Revenue and Financial Performance - Revenue for the year ended December 31, 2024, reached RMB 980.7 million, a year-on-year increase of 342% primarily due to Takeda Pharmaceutical's option payments and strong sales of Olverembatin (耐立克®) [4] - The company recorded a loss of RMB 405.7 million for the year ended December 31, 2024, a decrease of RMB 520.0 million or 56.2% from a loss of RMB 925.7 million for the previous year [8] - The gross profit for the year ended December 31, 2024, was RMB 951,565,000, compared to RMB 191,441,000 in 2023, indicating a substantial increase in profitability [68] - The total comprehensive loss for the year ended December 31, 2024, was RMB 398.7 million, a significant reduction of RMB 500.8 million or 55.7% from RMB 899.5 million for the year ended December 31, 2023 [107][119] - The company's cash and bank balances as of December 31, 2024, were RMB 1,261.2 million, an increase of RMB 167.4 million or 15.3% from RMB 1,093.8 million as of December 31, 2023 [9] - The company reported a foreign exchange gain of RMB 6,949,000 for the year, compared to a gain of RMB 26,259,000 in 2023 [70] - The basic loss per share for 2024 was RMB 1.34, based on a weighted average of 302,062,104 shares, compared to a loss of RMB 3.28 per share in 2023 with 282,299,269 shares [96] Research and Development - Research and development expenses increased by RMB 240.3 million or 34.0% to RMB 947.2 million for the year ended December 31, 2024, due to increased clinical research costs [7] - The company is conducting ten registration clinical trials, with two already approved by the FDA [5] - The company has a pipeline of 6 clinical-stage small molecule candidates as of December 31, 2024 [21] - The company is developing therapies targeting traditionally "undruggable" proteins associated with tumorigenesis, such as PROTACs [21] - Clinical trials for CLL/SLL, AML, and MDS are ongoing, with registration trials for NSCLC and ovarian cancer also in progress [23] - The company is actively involved in clinical research and development, participating in major oncology conferences such as AACR and ASCO [188] Product Development and Regulatory Approvals - The new drug application (NDA) for Lisaftoclax (APG-2575) in China was accepted and included in the priority review process [5] - Lisaftoclax's NDA for treating relapsed/refractory CLL and SLL was accepted for priority review by the NMPA in November 2024, marking it as the second NDA submission globally for a Bcl-2 inhibitor [18] - The company plans to launch Lisaftoclax in China in 2025, pending regulatory approval, and aims to seek approvals in multiple countries [18] - Aorebatin has received three indications for Chronic Myeloid Leukemia (CML) approval in China, with reimbursement expected to start in early 2025 [143] - The company aims to seek FDA approval for a Phase III clinical trial targeting newly diagnosed Ph+ ALL patients [31] Sales and Market Expansion - Sales revenue of Olverembatin (耐立克®) in China for 2024 amounted to RMB 241.0 million, representing a year-on-year growth of 52% [4] - For the year ending December 31, 2024, sales revenue of Nairike® (Aorebatin) in China reached RMB 241.0 million, an increase of RMB 82.0 million or 52% compared to RMB 159.0 million for the year ending December 31, 2023 [12] - As of December 31, 2024, the number of hospitals and DTP pharmacies with access to Nairike® (Aorebatin) reached 734, representing an 86% increase compared to December 31, 2023 [12] - Nairike has been included in the National Medical Insurance Drug List in China since January 2025, enhancing affordability and accessibility for patients [24] - The company aims to maximize the value of its pipeline products through global collaborations with leading biotech and pharmaceutical companies [65] Strategic Partnerships and Collaborations - The company has established collaborations with leading biotech and pharmaceutical companies, including AstraZeneca and Merck [20] - The company has entered into an exclusive option agreement with Takeda Pharmaceuticals for the research, development, import, export, manufacturing, use, commercialization, and development of Nilotinib, dated June 14, 2024 [190] - The company aims to seek strategic partnerships to maximize the potential of its product portfolio, leveraging strong relationships with key opinion leaders and collaborations with leading biotech and pharmaceutical companies [145] Employee and Corporate Governance - As of December 31, 2024, the company has 567 full-time employees, with 71.8% (407 employees) in R&D, 16.4% (93 employees) in commercial roles, and 11.8% (67 employees) in administrative functions [138] - The company has implemented various employee incentive plans, including pre-IPO and post-IPO share option plans, and restricted share unit plans [140] - The company expresses gratitude to shareholders, management, employees, business partners, and customers for their support and contributions [186] - The company is committed to maintaining compliance with corporate governance codes as per the listing rules [189] Financial Position and Investments - The company’s equity increased to RMB 274,162,000 as of December 31, 2024, compared to RMB 70,632,000 in 2023, reflecting a significant improvement in financial health [72] - The company has confirmed compliance with the standard code of conduct and securities trading code during the reporting period [147] - The company reported non-current assets totaling RMB 1,095,832 thousand in 2024, slightly up from RMB 1,091,422 thousand in 2023 [82] - The company has made slight adjustments to the planned allocation due to exchange rate fluctuations following the placements [166]

Investment Rating - The report initiates coverage with an OUTPERFORM rating for BeiGene [2]. Core Insights - BeiGene is positioned as a leading biopharma company in China, focusing on innovative drug development and global commercialization, with a strong pipeline and significant growth potential [3][11]. - The company is expected to achieve profitability by 2025, driven by the strong performance of its core products, particularly the BTK inhibitor, Zanubrutinib, and the PD-1 inhibitor, Tislelizumab [4][20]. Summary by Sections 1. Innovative Product Globalization - BeiGene has established a robust global presence with over 60 clinical projects and 17 commercialized products, including Zanubrutinib and Tislelizumab, which have been launched in multiple regions [3][11]. - The company aims to become the first biopharma in China to achieve recurring profitability by 2025, supported by its innovative product pipeline and global commercialization capabilities [11][20]. 2. Leadership in Hematology - The combination of BTK inhibitors, BCL-2 inhibitors, and BTK CDAC is expected to solidify BeiGene's leadership in hematological malignancies [5][27]. - Zanubrutinib is projected to double its revenue to $2.6 billion in 2024, further strengthening its market position in the U.S. hematology market [4][20]. 3. Pipeline Development - BeiGene's pipeline focuses on hematological and solid tumors, with several molecules showing best-in-class potential, including Sonrotoclax and BGB-16673 [27]. - The company has a rich pipeline with over 10 early-stage projects expected to report proof-of-concept data in 2025, enhancing its growth prospects [6][27]. 4. Financial Projections and Valuation - Revenue projections for FY25-27 are $5 billion, $6 billion, and $6.7 billion, respectively, with a CAGR of 21% [7]. - The target price is set at HK$182.35, based on a discounted cash flow model with a WACC of 9% and a perpetual growth rate of 4% [7].

Investment Rating - The report initiates coverage with an OUTPERFORM rating for BeiGene [2]. Core Views - BeiGene is positioned as a leading innovator in China's biopharmaceutical sector, with a strong focus on oncology treatments and a robust pipeline of over 60 clinical projects globally [3][11]. - The company is expected to achieve profitability by 2025, driven by significant revenue growth from its core products, particularly the BTK inhibitor, Zanubrutinib, which is projected to double its revenue in 2024 [4][20]. - BeiGene's global commercialization capabilities and a well-established management team are key competitive advantages that will support its growth trajectory [12][29]. Summary by Sections 1. Innovative Product Globalization - BeiGene has a diverse product pipeline and aims to become the first biopharma company to achieve consistent profitability [11]. - The company has 17 commercialized products, including Zanubrutinib and Tislelizumab, with strong sales performance in the US and Europe [20]. - Revenue for 2024 is projected at $3.81 billion, a 55% increase year-over-year, with significant contributions from the US market [20]. 2. Leadership in Hematology - The combination of BTK inhibitors and BCL-2 inhibitors is expected to solidify BeiGene's leadership in hematological malignancies [5]. - Zanubrutinib has shown superior efficacy compared to Ibrutinib, establishing its best-in-class status [5][24]. - The company is also developing Sonratoclax, a BCL-2 inhibitor, which is anticipated to enhance its market position [5]. 3. Expansion in Solid Tumors - BeiGene is actively expanding its presence in solid tumors, with Tislelizumab gaining traction in various indications [11]. - The company is developing next-generation CDK inhibitors targeting a market exceeding $10 billion [11]. - Focus areas include lung cancer and breast cancer, with ongoing clinical trials for multiple candidates [11]. 4. Financial Projections and Valuation - Revenue forecasts for FY25-27 are $5 billion, $6 billion, and $6.7 billion, respectively, with a CAGR of 21% [7]. - The net profit is expected to turn positive by FY25, reaching $390 million by FY26 [7]. - The target price is set at HK$182.35, based on a DCF model with a WACC of 9% and a perpetual growth rate of 4% [7].

