Core Viewpoint - The collaboration between Nocera and Zenas marks a significant milestone in the internationalization process of Nocera, accelerating the global development and commercialization of its products, including Obeticholic Acid [1] Group 1: Internationalization and Partnerships - The partnership with Zenas is highlighted as a crucial step in Nocera's international expansion efforts [1] - The collaboration is expected to expedite the development and commercialization of Obeticholic Acid and other pipeline products globally [1] Group 2: Product Development Timeline - Obeticholic Acid is set to initiate Phase III trials for Primary Progressive Multiple Sclerosis (PPMS) in Q3 2025 and for Secondary Progressive Multiple Sclerosis (SPMS) in Q1 2026 [1] - The Phase III registration clinical trial for Obeticholic Acid in Immune Thrombocytopenic Purpura (ITP) in China has completed patient enrollment, with a market application submission expected in the first half of 2026 [1] - Zenas's core pipeline product, Obexelimab, is anticipated to report 12-week primary endpoint data from its Phase II clinical trial in the RMS field in Q4 2025, with 24-week data expected in Q1 2026 [1] Group 3: Product Pipeline and Market Position - Nocera has a comprehensive pipeline in hematological malignancies, autoimmune diseases, and solid tumors, indicating a broad market presence [1] - The core products are expected to drive performance, with ongoing advancements in the hematological, autoimmune, and solid tumor pipelines [1] - The successful business development (BD) of products like Obeticholic Acid is seen as a continuous coverage strategy for the company [1]

Core Viewpoint - The innovative drug sector is experiencing a rebound, with the Hang Seng Hong Kong Stock Connect Innovative Drug Index rising by 2.54% as of 15:15. The recent fluctuations in the sector are attributed to the digestion of previous positive news and geopolitical concerns, rather than a reversal in industry trends. The recognition of Chinese innovative drugs by overseas pharmaceutical companies has shifted from a "stock selection" approach to a "country-level" strategic focus, making China a core supplier in the global innovative drug landscape [1]. Group 1: Market Dynamics - The innovative drug sector is currently undergoing a fundamental transformation in its business development (BD) logic, with overseas companies increasingly recognizing the importance of Chinese innovative drugs [1]. - The current slowdown in BD transaction activity is viewed as a minor fluctuation within a longer-term trend, rather than a sign of a significant downturn [1]. Group 2: Upcoming Catalysts - The fourth quarter is expected to be a period of intensive catalysts for the innovative drug sector, with major academic conferences such as ESMO, ASH, and SABCS set to present key clinical data from Chinese innovative drugs, which could enhance market confidence if results exceed expectations [2]. - The traditional peak season for BD transactions is anticipated in October and November, with significant deals already initiated, such as the one involving Innovent Biologics, which may validate long-term industry logic [2]. - Policy adjustments, both domestically and internationally, are expected to support the innovative drug sector, including the opening of a window for adjustments to the medical insurance catalog and the potential benefits from a renewed interest in interest rate cuts by the Federal Reserve [2]. Group 3: Related Investment Vehicles - Relevant investment vehicles include the Hang Seng Innovative Drug ETF (159316), Hong Kong Stock Connect Pharmaceutical ETF (513200), and Pharmaceutical ETF (512010), which provide exposure to the innovative drug sector [3].

Core Viewpoint - The A-share market for innovative drugs and chemical pharmaceuticals has seen a strong surge, driven by the upcoming ESMO conference and the increasing global competitiveness of Chinese innovative drugs [1][3][4] Group 1: Market Performance - As of October 15, several stocks in the innovative drug sector experienced significant gains, with Guangshentang rising over 17% and Shutaishen increasing by over 12% [1][2] - The overall market sentiment is buoyed by the anticipation of the ESMO conference, which is expected to showcase advancements in clinical data from Chinese pharmaceutical companies [3] Group 2: ESMO Conference Impact - The ESMO conference, taking place from October 17 to 21 in Berlin, is a key platform for releasing significant clinical data, particularly for Chinese companies involved in PD-1 combination therapies and ADCs [3] - The conference is viewed as a critical catalyst for the innovative drug sector, with expectations that positive clinical data could enhance market confidence in the R&D capabilities of related companies [3] Group 3: Business Development (BD) Trends - There has been a notable increase in high-value BD transactions, indicating a growing recognition of the global competitiveness of Chinese innovative drugs [4] - The total value of innovative drug-related transactions in China reached $60.8 billion in the first half of 2025, marking a 129% year-on-year increase [4] Group 4: Company Developments - Recent advancements in R&D include the acceptance of Rongchang Bio's application for its dual-target fusion protein drug for primary IgA nephropathy, marking a significant milestone for domestic innovation [6] - Companies like Luoxin Pharmaceutical have reported positive earnings forecasts, indicating a recovery from previous losses, driven by strong market performance of their core innovative products [6] Group 5: Industry Outlook - Analysts maintain an optimistic outlook for the innovative drug sector, expecting continued revenue growth and emphasizing the importance of companies with strong clinical data and commercialization capabilities [7] - The trend of "innovation + internationalization" is expected to remain a core focus for the pharmaceutical industry, supported by favorable policies and increasing global competitiveness [7]

