康方生物：AK112 to validate its potential as next-generation IO therapy-20250402

Investment Rating - The report maintains a "BUY" rating for Akeso, indicating a potential return of over 15% over the next 12 months [15]. Core Insights - Akeso's FY24 results showed strong cost controls despite a revenue shortfall, with total revenue of RMB2.1 billion, including RMB2.0 billion from product sales, representing a 25% YoY increase [8]. - The company is expected to see product sales surge by 60% YoY to RMB3.3 billion in FY25, driven by the inclusion of AK104 and AK112 in the National Reimbursement Drug List (NRDL) [8]. - AK112 is positioned as a next-generation immuno-oncology (IO) therapy, with pivotal clinical data demonstrating a meaningful progression-free survival (PFS) benefit in a Phase 3 trial against Keytruda for first-line PD-L1-positive non-small cell lung cancer (NSCLC) [8]. - The report highlights ongoing clinical trials for AK112 in various cancer types, including triple-negative breast cancer (TNBC) and pancreatic cancer, indicating a broad first-line strategy [8]. - The target price for Akeso has been raised from HK$58.97 to HK$102.61, reflecting increased sales projections for AK112 [8]. Financial Summary - For FY23A, Akeso reported revenue of RMB4,526 million, with a YoY growth of 440.3%, followed by a projected revenue of RMB2,124 million for FY24A, reflecting a decline of 53.1% [2]. - The net profit for FY23A was RMB2,028.3 million, with a projected net loss of RMB501 million for FY24A [2]. - R&D expenses are projected to be RMB1,306 million for FY25E, increasing to RMB1,937 million by FY27E [2]. - The company held a cash balance of RMB7.3 billion at the end of FY24, sufficient to support ongoing R&D and future commercial expansion [8]. Share Performance - Akeso's current market capitalization is HK$77,191.5 million, with a current price of HK$86.00 and a target price indicating a 19.3% upside [3]. - The stock has shown strong performance, with a 1-month absolute return of 17.9% and a 3-month return of 41.7% [5]. Valuation - The DCF valuation estimates the equity value at RMB 85,652 million, translating to a DCF per share of RMB 95.43 or HK$ 102.61 [9]. - The report includes a sensitivity analysis indicating how changes in the weighted average cost of capital (WACC) and terminal growth rate affect the target price [10].