Investment Rating - The report maintains an "Outperform" rating for the pharmaceutical and biotechnology industry [5] Core Viewpoints - The AI concept has experienced a pullback, but the upward momentum for innovative drugs is expected to continue [1][2] - The pharmaceutical index fell by 2.15% last week, outperforming the CSI 300 index by 0.07 percentage points, ranking 25th in industry performance [10] - The healthcare services sub-sector has shown the highest growth since the beginning of 2025, with a rise of 12.31% [16] - The report highlights the strong performance of innovative drugs and companies with positive earnings forecasts, such as Nocera Health and Newnovel [19][31] Market Performance Summary - The pharmaceutical index has increased by 4.17% year-to-date, outperforming the CSI 300 index by 5.31 percentage points, ranking 12th in industry performance [10] - The best-performing stocks in the A-share market last week included Nocera Health (+20.98%), Changyao Holdings (+20.96%), and Shanghai Yizhong (+18.78%) [19] - In the Hong Kong stock market, 30 out of 106 pharmaceutical stocks rose, accounting for 28.3% [23] Sub-industry Performance - The sub-industry with the smallest decline last week was Traditional Chinese Medicine, down 0.35%, while the largest decline was in pharmaceutical commerce, down 3.44% [14] - Year-to-date, the Traditional Chinese Medicine sub-sector has decreased by 5.29%, while healthcare services have increased by 12.31% [16] Industry News and Policies - Starting March 1, Guangxi will implement centralized procurement for large medical equipment, aiming to reduce costs through bulk purchasing [27][28] - Huadong Medicine's ADC innovative drug has received orphan drug designation from the FDA, which provides various incentives for the company [29] Company Announcements - Notable company announcements include Nocera Health's significant R&D progress and Newnovel's exclusive cooperation agreement with RadianceBiopharma, potentially worth $1.23 billion [19][31]

Product Pipeline and Development - Olverembatinib (耐立克°) and APG-2575 Lisaftoclax are key products under development[1] - APG-115 is a novel oral small molecule MDM2-p53 inhibitor in the company's pipeline[4] - APG-1252 is a novel small molecule drug targeting Bcl-2/Bcl-xL proteins to restore apoptosis[4] - APG-1387 is a novel small molecule IAP inhibitor being developed by the company[4] - APG-2449 is a third-generation inhibitor targeting FAK, ROS1, and ALK kinases[4] - APG-5918 is a highly potent oral selective EED inhibitor in development[4] - The company's pipeline includes multiple novel small molecule inhibitors targeting various cancer pathways[4] - Key therapeutic areas include leukemia (CML, ALL, AML) and lymphoma (Bcl-2/Bcl-xL)[4][5] - The company's third-generation BCR-ABL inhibitor, HQP1351, is designed to overcome drug resistance caused by BCR-ABL kinase mutations, including the T315I mutation[7] - The company's product HQP1351 is aimed at addressing drug resistance in BCR-ABL kinase mutations, particularly the T315I mutation[7] - The company has 6 small molecule candidates in clinical development, with 40+ Phase I/II trials ongoing in China, the US, Australia, and Europe[18] - The company's lead asset, Olverembatinib, is the first and only third-generation BCR-ABL1 inhibitor approved in China for T315I-mutated CML patients[18] - Olverembatinib received 4 FDA orphan drug designations and 1 fast-track designation for CML, AML, ALL, and GIST, as well as an EMA orphan drug designation for CML[23] - Olverembatinib was included in the 2024 NCCN CML treatment guidelines and recommended by the CSCO CML and Ph+ ALL treatment guidelines[23] - Olverembatinib was included in China's National Reimbursement Drug List in January 2023, significantly improving patient accessibility[23] - Nailike® (Olverembatinib) was approved for marketing in Macau, China in July 2024, targeting TKI-resistant CML patients with or without T315I mutation[24] - Nailike® was included in the 2024 CSCO Guidelines for Hematologic Malignancies in May 2024 and the 2024 NCCN CML Guidelines in December 2023[24] - The company disclosed updated 1-year follow-up data for Nailike® in CML and Ph+ ALL at EHA 2024, showing sustained clinical efficacy and good tolerability[24] - Nailike® demonstrated significant efficacy and safety in SDH-deficient GIST patients at ASCO 2024, marking its third consecutive year of presentation at ASCO[25] - The company plans to continue Phase III trials for Nailike® in CML (POLARIS-2), Ph+ ALL (POLARIS-1), and SDH-deficient GIST (POLARIS-3) in 2024[26] - Lisaftoclax (APG-2575) is expected to submit an NDA for CLL/SLL in China in 2024, potentially becoming the second global and first Chinese Bcl-2 inhibitor for this indication[27] - Over 1,000 patients, including more than 400 CLL/SLL patients, have been treated with Lisaftoclax (APG-2575) as of June 30, 2024[27] - Lisaftoclax (APG-2575) received FDA orphan drug designations for FL, WM, CLL, MM, and AML[27] - A Phase III trial (GLORA-4) for Lisaftoclax combined with azacitidine in high-risk MDS patients is underway in China[27] - A global Phase III trial (GLORA) for Lisaftoclax combined with BTK inhibitors in CLL/SLL patients previously treated with BTK inhibitors is ongoing[28] - Lisaftoclax (APG-2575) combined with pomalidomide and dexamethasone showed an ORR of 70.4% in 27 evaluable r/r MM patients, with 10 PR, 7 VGPR, and 2 CR cases[29] - Lisaftoclax (APG-2575) monotherapy or combination therapy in newly diagnosed AML patients showed an ORR of 64.1% and a CRc rate of 51.3% in 39 patients[29] - The company plans to submit a new drug application for Lisaftoclax (APG-2575) for the treatment of r/r CLL/SLL in China in 2024[30] - Alrizomadlin (APG-115) has received six orphan drug designations from the FDA, including for soft tissue sarcoma, gastric cancer, AML, retinoblastoma, melanoma, and neuroblastoma[31] - Alrizomadlin (APG-115) demonstrated promising antitumor activity and tolerability in progressive salivary gland cancer, particularly adenoid cystic carcinoma[32] - Pelcitoclax (APG-1252) has shown preliminary antitumor activity in heavily pretreated patients and is being studied in combination with osimertinib for EGFR-mutated NSCLC[34][35] - APG-5918, an EED inhibitor, has shown potential in improving hemoglobin deficiency in preclinical models of CKD-induced anemia[36] - The company is conducting a multicenter, open-label Phase I trial of APG-5918 in advanced solid tumors or lymphomas[36] - Lisaftoclax (APG-2575) is being studied in global Ib/II trials for WM patients in combination with BTK inhibitors[29] - Alrizomadlin (APG-115) is being evaluated in multiple clinical trials in combination with immune therapies or chemotherapy for solid and hematologic tumors[31][32] - APG-5918 showed preclinical progress in improving hemoglobin deficiency in CKD-induced anemia models at EHA 2024[37] - APG-5918 demonstrated synergistic tumor growth inhibition with alrizomadlin in prostate cancer models at AACR 2024[37] - APG-2449 showed preliminary efficacy in NSCLC patients, including those resistant to 2nd-gen ALK TKIs, at ASCO 2024[38] - APG-2449 exhibited tumor metastasis inhibition and enhanced PLD's antitumor effects in epithelial ovarian cancer at AACR 2024[38] Financial Performance and Reporting - Revenue increased by RMB 681.0 million or 477.2% to RMB 823.7 million for the six months ended June 30, 2024, compared to RMB 142.7 million for the same period in 2023[13] - Other income and gains increased by RMB 0.3 million or 1.8% to RMB 17.3 million for the six months ended June 30, 2024, primarily due to increased bank interest income[13] - Sales and distribution expenses increased by RMB 6.3 million or 7.6% to RMB 89.6 million for the six months ended June 30, 2024, driven by commercialization of Olverembatinib (HQP1351) and other products[13] - R&D expenses increased by RMB 134.3 million or 43.4% to RMB 444.1 million for the six months ended June 30, 2024, mainly due to increased internal R&D spending[13] - Net income increased by RMB 565.1 million to RMB 162.8 million for the six months ended June 30, 2024, compared