Group 1 - The Hong Kong Stock Connect innovative drug sector is experiencing a significant rally, with Ascentage Pharma-B leading with a nearly 6% increase, and several other stocks like Kelun-B and 3SBio rebounding over 4% [1] - The Hong Kong Stock Connect Innovative Drug ETF (520880) is fully invested in innovative drug R&D companies and saw a trading increase of up to 2% in the afternoon session, with a transaction volume exceeding 340 million yuan [1] - The ETF has attracted over 129 million yuan in net subscriptions during recent dips, indicating strong buying interest [1] Group 2 - The ESMO 2025 annual meeting will take place from October 17-21 in Berlin, where multiple Chinese innovative drug companies are expected to announce breakthrough clinical research results in areas such as kidney and lung cancer [3] - The Federal Reserve's dovish stance suggests a potential interest rate cut in October, which may create a favorable environment for the Chinese pharmaceutical sector [3] - Recent BD transactions, such as the one involving Innovent Biologics with a total value exceeding 2 billion USD, indicate a busy end-of-year period for global innovative drug product licensing collaborations [3] Group 3 - The Hong Kong Stock Connect Innovative Drug ETF (520880) is the first ETF tracking the Hang Seng Hong Kong Stock Connect Innovative Drug Select Index, which exclusively focuses on innovative drug companies without including CXO [4] - As of the end of September, the fund size of the ETF is 1.806 billion yuan, with an average daily trading volume of 493 million yuan, making it the largest and most liquid ETF in its category [4] - The Hang Seng Hong Kong Stock Connect Innovative Drug Select Index has shown a year-to-date increase of 108.14%, outperforming other innovative drug indices [6]

Investment Rating - The report maintains an "Outperform" rating for the biopharmaceutical industry [1]. Core Insights - The report is optimistic about the trend of innovative drugs, particularly focusing on the upcoming ESMO conference and national medical insurance negotiations [1][3]. - The innovative drug sector is expected to experience a qualitative change driven by quantitative growth over the next 5-10 years, with business development (BD) overseas, continuous data catalysts, and new product sales driving the rise of innovative drugs [3]. Summary by Sections 1. Innovative Drug Highlights - uniQure's gene therapy AMT-130 for Huntington's disease showed significant results in a key I/II clinical trial, with a 75% reduction in disease progression at high doses [3][5]. - Novartis acquired Akero Therapeutics for $5.2 billion, focusing on FGF21-targeted therapies for MASH, with the core asset being efruxifermin, currently in Phase III trials [22][23]. - The report emphasizes the importance of clinical data from the upcoming ESMO conference and the third-quarter earnings reports, as well as the November national medical insurance negotiations [3]. 2. Industry Catalysts and Strategies - The report suggests focusing on companies with strong clinical data, commercialization capabilities, and potential for successful international expansion, recommending specific companies in both the Biopharma and Pharma sectors [3]. - Suggested companies include: - Pharma: CSPC Pharmaceutical Group, China Biologic Products, and Hengrui Medicine [3]. - Biopharma: Innovent Biologics, Kelun-Biotech, and Zai Lab [3]. 3. Investment Recommendations - The report recommends a dual focus on Biotech and generic-to-innovative companies with potential catalysts, highlighting specific companies in each category [3]. - Suggested Biotech companies include: EdiGene, CanSino Biologics, and I-Mab Biopharma [3]. - Suggested generic-to-innovative companies include: Jingxin Pharmaceutical, Enhua Pharmaceutical, and Changchun High-tech [3].

