for innovative drugs [4] - The new medical insurance directory has been implemented, facilitating the inclusion of innovative drugs in hospitals, which alleviates initial payment challenges for high-value innovative drugs [4] - The NMPA is also optimizing the review process for urgently needed foreign drugs, encouraging global simultaneous research and application in China [4][5]

Core Viewpoint - The A-share and Hong Kong stock markets for the pharmaceutical sector have shown a strong recovery at the beginning of 2026, marked by a "five consecutive days of gains" trend, driven by supportive policies, payment innovations, and explosive growth in overseas markets [2][4][6]. Group 1: Market Performance - As of the latest close, the A-share innovative drug ETF (159992) closed at 0.897 CNY per share, up 1.7%, with a daily trading volume of 845 million CNY, and a year-to-date increase of 7.94% [2]. - The Hong Kong innovative drug ETF (159570) closed at 0.553 HKD per share, up 0.91%, with a trading volume of 572 million HKD, and a year-to-date increase of 11.04% [4]. - Notable stocks such as Weikang Pharmaceutical, Frontier Biologics-U, and Hongbo Pharmaceutical achieved daily price limits, indicating strong market sentiment [2][4]. Group 2: Policy Support - The turnaround in market sentiment is attributed to a combination of policy support, payment innovations, and explosive growth in overseas markets [6]. - The new medical insurance directory and the first commercial insurance innovative drug directory were launched simultaneously, further supporting the innovative drug sector [6]. - Local policies have also been strengthened, with the Guangzhou government announcing plans to accelerate the strategic layout of innovative drugs, focusing on monoclonal antibodies, vaccines, and blood products [8]. Group 3: Regulatory Improvements - The approval process for innovative drugs has entered a fast track, with the National Medical Products Administration (NMPA) enhancing support for innovative drugs with new mechanisms and targets [8]. - The NMPA has optimized the review and approval processes for urgently needed foreign drugs, aiming to shorten the listing cycle for innovative drugs [8]. - As of early 2026, several significant drugs have been approved, setting a positive tone for the industry's development [9]. Group 4: Supply Chain and Production - In 2025, a record 76 innovative drugs were approved for listing, with over one-third in the oncology treatment field, indicating a strong focus on cancer research [10]. - The majority of approved drugs were domestically developed, with a domestic rate of 85.53%, highlighting the strength of local innovation [12]. Group 5: Payment Innovations - A multi-tiered payment system has been established to address the "payment difficulty" that has historically hindered the development of innovative drugs in China [14]. - The new medical insurance directory includes 114 drugs, with an 88% success rate for inclusion, and 80% of innovative drugs entering the directory within two years of listing [16]. - The introduction of a commercial insurance directory for high-value innovative drugs enhances patient access and secures profitability for companies [16]. Group 6: International Expansion - The overseas market for Chinese innovative drugs has seen explosive growth, with total overseas authorization transaction amounts reaching 1356.55 billion USD in 2025, significantly up from 519 billion USD in 2024 [17]. - The focus on antibody drugs and ADCs has attracted attention from overseas pharmaceutical companies, with a shift towards later-stage clinical authorizations [17]. - The growth in overseas business not only provides substantial upfront payments but also benefits the entire industry chain, including contract research organizations (CROs) [17][18].