to a loss of RMB 402.3 million for the same period in 2023[13] - Cash and bank balances stood at RMB 1,100.3 million as of June 30, 2024, an increase of RMB 6.5 million or 0.6% compared to December 31, 2023[13] - Olverembatinib (HQP1351) achieved cumulative sales of RMB 489.7 million since its launch in November 2021, with sales in the first half of 2024 increasing by 120% compared to the second half of 2023[14] - The company received USD 100.0 million in July 2024 from Takeda Pharmaceuticals under an exclusive option agreement for Olverembatinib, with potential milestone payments and royalties up to USD 1.2 billion[14] - The company successfully issued and allotted 24,307,322 shares to Takeda Pharmaceuticals in June 2024, raising USD 75.0 million (approximately HKD 585.77 million)[14] - Revenue for the six months ended June 30, 2024, increased to RMB 823.7 million, up 477.2% from RMB 142.7 million in the same period in 2023[48][49][50] - Net profit for the six months ended June 30, 2024, was RMB 162.8 million, compared to a net loss of RMB 402.3 million in the same period in 2023[48][49] - R&D expenses for the six months ended June 30, 2024, increased to RMB 444.1 million, up from RMB 309.8 million in the same period in 2023[48][49] - The company received a $100 million option payment related to the exclusive option agreement with Takeda Pharmaceutical for the global rights to develop and commercialize Olverembatinib (耐立克®), excluding China, Hong Kong, Macau, and Taiwan[46] - The company is eligible to receive up to $1.2 billion in option exercise fees and additional potential milestone payments, as well as double-digit percentage royalties on annual net sales from the Takeda agreement[46] - Sales and distribution expenses increased by RMB 6.3 million or 7.6% to RMB 89.6 million, driven by the commercialization of Olverembatinib and other products[53] - R&D expenses increased by RMB 134.3 million or 43.4% to RMB 444.1 million, primarily due to higher internal R&D costs[54] - Administrative expenses decreased by RMB 4.3 million or 4.7% to RMB 87.0 million, mainly due to reduced labor and operational costs at the Suzhou base[56] - Financing costs decreased by RMB 18.6 million or 35.3% to RMB 34.1 million, primarily due to lower interest on bank borrowings[58] - Other expenses increased by RMB 2.9 million or 69.0% to RMB 7.1 million, mainly due to higher charitable donations[59] - The company's profit increased by RMB 565.1 million from a loss of RMB 402.3 million to a profit of RMB 162.8 million[60] - Net cash outflow from operating activities was RMB 354.4 million, a decrease from RMB 368.5 million in the previous period[61] - Net cash outflow from investing activities was RMB 131.3 million, including RMB 16.5 million for property, plant, and equipment[62] - Net cash inflow from financing activities was RMB 396.9 million, including RMB 532.0 million from the 2024 share subscription[62] - The company's current ratio improved to 1.8 from 1.4, and the quick ratio also improved to 1.8 from 1.4[63] - The company's cash and bank balances remained stable at RMB 1,100.3 million as of June 30, 2024, compared to RMB 1,093.8 million as of December 31, 2023[70] - The company's total current assets amounted to RMB 1,963.8 million, including cash and bank balances of RMB 1,100.3 million, inventory of RMB 10.7 million, and trade receivables of RMB 743.5 million as of June 30, 2024[70] - The company's total current liabilities were RMB 1,065.4 million, including trade payables of RMB 83.1 million, other payables and accrued expenses of RMB 215.2 million, and borrowings of RMB 729.5 million as of June 30, 2024[70] - The company's total non-current liabilities were RMB 1,265.3 million, including long-term borrowings of RMB 970.6 million and deferred revenue of RMB 233.4 million as of June 30, 2024[70] - The company has 574 full-time employees, with 70.9% (407 employees) engaged in R&D and laboratory work as of June 30, 2024[71] - Employee benefit expenses increased to RMB 218.9 million for the six months ended June 30, 2024, compared to RMB 201.2 million for the same period in 2023[71] - The company has 520 authorized patents globally, including 367 overseas patents, as of June 30, 2024[73] - The company plans to advance six differentiated clinical-stage product candidates to the next clinical stage and seek global NDA approvals[73] - The company aims to strengthen its global intellectual property portfolio and seek strategic partnerships with global biotech and pharmaceutical companies[73] - The company did not recommend an interim dividend for the six months ended June 30, 2024[74] - The company's unaudited condensed consolidated financial statements for the six months ended June 30, 2024, were reviewed by Ernst & Young and the Audit Committee, which found them to be in compliance with applicable accounting standards[161] - The company's interim financial information for 2024 shows revenue of RMB 823.746 million, a decrease of RMB 15.059 million compared to the previous year[169] - The company reported a net profit attributable to ordinary equity holders of RMB 162.826 million for the six months ended June 30, 2024, compared to a net loss of RMB 402.349 million in the same period last year[169] - Earnings per share for the six months ended June 30, 2024, were RMB 0.56, compared to a loss per share of RMB 1.47 in the same period last year[169] - The company reported a net profit of RMB 162,826 thousand for the first half of 2024, compared to a net loss of RMB 402,349 thousand in the same period of 2023[170] - Total comprehensive income for the first half of 2024 was RMB 165,095 thousand, a significant improvement from a loss of RMB 362,569 thousand in the first half of 2023[170] - The company's total assets as of June 30, 2024, were RMB 1,963,839 thousand, a 46.1% increase from RMB 1,344,178 thousand as of December 31, 2023[171] - Total equity increased to RMB 776,439 thousand as of June 30, 2024, from RMB 70,632 thousand as of December 31, 2023, representing a 999.5% increase[172] - Non-current liabilities decreased to RMB 1,265,281 thousand as of June 30, 2024, from RMB 1,495,588 thousand as of December 31, 2023, a 15.4% reduction[172] - The company's financial assets measured at fair value through profit or loss decreased to RMB 1,458 thousand as of June 30, 2024, from RMB 1,951 thousand as of December 31, 2023[171] - Contract liabilities decreased to RMB 233,423 thousand as of June 30, 2024, from RMB 251,189 thousand as of December 31, 2023[172] - Interest-bearing bank and other borrowings decreased to RMB 970,555 thousand as of June 30, 2024, from RMB 1,179,191 thousand as of December 31, 2023, a 17.7% reduction[172] - Deferred tax liabilities decreased to RMB 5,849 thousand as of June 30, 2024, from RMB 10,549 thousand as of December 31, 2023[172] - The company's cash and cash equivalents decreased to RMB 882,198 thousand as of June 30, 2024, from RMB 905,815 thousand as of December 31, 2023[171] - Net profit for the period reached RMB 163,001 thousand, compared to a net loss of RMB 402,351 thousand in the same period last year[173] - Total equity increased to RMB 776,439 thousand as of June 30, 2024, up from RMB 600,178 thousand as of June 30, 2023[173] - Cash and cash equivalents decreased by RMB 88,763 thousand, ending at RMB 952,434 thousand as of June 30, 2024[174] - Operating cash outflow was RMB 354,391 thousand, slightly lower than the previous year's outflow of RMB 368,464 thousand[174] - Financing activities generated a net cash inflow of RMB 396,906 thousand, primarily from the issuance of shares amounting to RMB 533,940 thousand[174] - Investment activities resulted in a net cash outflow of RMB 131,278 thousand, mainly due to investments in property, plant, and equipment, and joint ventures[174] - The company's total cash and bank balances stood at RMB 1,100,314 thousand as of June 30, 2024, down from RMB 1,581,600 thousand in the previous year[174] - The company issued ordinary shares worth RMB 533,940 thousand during the period, contributing to the increase in share capital and share premium[173] - Exchange rate fluctuations resulted in a gain of RMB 2,269 thousand, positively impacting the company's comprehensive income[173] - The company's accumulated losses decreased to RMB 5,202,121 thousand as of June 30, 2024, from RMB 5,365,122 thousand at the beginning of the year[173] - Revenue from external customers in Mainland China increased to RMB 145.33 million in the first half of 2024, up from RMB 142.70 million in the same period in 2023[179] - Revenue from Switzerland, a new market, contributed RMB 678.42 million in the first half of 2024, compared to zero in the same period in 2023[179] - Total revenue for the first half of 2024 reached RMB 823.75 million, a significant increase from RMB 142.70 million in the first half of 2023[179] - Non-current assets in Mainland China slightly decreased to RMB 1,083.22 million as of June 30, 2024, from RMB 1,