Core Viewpoint - The collaboration between Nocera and Zenas, valued at over $2 billion, aims to accelerate the global clinical development of obexelimab, enhancing its global value despite market skepticism due to recent stock fluctuations [1][2]. Group 1: Transaction Purpose and Financial Aspects - The primary goal of the transaction is to expedite the global multi-center clinical development of obexelimab, with Nocera under no cash flow pressure [1]. - The upfront payment includes $100 million in cash and 7 million shares, totaling nearly $300 million, providing immediate financial and equity benefits to Nocera [1][4]. - Zenas is expected to pay a tiered royalty of 17%-19% on sales, along with milestone payments, indicating Zenas's strong recognition of obexelimab's potential value [4]. Group 2: Strategic Fit and Development Capability - The high compatibility between Nocera and Zenas is crucial, as Zenas specializes in the autoimmune field, allowing focused resource allocation to obexelimab [5]. - Zenas's leadership team has extensive experience in the autoimmune sector, enhancing clinical development efficiency [5]. - Zenas's strategy combines experienced leadership with a rigorous candidate product portfolio, aiming to discover and develop products that provide excellent clinical efficacy for autoimmune disease patients [5]. Group 3: Clinical Development and Financial Health - Zenas plans to release key data from the obexelimab clinical trial for relapsing multiple sclerosis (RMS) by Q4 2025, with a peak sales potential of $3 billion for its first commercialized product [6]. - Zenas reported a cash balance of $275 million with no debt, indicating a healthy balance sheet, and has recently completed financing rounds totaling up to $300 million [6]. - The collaboration allows Nocera to alleviate financial burdens associated with international clinical trials while benefiting from Zenas's expertise [7]. Group 4: Market Confidence - In response to recent market corrections in the innovative drug sector, the company demonstrated confidence by repurchasing shares worth nearly HKD 12 million [9].

Market Overview - On October 10, Hong Kong stocks were influenced by the decline of the Nasdaq Golden Dragon Index, leading to a drop in the Hang Seng Index by 462 points, closing at 26,290 points. The Hang Seng Tech Index fell by 211 points to 6,259 points, with a total turnover of HKD 333.73 billion. The Hang Seng Index has now declined for five consecutive trading days, with a net outflow of southbound funds amounting to HKD 399 million [1][2]. Macro Dynamics - On October 9, the Ministry of Commerce announced new export controls on rare earth-related items and technologies, affecting five additional rare earth metals: holmium, erbium, thulium, europium, and ytterbium. This move is part of a broader strategy to strengthen export regulations [3]. Industry Dynamics Smart Driving Sector - The automotive sector, particularly smart driving companies, experienced a downturn due to market declines. Xpeng Motors announced significant breakthroughs in physical AI during its AI Technology Day, but the stock still fell by 4.2%. Other new energy vehicle stocks also saw declines ranging from 2% to 4% [4]. Pharmaceutical Sector - The Hang Seng Healthcare Index dropped by 6.4%, primarily due to declines on Thursday and Friday. There are concerns regarding the overseas licensing agreement of Innovent Biologics, which fell short of expectations in terms of transaction value and the reputation of the licensed party. However, a USD 100 million upfront payment is expected to solidify funding [4]. New Energy/Public Utilities - The new energy and public utility sectors showed volatility, with significant fluctuations in stock performance. Xinyi Solar, GCL-Poly Energy, and Longyuan Power fell by 6.0%, 3.7%, and 2.3%, respectively. Conversely, Huadian International, China Everbright Environment, and China Resources Gas saw increases of 4.8%, 3.2%, and 3.5% [5].