[Performance Highlights](index=1&type=section&id=Performance%20Highlights) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) H1 2024 revenue surged **477.2%** to **RMB 823.7 million**, primarily from IP income, turning a **RMB 402.3 million loss** into **RMB 162.8 million net profit** Key Financial Indicators for H1 2024 | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 823.7 million | RMB 142.7 million | +477.2% | | R&D Expenses | RMB 444.1 million | RMB 309.8 million | +43.4% | | Administrative Expenses | RMB 87.0 million | RMB 91.3 million | -4.7% | | Profit/(Loss) for the Period | RMB 162.8 million | (RMB 402.3 million) | Turned Profitable | - Significant revenue growth primarily stemmed from intellectual property income, pharmaceutical product sales, commercialization rights income, and service revenue[2](index=2&type=chunk) - As of June 30, 2024, the Group's cash and bank balances totaled **RMB 1.1003 billion**, with an additional **USD 100 million** option payment received from Takeda Pharmaceutical in July 2024[3](index=3&type=chunk) [Business Highlights](index=2&type=section&id=Business%20Highlights) The company achieved significant business milestones, including a major strategic partnership for Olverembatinib with Takeda and key pipeline products advancing to Phase III - An exclusive option agreement was signed with Takeda Pharmaceutical for core product Olverembatinib, granting Takeda exclusive global development and commercialization rights outside Greater China[4](index=4&type=chunk) Strategic Collaboration Financial Terms with Takeda Pharmaceutical | Item | Amount | | :--- | :--- | | Exclusive Option Payment | USD 100 million (received in July 2024) | | Option Exercise Fee and Potential Milestone Payments | Up to approximately USD 1.2 billion | | Sales Royalties | Double-digit percentage of annual sales | | Equity Investment | USD 75 million | - Core product Olverembatinib's sales revenue in H1 2024 increased by **120%** compared to H2 2023 and **5%** compared to H1 2023[4](index=4&type=chunk) - Key candidate product lisaftoclax (APG-2575) received approval to conduct a registrational Phase III clinical study (GLORA-4) for MDS patients[5](index=5&type=chunk) - Olverembatinib received approval to conduct a registrational Phase III clinical trial (POLARIS-3) for SDH-deficient GIST patients and a registrational Phase III clinical trial (POLARIS-2) for CML-CP patients in the US[5](index=5&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) [Business Overview](index=4&type=section&id=Business%20Overview) The company is a global biopharmaceutical company focused on innovative therapies for hematological malignancies, with core product Olverembatinib commercialized in China and a strong global IP portfolio - The company focuses on discovering, developing, and commercializing first-in-class and best-in-class therapies to address global unmet medical needs in hematological malignancies[8](index=8&type=chunk) - Core product Olverembatinib is China's first and only approved third-generation BCR-ABL inhibitor for T315I-mutated CML patients[8](index=8&type=chunk) - As of June 30, 2024, the company held **520** authorized patents globally, with **367** being overseas authorized patents[9](index=9&type=chunk) [Pipeline Review](index=5&type=section&id=Pipeline%20Review) The company has six clinical-stage small molecule candidates targeting various pathways, with core and key products advancing in multiple registrational clinical studies Product Pipeline as of June 30, 2024 | Candidate Product | Mechanism | Primary Indication | Clinical Stage | | :--- | :--- | :--- | :--- | | Olverembatinib (HQP1351) | BCR-ABL/KIT | Drug-resistant CML, GIST, etc. | Marketed/Phase III | | Lisaftoclax (APG-2575) | Bcl-2 selective | CLL/SLL, AML, MDS, MM | Phase III/Phase II | | Alrizomadlin (APG-115) | MDM2-p53 | AML, MDS, Solid Tumors | Phase II/Phase I | | Pelcitoclax (APG-1252) | Bcl-2/Bcl-xL | NSCLC, SCLC, Lymphoma | Phase II/Phase I | | APG-5918 | EED selective | Oncology/Anemia | Phase I | | APG-2449 | FAK/ALK/ROS1 | NSCLC/Solid Tumors | Phase I | [Olverembatinib](index=5&type=section&id=Olverembatinib) As China's first and only approved third-generation BCR-ABL inhibitor, Olverembatinib is included in national medical insurance, approved in Macau, and advancing global Phase III trials for GIST and CML - In July 2024, Olverembatinib was officially approved for marketing by the Macao Pharmaceutical Administration Bureau (ISAF)[14](index=14&type=chunk) - In May 2024, NMPA approved the initiation of a registrational Phase III clinical study (POLARIS-3) for SDH-deficient GIST patients[14](index=14&type=chunk) - In February 2024, the US FDA granted permission to conduct a registrational Phase III clinical trial (POLARIS-2) for CML-CP patients[14](index=14&type=chunk) - The company expects to apply for inclusion of the indication for drug-resistant/intolerant CML-CP patients in the 2024 National Medical Insurance Directory, effective early 2025[16](index=16&type=chunk) [Lisaftoclax (APG-2575)](index=7&type=section&id=Lisaftoclax%20(APG-2575)) Lisaftoclax, a novel oral Bcl-2 inhibitor, is expected to file an NDA in China for r/r CLL/SLL in 2024, with multiple global registrational Phase III studies ongoing for various hematological malignancies - An NDA for lisaftoclax for relapsed/refractory CLL/SLL is planned for submission to China NMPA in 2024, potentially becoming the world's second and China's first approved Bcl-2 inhibitor[17](index=17&type=chunk)[20](index=20&type=chunk) - Recently approved by NMPA to conduct a registrational Phase III clinical study (GLORA-4) in combination with azacitidine for MDS[17](index=17&type=chunk) - Data presented at EHA 2024 showed an objective response rate (ORR) of **70.4%** for lisaftoclax combination therapy in relapsed/refractory multiple myeloma (MM)[18](index=18&type=chunk) [Alrizomadlin (APG-115)](index=9&type=section&id=Alrizomadlin%20(APG-115)) Alrizomadlin, an oral MDM2-p53 inhibitor with six FDA orphan drug designations, is undergoing multiple clinical studies in solid and hematological tumors, showing promising anti-tumor activity - Received **six** Orphan Drug Designations (ODD) and **two** Rare Pediatric Disease Designations (RPD) from the FDA[21](index=21&type=chunk) - Ongoing Ib/II studies in collaboration with Merck for combination with pembrolizumab in melanoma and other solid tumors[21](index=21&type=chunk) - Study results showed good anti-tumor activity and tolerability for APG-115 in patients with progressive salivary gland cancer, especially adenoid cystic carcinoma (ACC)[23](index=23&type=chunk) [Pelcitoclax (APG-1252)](index=10&type=section&id=Pelcitoclax%20(APG-1252)) Pelcitoclax, a Bcl-2/Bcl-xL dual inhibitor with FDA orphan drug designation for SCLC, is undergoing multiple combination studies in China for NSCLC, neuroendocrine tumors, and non-Hodgkin lymphoma - APG-1252 is a dual Bcl-2 and Bcl-xL protein inhibitor, granted Orphan Drug Designation by the FDA for small cell lung cancer (SCLC)[24](index=24&type=chunk) - Multiple combination studies are ongoing in China, including a Phase Ib study with osimertinib for EGFR-mutated NSCLC[25](index=25&type=chunk) [APG-5918](index=11&type=section&id=APG-5918) APG-5918, a highly selective EED inhibitor, shows potential for improving CKD-related anemia and is in Phase I trials for advanced solid tumors/lymphoma in the US and anemia in China - APG-5918 is a highly selective EED inhibitor, with preliminary studies showing its potential to improve anemia caused by chronic kidney disease (CKD)[26](index=26&type=chunk) - Approved for clinical trials for anemia-related indications in China, with single-dose escalation studies in healthy subjects completed[27](index=27&type=chunk) [Other Clinical or IND Stage Candidate Drugs](index=12&type=section&id=Other%20Clinical%20or%20IND%20Stage%20Candidate%20Drugs) APG-2449, the first domestic third-generation ALK inhibitor and FAK/ALK/ROS1 triple kinase inhibitor, shows preliminary efficacy in NSCLC patients, including those with brain metastases - APG-2449 is the first domestic third-generation ALK inhibitor, also a FAK/ALK/ROS1 triple kinase inhibitor[28](index=28&type=chunk) - ASCO annual meeting data showed preliminary efficacy for APG-2449 in TKI-naive and second-generation ALK TKI-resistant NSCLC patients, with initial inhibitory effects on brain metastases[28](index=28&type=chunk) [Discovery Pipeline](index=13&type=section&id=Discovery%20Pipeline) The company is developing targeted protein degraders (TPD) to address drug resistance, with a p53-MDM2 pathway degrader in preclinical development and a low platelet toxicity Bcl-xL degrader underway - The company is developing Targeted Protein Degraders (TPD) to address drug resistance issues with traditional drugs[29](index=29&type=chunk) - The first orally active degrader targeting the p53-MDM2 pathway has entered preclinical development[29](index=29&type=chunk) - A Bcl-xL protein degrader with potential for low platelet toxicity is under development, with a preclinical candidate nomination expected by year-end[29](index=29&type=chunk) [R&D, Commercialization and Business Development](index=14&type=section&id=R%26D%2C%20Commercialization%20and%20Business%20Development) R&D investment grew in H1 2024, with core product Olverembatinib showing strong commercialization progress and the Takeda strategic collaboration significantly advancing its global reach R&D Expenses | Period | Amount | | :--- | :--- | | H1 2024 | RMB 444.1 million | | H1 2023 | RMB 309.8 million | - Core product Olverembatinib (HQP1351) achieved **RMB 112.92 million** in VAT-inclusive sales revenue in H1 2024[32](index=32&type=chunk) - As of June 30, 2024, the product was accessible in **670** hospitals and DTP pharmacies nationwide, supported by a commercial team of approximately **100** people[32](index=32&type=chunk) - The Suzhou industrialization base successfully completed GMP batch production of Olverembatinib tablets, supporting clinical supply in China and globally[35](index=35&type=chunk) - The exclusive option agreement with Takeda Pharmaceutical will leverage Takeda's global commercial expertise to expand Olverembatinib's accessibility to patients worldwide[36](index=36&type=chunk) [Financial Statements and Review](index=17&type=section&id=Financial%20Statements%20and%20Review) [Condensed Consolidated Financial Statements](index=17&type=section&id=Condensed%20Consolidated%20Financial%20Statements) H1 2024 financial statements show **RMB 823.7 million** revenue and **RMB 162.8 million** net profit, with total assets increasing to **RMB 3.107 billion** and net assets significantly rising to **RMB 776.4 million** Key Data from Condensed Consolidated Statement of Profit or Loss (RMB Thousand) | Item | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 823,746 | 142,701 | | Gross Profit | 808,687 | 124,547 | | R&D Expenses | (444,079) | (309,814) | | Profit/(Loss) before Tax | 162,895 | (399,603) | | Profit/(Loss) for the Period | 162,826 | (402,349) | Key Data from Condensed Consolidated Statement of Financial Position (RMB Thousand) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Non-current Assets | 1,143,231 | 1,156,215 | | Total Current Assets | 1,963,839 | 1,344,178 | | Cash and Bank Balances | 1,100,314 | 1,093,833 | | Total Current Liabilities | 1,065,350 | 934,173 | | Total Non-current Liabilities | 1,265,281 | 1,495,588 | | Net Assets | 776,439 | 70,632 | [Financial Review](index=29&type=section&id=Financial%20Review) This section details the **477.2%** revenue increase, primarily from IP income, a **43.4%** rise in R&D expenses, and decreases in administrative and finance costs, leading to a **RMB 162.8 million** net profit - Revenue increased by **RMB 681 million** or **477.2%** year-on-year, primarily due to the combined impact of intellectual property income, pharmaceutical product sales, commercialization rights income, and service revenue[70](index=70&type=chunk) - R&D expenses increased by **RMB 134.3 million** or **43.4%** year-on-year, mainly due to increased internal R&D activities[73](index=73&type=chunk) - Administrative expenses decreased by **RMB 4.3 million** or **4.7%** year-on-year, primarily due to reduced staff costs and operating depreciation expenses at the Suzhou base[75](index=75&type=chunk) - Finance costs decreased by **RMB 18.6 million** or **35.3%** year-on-year, mainly due to reduced interest on bank borrowings[77](index=77&type=chunk) - As a result of the aforementioned factors, the company's net profit turned from a **RMB 402.3 million loss** in the prior period to a **RMB 162.8 million profit**[79](index=79&type=chunk) [Key Financial Ratios and Liquidity](index=34&type=section&id=Key%20Financial%20Ratios%20and%20Liquidity) The company's financial position significantly improved, with current and quick ratios increasing to **1.8**, and the debt-to-asset ratio sharply decreasing to **77.2%**, indicating stronger solvency and a more robust financial structure Key Financial Ratios | Ratio | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Current Ratio | 1.8 | 1.4 | | Quick Ratio | 1.8 | 1.4 | | Debt-to-Asset Ratio | 77.2% | 993.5% | - As of June 30, 2024, the Group's cash and bank balances amounted to **RMB 1.1003 billion**, largely consistent with year-end 2023[89](index=89&type=chunk) - As of June 30, 2024, the Group's total interest-bearing bank and other borrowings amounted to **RMB 1.700 billion**[85](index=85&type=chunk)[87](index=87&type=chunk) [Other Information](index=37&type=section&id=Other%20Information) [Employees and Remuneration Policy](index=37&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2024, the company had **574** full-time employees, with **70.9%** in R&D, reflecting its R&D-centric strategy, and implemented incentive plans to attract and retain talent Employee Distribution by Function (as of June 30, 2024) | Function | Number of Employees | Percentage | | :--- | :--- | :--- | | R&D | 407 | 70.9% | | Commercial | 101 | 17.6% | | Administrative and Others | 66 | 11.5% | | **Total** | **574** | **100.0%** | - Employee benefit expenses for H1 2024 were **RMB 218.9 million**, compared to **RMB 201.2 million** in the prior period[92](index=92&type=chunk) [Future and Outlook](index=39&type=section&id=Future%20and%20Outlook) The company plans to accelerate clinical development and global NDA applications for six candidate drugs, seek global partnerships, and strengthen its global intellectual property portfolio to become a leading biotech company - The company will accelerate the advancement of six candidate drugs in its highly differentiated novel clinical pipeline to the next clinical stage and pursue global NDA applications[94](index=94&type=chunk) - Plans to actively seek strategic partnerships with global biotechnology and pharmaceutical companies to seize global commercialization opportunities[94](index=94&type=chunk) - Will further strengthen its comprehensive and growing global intellectual property portfolio to safeguard shareholder interests[94](index=94&type=chunk) [Corporate Governance and Other Information](index=40&type=section&id=Corporate%20Governance%20and%20Other%20Information) The company adheres to corporate governance codes, detailing the use of proceeds from past placings and the **USD 75 million** Takeda share subscription, primarily for core product and key candidate development - The roles of Chairman and CEO are held by the same person (Dr. Yang), with the Board believing the existing structure does not affect the balance of power and accountability[95](index=95&type=chunk) - Net proceeds from the 2023 placing were approximately **HKD 543.9 million**, with **RMB 119.5 million** remaining unused as of June 30, 2024, expected to be fully utilized by end of 2024[107](index=107&type=chunk)[108](index=108&type=chunk) - Net proceeds from the 2024 share issuance to Takeda Pharmaceutical were approximately **USD 73 million**, with **90%** planned for the development of core product HQP1351 and key candidate APG-2575, and **10%** for other key candidates, expected to be utilized by end of 2025[113](index=113&type=chunk)[114](index=114&type=chunk) - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2024[117](index=117&type=chunk)