Core Insights - The Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index has decreased by 3.79% as of October 13, 2025, with notable declines in stocks such as Junshi Biosciences down 10.01% and Innovent Biologics down 7.08% [3] - The Hong Kong Innovative Drug Selection ETF (520690) has also fallen by 3.54%, currently priced at 0.95 yuan, indicating a challenging market environment for innovative drug companies [3] - The European Society for Medical Oncology (ESMO) conference is set to take place from October 17 to 21, 2025, in Berlin, where breakthrough data from various Chinese innovative drug companies is anticipated [3] Company Developments - Rongchang Biopharmaceutical's Taitasip has been proposed for priority review by China's drug regulatory authority, targeting adult patients with IgA nephropathy [4] - Innovent Biologics has initiated Phase III clinical trials for IBI363, aimed at squamous non-small cell lung cancer [4] - SystImmune, a wholly-owned subsidiary of Bai Li Tianheng, has entered a global strategic collaboration with Bristol-Myers Squibb for the dual antibody ADC project, triggering an initial payment of $250 million [4] Market Trends - The trend of Chinese innovative drugs entering international markets is expected to continue, with 72 license-out transactions recorded in the first half of 2025, surpassing the total for 2024 [4] - The total transaction amount for these deals has increased by 16% compared to the entirety of 2024, with 16 transactions exceeding $1 billion [4] - Despite concerns over trade tensions and potential decoupling, the shift of global innovative research and development towards China is viewed as an unstoppable trend [4] ETF Performance - The Hong Kong Innovative Drug Selection ETF has reached a new high with 431 million shares outstanding [5] - Recent net inflows into the ETF amount to 3.01 million yuan, with a total of 75.52 million yuan net inflow over the past 14 trading days [5] - The ETF closely tracks the Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index, which reflects the performance of Hong Kong-listed companies involved in innovative drug research, development, and production [5]

Core Insights - The "Double Ten Law" highlights the high threshold of "ten years of R&D and one billion USD" that every innovative pharmaceutical company must face, including Nocare Pharma [1][6] - Nocare Pharma's sustainable development is supported by significant R&D investments, which accounted for over 90% of its revenue in the past three years, totaling over 2.2 billion RMB [1][7] - The company has successfully transitioned from relying on external funding to achieving self-sustaining revenue through its core product, Oubatinib, which has surpassed 1 billion RMB in annual sales [1][8] Company Development - Nocare Pharma was established in 2015, focusing on innovative drug development for malignant tumors and autoimmune diseases, with several indications successfully approved for market [3] - Oubatinib, the company's first commercial product, is the first BTK inhibitor in the autoimmune disease field in China, with three indications approved and included in the national medical insurance directory by the end of 2024 [3][4] Financial Performance - In the first quarter of 2025, Nocare Pharma achieved a significant milestone by recording its first quarterly profit, with revenue of 381 million RMB, a year-on-year increase of 129.92% [8] - The company reported a net profit of 18 million RMB, a substantial improvement from a loss of 142 million RMB in the same period last year [8] Business Development - Nocare Pharma has engaged in strategic business development (BD) partnerships to enhance its profitability, including a collaboration with Prolium that could yield up to 5.025 billion RMB in milestone payments [8][9] - A recent licensing agreement with Zenas BioPharma for Oubatinib and two preclinical assets could generate over 2 billion USD in total, marking a record for small molecule licensing in China's autoimmune field [9]

Group 1 - The core viewpoint of the news is that Nocera Biopharma experienced a significant drop in stock price, with a 9.16% decline on October 10, 2023, and a trading volume of 490 million yuan [1] - On the same day, Nocera Biopharma had a financing buy-in amount of 50.08 million yuan, with a net financing buy of 16.32 million yuan, indicating strong investor interest despite the stock price drop [1] - The total financing and securities balance for Nocera Biopharma reached 287 million yuan, accounting for 4.40% of its circulating market value, which is above the 90th percentile of the past year, indicating a high level of financing activity [1] Group 2 - Nocera Biopharma, established on November 3, 2015, and listed on September 21, 2022, focuses on the research, production, and commercialization of biopharmaceuticals, particularly in oncology and autoimmune diseases [2] - The company's revenue composition shows that 87.67% comes from drug sales, 12.04% from technology licensing, and minimal contributions from testing and research services [2] - For the first half of 2025, Nocera Biopharma reported a revenue of 731 million yuan, representing a year-on-year growth of 74.26%, while the net profit attributable to shareholders was -30.09 million yuan, an increase of 88.51% compared to the previous period [2] Group 3 - As of June 30, 2025, the top ten circulating shareholders of Nocera Biopharma included several funds, with notable changes in holdings, such as an increase of 3.98 million shares by China Europe Medical Health Mixed A [3] - New entrants among the top shareholders include E Fund Innovative Medicine Mixed A and Yifangda Medical Health Industry Mixed A, indicating a shift in institutional interest [3] - The exit of certain funds like Xingquan Helun Mixed A and Ping An Medical Health Mixed A from the top ten shareholders suggests a reallocation of investment strategies among institutional investors [3]