Financial Performance - The company reported a revenue of HKD 1.2 billion for the fiscal year 2023, representing a 15% increase compared to the previous year[6]. - The company reported a significant increase in revenue, reaching $150 million, representing a 25% year-over-year growth[11]. - The company reported a revenue of RMB 1.2 billion for the fiscal year 2023, representing a year-over-year growth of 25%[14]. - Total revenue for 2023 reached RMB 221,984,000, an increase from RMB 209,711,000 in 2022, representing a growth of approximately 5.7%[19]. - For the year ended December 31, 2023, the company's revenue was RMB 222.0 million, an increase of RMB 12.3 million or 5.9% compared to RMB 209.7 million for the year ended December 31, 2022[52][53]. - The total comprehensive loss for the year ended December 31, 2023, was RMB 899.5 million, compared to RMB 821.4 million for the year ended December 31, 2022, representing an increase of RMB 78.1 million or 9.5%[52][64]. - The company's loss for the year ended December 31, 2023, was RMB 925.7 million, an increase of RMB 42.8 million or 4.8% from RMB 882.9 million for the year ended December 31, 2022[64]. User Growth and Market Expansion - User data showed a growth of 25% in active users, reaching 3 million by the end of 2023[6]. - User data showed an increase in active users to 1.2 million, up from 900,000 in the previous year, marking a 33% growth[12]. - User data indicates an increase in active patients to 150,000, up from 120,000 in the previous year, marking a growth of 25%[15]. - The company is expanding its market presence in Southeast Asia, targeting a 20% market share by 2025[6]. - The company is expanding its market presence in Europe, targeting a 15% market share by the end of 2025[11]. Product Development and R&D - New product launches included two innovative drugs, APG-115 and APG-125, which are expected to enter the market in Q3 2024[9]. - New product development includes the launch of a novel oral Bcl-2 inhibitor, expected to enter clinical trials in Q2 2024[12]. - New product launches include a PD-1 inhibitor, which is expected to enter the market by Q3 2024[17]. - The R&D expenditure increased to $30 million, accounting for 20% of total revenue, emphasizing the commitment to innovation[11]. - Research and development expenses increased to RMB 300 million, accounting for 25% of total revenue[15]. - The company has a robust pipeline with nine clinical-stage small molecule candidates, including the core product Olverembatin (耐立克®), which targets BCR-ABL mutations, including T315I mutation[25]. - The company is conducting over 40 I/II clinical trials globally, including in China, the US, Australia, and Europe[24]. Strategic Partnerships and Acquisitions - A strategic acquisition of a biotech firm was completed for HKD 500 million, enhancing the company's R&D capabilities[6]. - A strategic acquisition of a biotech firm was announced, valued at $50 million, aimed at enhancing R&D capabilities[13]. - A new partnership with a leading research institution was announced to accelerate the development of next-generation therapies[6]. - A new partnership with a leading pharmaceutical company was established to co-develop therapies, expected to generate $25 million in revenue over the next three years[12]. - The company has initiated a strategic partnership with Unity Biotechnology to enhance its R&D capabilities[16]. Operational Efficiency and Cost Management - The management highlighted a focus on enhancing operational efficiency, targeting a 5% reduction in operational costs by the end of 2024[6]. - The company plans to enhance its manufacturing capacity by 40% to meet growing demand for its core products[13]. - The company plans to invest RMB 500 million in technology upgrades to improve operational efficiency by 20% over the next two years[16]. Financial Guidance and Future Projections - The company provided a forward guidance of 10-12% revenue growth for the next fiscal year[6]. - The company provided guidance for the next fiscal year, projecting revenue between $180 million and $200 million, indicating a potential growth of 20% to 33%[13]. - The company anticipates a revenue guidance of RMB 1.5 billion for the next fiscal year, reflecting an expected growth of 25%[16]. Clinical Trials and Regulatory Approvals - The company received orphan drug designation for its new treatment for NHL, which is anticipated to boost its market potential significantly[18]. - The company received FDA approval to conduct five global pivotal registration clinical trials for Nairike® (Orebatin) and other key assets in 2023[21]. - Lisaftoclax (APG-2575) has been approved for 21 Phase Ib/II clinical studies across various indications, including CLL, NHL, AML, MM, and WM, with over 800 patients treated[29]. - The company received NMPA approval in December 2023 to conduct a pivotal Phase III clinical trial for Lisaftoclax (APG-2575) in newly diagnosed elderly/weak AML patients[30]. - The company expects to continue patient enrollment in the global pivotal Phase III clinical trial for CML-CP (POLARIS-2) in 2024[28]. Employee and Management Insights - The company has 47 employees with medical doctor or PhD degrees, primarily involved in R&D and laboratory work[76]. - The senior management team consists of 159 senior employees with an average of 15 to 20 years of experience in the biotechnology industry[76]. - The company has maintained an employee retention rate of over 80% over the past two years, supporting the continuous development of its knowledge base[76]. - The company actively recruits talent globally by offering a collaborative work environment, competitive compensation, and opportunities to engage in cutting-edge scientific projects[76]. Corporate Governance and Compliance - The company is committed to maintaining high standards of corporate governance and compliance with listing rules[85]. - The independent directors bring a wealth of knowledge and experience, contributing to the company's governance and strategic decision-making[87]. - The board comprises members with diverse backgrounds, including finance, law, and medicine, ensuring comprehensive oversight and governance[88]. Risks and Challenges - The company faces risks related to its financial condition and additional capital needs, including the potential inability to achieve profitability despite one candidate drug being commercialized[99]. - The company relies heavily on the success of its candidate drugs currently in clinical development, with the risk that clinical trials may not succeed[100]. - The company faces significant risks in obtaining regulatory approvals for candidate drugs, which could severely damage its business if not achieved[101]. - The company has experienced challenges in recruiting patients for clinical trials, which could delay or adversely affect clinical development activities[100]. Social Responsibility and Community Engagement - The company is committed to social responsibility, employee welfare, and sustainable development, adhering to environmental laws and regulations[98]. - The company made charitable donations totaling RMB 2.0 million to Peking University Education Foundation, RMB 1.1 million to Beijing Kangmeng Charity Foundation, and RMB 0.9 million to other foundations during the reporting period[112].

Financial Performance - Revenue increased by RMB 12.3 million or 5.9% from RMB 209.7 million for the year ended December 31, 2022, to RMB 222.0 million for the year ended December 31, 2023[2]. - Other income decreased by RMB 7.7 million or 11.5% from RMB 67.0 million to RMB 59.3 million, primarily due to a reduction in government subsidies and fair value gains from financial instruments[2]. - Loss increased by RMB 42.8 million or 4.8% from RMB 882.9 million to RMB 925.7 million for the year ended December 31, 2023[3]. - The company reported a net loss of RMB 925.71 million for the year ended December 31, 2023, compared to a net loss of RMB 882.92 million in 2022[32]. - The total comprehensive loss for the fiscal year ending December 31, 2023, was RMB 899.45 million, compared to RMB 821.43 million for the fiscal year ending December 31, 2022[64]. - The company's total assets decreased to RMB 1,566.22 million in 2023 from RMB 1,949.11 million in 2022, indicating a decline of approximately 19.6%[34]. - The company's total liabilities included a deferred tax credit of RMB (7,150,000) for the year, compared to RMB (4,248,000) in 2022[55]. - The company's basic loss per share for the fiscal year ending December 31, 2023, was RMB 925.64 million, compared to RMB 882.92 million for the fiscal year ending December 31, 2022[57]. Research and Development - R&D expenses decreased by RMB 36.1 million or 4.9% from RMB 743.1 million to RMB 707.0 million, mainly due to a reduction in outsourced services[3]. - The company has conducted over 40 ongoing Phase I/II clinical trials globally, leveraging its proprietary platform for drug development targeting apoptosis and immune modulation[6]. - The core product, Olverembatin (APG-2575), has been approved for commercialization in China, marking a significant milestone in the company's product pipeline[6]. - The company has developed a rich pipeline of nine clinical-stage small molecule candidates, including next-generation multi-kinase inhibitors targeting FAK/ALK/ROS1[6]. - The company is focused on addressing unmet clinical needs for patients globally, aiming to benefit more patients through its innovative therapies[6]. - The company aims to enhance its R&D capabilities to develop innovative therapies that address unmet medical needs[92]. Product Development and Clinical Trials - Cumulative sales of Nairike® (Aorebatin) reached RMB 362.1 million since its launch in November 2021, with a 259% increase in sales volume in 2023 compared to 2022[4]. - The number of patients increased by 123% and the number of hospitals with access increased by 567% for Nairike® (Aorebatin) in 2023[4]. - Nairike® (Aorebatin) was included in the 2022 National Medical Insurance Drug List and received approval for clinical trials in various indications[4]. - The company received clinical trial approvals from the NMPA for the global pivotal Phase III studies of lisaftoclax (APG-2575) for treating newly diagnosed elderly/fragile acute myeloid leukemia (AML) patients in December 2023 and for first-line treatment in chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) patients in October 2023[5]. - Lisaftoclax (APG-2575) has been approved for 21 clinical studies in China, the US, Australia, and Europe, targeting various hematological malignancies and solid tumors, with over 800 patients treated, including more than 400 CLL/SLL patients[12]. - The company is actively pursuing key registration studies for GIST and Ph+ ALL indications[10]. - Recent clinical data presented at the 2023 ASH Annual Meeting showed promising results for Nairike® (Aorebatin) in CML-CP patients resistant to second-generation TKIs[11]. Market and Commercialization - The commercialization team has expanded to approximately 100 members, covering 117 distributors and over 800 hospitals, with 526 hospitals and DTP pharmacies included in 2023[29]. - The product Nairike (Aorebatin) was successfully included in the National Reimbursement Drug List (NRDL) in January 2023, enhancing patient accessibility[29]. - The company aims to expand the commercialization and accessibility of Nairike® (Aorebatin) in both domestic and international markets[8]. - The company is advancing its late-stage commercialization and marketing teams to support its innovative drug development efforts[6]. - The company is investing $20 million in the development of APG-2575, a novel oral Bcl-2 inhibitor, with expected completion in 2025[119]. Financial Position and Assets - The company's production facility in Suzhou has a capacity of 250 million tablets/capsules per year, supporting its transition from Biotech to Biopharma[30]. - The company's net asset value dropped from RMB 408,658 thousand in 2022 to RMB 70,632 thousand in 2023, a decrease of around 82.7%[36]. - The company's long-term payables decreased from RMB 35,331 thousand in 2022 to RMB 18,299 thousand in 2023, a reduction of approximately 48.2%[35]. - The total amount of bank and other borrowings due within one year was RMB 616.4 million, compared to RMB 518.4 million in the previous year[83]. - The group had no significant contingent liabilities as of December 31, 2023[84]. Governance and Compliance - The financial statements were prepared in accordance with International Financial Reporting Standards, reflecting a commitment to transparency and compliance[38]. - The company confirmed compliance with the corporate governance code during the reporting period[93]. - The audit committee has reviewed the financial performance for the year ended December 31, 2023, ensuring compliance with relevant accounting standards[110]. Employee and Organizational Structure - The group employed 583 full-time employees as of December 31, 2023, with 401 (68.8%) in R&D roles[87]. - Employee benefit expenses for the years ended December 31, 2022, and 2023 were RMB 427.6 million and RMB 413.0 million, respectively[88]. - The board of directors includes Dr. Dajun Yang as the chairman and CEO, along with other non-executive and independent directors[124].

Financial Performance - The company reported a significant increase in revenue, reaching HKD 1.2 billion, representing a 25% growth compared to the previous year[6]. - The company reported a revenue of HKD 150 million for the first half of 2023, representing a 25% increase compared to the same period last year[11]. - The company expects to launch two new products by Q4 2023, contributing an estimated HKD 80 million in additional revenue[11]. - The company has set a performance guidance of HKD 300 million in revenue for the full year 2023, reflecting a 20% year-over-year growth[11]. - The company provided guidance for the second half of 2023, expecting revenue to reach between RMB 200 million and RMB 250 million, reflecting a growth rate of 33% to 67% year-over-year[13]. - Total revenue for the six months ended June 30, 2023, was RMB 142,701,000, compared to RMB 95,763,000 for the same period in 2022, representing an increase of approximately 49%[146]. - Revenue from pharmaceutical product sales reached RMB 129,534 thousand, up 63.1% from RMB 79,452 thousand in the prior year[160]. User Growth - User data showed a 15% increase in active users, totaling 3 million users as of the end of the reporting period[6]. - The company reported a user base growth of 15% in the first half of 2023, reaching a total of 200,000 active users[11]. - User data indicates a growth in the patient population for the company's key therapies, with an estimated increase of 30% in new patients diagnosed with NSCLC[14]. Research and Development - New product development includes the launch of APG-115, a novel oral active small molecule MDM2-p53 inhibitor, expected to enter clinical trials in Q4 2023[7]. - The company is advancing its third-generation BCR-ABL inhibitor, HQP1351, aimed at overcoming T315I mutation resistance[11]. - The R&D pipeline includes three new drug candidates expected to enter clinical trials by the end of 2023, focusing on NHL and NPC indications[14]. - The company is investing in R&D, with a budget allocation of HKD 50 million for new product development in 2023[11]. - The company has a robust pipeline with nine clinical-stage small molecule candidates, including the core product, Olverembatinib (耐立克), which targets BCR-ABL mutations, including T315I[24]. - The company is actively pursuing communication with the FDA regarding global pivotal registration clinical trials for Nairik® (Orebatinib)[27]. Market Expansion - The company is expanding its market presence in Asia, targeting a 30% increase in market share by the end of 2024[8]. - The company plans to expand its market presence in Southeast Asia, targeting a 15% market share in the region by 2025[14]. - The company has initiated a new marketing strategy focusing on digital channels, aiming for a 40% increase in online sales[8]. Financial Health - The gross margin improved to 60%, up from 55% in the previous year, indicating better cost management[6]. - The company reported a net loss of RMB 402.3 million, a decrease in loss of RMB 4.4 million compared to the net loss of RMB 406.7 million for the same period in 2022[20]. - The company’s total liabilities as of June 30, 2023, were RMB 2,317.9 million, with current liabilities of RMB 642.9 million and non-current liabilities of RMB 1,675.0 million[64]. - The company’s cash and cash equivalents amounted to RMB 1,581.6 million, an increase of RMB 89.4 million or 6.0% from RMB 1,492.2 million as of December 31, 2022[20]. Strategic Initiatives - A strategic acquisition of a biotech firm was announced, valued at USD 500 million, aimed at enhancing R&D capabilities[8]. - The company has initiated discussions for potential mergers and acquisitions to enhance its product pipeline and market reach[11]. - The management emphasized the importance of sustainability in operations, committing to reduce carbon emissions by 25% by 2025[8]. Shareholder Information - Ascentage Limited, the major shareholder, holds 45.53% of the shares, while HealthQuest Pharma Limited, owned by Dr. Zhai, is also a significant stakeholder[10]. - Major shareholders collectively hold 22.30% of the company's equity, with Li Ju-Yun, Dr. Gao, and Dr. Zhai each having significant interests[73]. - The company has initiated a share buyback program, intending to repurchase up to 5% of its outstanding shares over the next 12 months[14]. Clinical Trials and Approvals - The company obtained FDA approval in August 2023 for a global Phase III clinical trial of lisaftoclax (APG-2575) in previously treated CLL/SLL patients[21]. - Olverembatinib received approval for a pivotal Phase III clinical trial to compare its efficacy with Imatinib in newly diagnosed Ph+ ALL patients[25]. - Alrizomadlin (APG-115) has received six orphan drug designations from the FDA, including for soft tissue sarcoma and AML[31]. Corporate Governance - The board of directors continues to review the effectiveness of the corporate governance structure, particularly the separation of the roles of Chairman and CEO[140]. - The company has adopted its own securities trading code, ensuring compliance with the standard code for all directors during the reporting period[141].

Financial Performance - For the six months ended June 30, 2023, revenue increased by RMB 46.9 million or 49.0% to RMB 142.7 million, primarily due to the sales growth of Nairike® (Orebatin), which increased by 36.7% compared to the same period last year[2]. - Other income and gains decreased by RMB 20.0 million or 54.1% to RMB 17.0 million, mainly due to a reduction in government subsidies and fair value gains from derivative financial instruments[2]. - Sales and distribution expenses increased by RMB 12.0 million or 16.8% to RMB 83.3 million, primarily due to commercialization costs associated with Nairike® (Orebatin) and other products[3]. - R&D expenses decreased by RMB 31.6 million or 9.3% to RMB 309.8 million, mainly due to a reduction in outsourced services and labor costs[3]. - Administrative expenses increased by RMB 9.0 million or 10.9% to RMB 91.3 million, primarily due to increased operational and depreciation costs at the Suzhou base[3]. - As of June 30, 2023, the group recorded a net loss of RMB 402.3 million, a decrease in loss of RMB 4.4 million compared to RMB 406.7 million for the same period last year[3]. - As of June 30, 2023, cash and cash equivalents amounted to RMB 1,581.6 million, an increase of RMB 89.4 million or 6.0% from RMB 1,492.2 million as of December 31, 2022[3]. - Revenue for the six months ended June 30, 2023, was RMB 142,701,000, a significant increase from RMB 95,763,000 in the same period of 2022, representing a growth of approximately 49%[29]. - Gross profit for the same period was RMB 124,547,000, compared to RMB 90,742,000 in 2022, indicating a gross margin improvement[29]. - The company reported a loss before tax of RMB 399,603,000, slightly improved from a loss of RMB 402,252,000 in the previous year[29]. - Total comprehensive loss for the period was RMB 362,569,000, compared to RMB 363,472,000 in the prior year, showing a marginal improvement[31]. Product Development and Clinical Trials - Cumulative sales of Nairike® (Orebatin) reached RMB 303.9 million since its launch in November 2021, with significant progress in global development and commercialization[4]. - In July 2023, Nairike® (Orebatin) received clinical trial approval from the NMPA for a pivotal Phase III study in patients with newly diagnosed Ph+ ALL[4]. - In August 2023, the company obtained FDA approval for a pivotal Phase III clinical trial of Lisaftoclax (APG-2575) in patients with previously treated CLL/SLL[4]. - The company announced the latest Phase I clinical trial data for APG-2449, which overcomes resistance to second-generation ALK inhibitors in non-small cell lung cancer (NSCLC) patients[6]. - The high-potential asset EED inhibitor APG-5918 has received clinical trial approvals for advanced solid tumors and hematologic malignancies in the US and China, expanding into new treatment areas[6]. - The core product, Nairike (Orebatinib), has been approved for commercialization in China[7]. - The company is conducting over 40 Phase I/II clinical trials globally, demonstrating its commitment to addressing unmet clinical needs[7]. - The product pipeline includes candidates targeting various cancers and diseases, with ongoing trials in multiple regions[8]. - The core product, Nairike® (Aorebatinib), is the first and only third-generation BCR-ABL inhibitor approved in China for treating T315I mutation CML patients, marking a significant advancement in the treatment landscape[9]. - Lisaftoclax (APG-2575) is a novel oral Bcl-2 inhibitor, currently undergoing 19 Phase Ib/II clinical trials across various indications, including CLL, NHL, AML, and solid tumors, with over 600 patients treated[12]. Research and Development - The company has a robust pipeline with nine small molecule candidates in clinical stages, including innovative Bcl-2 and dual-target Bcl-2/Bcl-xL inhibitors, and next-generation multi-kinase inhibitors targeting FAK/ALK/ROS1[7]. - The company has established global collaborations with leading biotech and pharmaceutical companies and academic institutions, enhancing its research and development capabilities[7]. - The company aims to accelerate the clinical development of its product pipeline to benefit more patients globally[7]. - The company reported R&D expenses of RMB 341.4 million and RMB 309.8 million for the years ended June 30, 2022, and 2023, respectively[23]. - The company has a single operating segment focused on developing and selling innovative small molecule therapies for oncology and chronic hepatitis B[40]. Financial Position and Liquidity - The financial and liquidity position remained stable during the first half of 2023 despite the impacts of COVID-19[28]. - Current assets increased to RMB 1,760,839,000 from RMB 1,636,488,000, reflecting a growth in liquidity[32]. - The company’s net asset value rose to RMB 600,178,000 as of June 30, 2023, compared to RMB 408,658,000 at the end of 2022[33]. - The current ratio improved to 2.7 as of June 30, 2023, from 1.9 as of December 31, 2022[73]. - The debt-to-equity ratio decreased to 15.7% as of June 30, 2023, down from 73.5% as of December 31, 2022[73]. - Cash and bank balances increased to RMB 1,581.6 million as of June 30, 2023, from RMB 1,492.2 million as of December 31, 2022[82]. Employee and Management - As of June 30, 2023, the company had a total of 565 full-time employees, with 68.0% (384 employees) in R&D, 19.1% (108 employees) in commercial roles, and 12.9% (73 employees) in administrative functions[84]. - The company has a high employee retention rate of over 80% over the past two years, contributing to the continuous development of its knowledge base[84]. - The senior management team consists of 152 senior employees with an average of 15 to 20 years of experience in the biotechnology industry[84]. - The company actively recruits talent globally by offering a collaborative work environment, competitive compensation, and opportunities to work on cutting-edge scientific projects[84]. Corporate Governance and Compliance - The board of directors continues to review the effectiveness of the corporate governance structure to assess the need for separating the roles of chairman and CEO[90]. - The company has established an audit committee to ensure compliance with applicable accounting standards and regulations[108]. - The company’s financial statements were reviewed by external auditors Ernst & Young, ensuring adequate disclosure and compliance with accounting standards[108]. - The board is committed to maintaining transparency and accountability in its operations[121].