Investment Rating - The report indicates a positive outlook for China's biopharma sector, highlighting its transition into a more mature phase characterized by self-sufficiency and innovation [3]. Core Insights - China's biopharma sector is increasingly self-sufficient, supported by domestic funding and innovation, leading to a competitive edge in early-stage asset generation [3]. - The outlicensing market in China is expected to remain active, expanding into new therapeutic areas beyond oncology [3]. - Despite a pullback from non-domestic venture capital, domestic funding is reinforcing a self-reliant ecosystem in China's biopharma landscape [3]. - The report emphasizes that US restrictions may disrupt US biopharma innovation more than they will slow China's progress [3]. Summary by Sections Internal Dynamics of China's Biopharma Landscape - China's biopharma ecosystem is evolving from a generics powerhouse to a leader in next-generation therapeutics, supported by efficient clinical-trial infrastructure [5]. - The number of Investigational New Drug (IND) applications for innovative drugs increased significantly from 688 in 2019 to 2,298 in 2023 [5]. - China has adopted international standards for clinical trials, allowing companies to save 12 to 18 months in trial initiation compared to the US [5]. Global Engagement with China: Cross-Border Trends - China's licensing activity has increased, with a focus on complex biologics rather than legacy modalities [48]. - In 2025, antibodies and antibody-drug conjugates (ADCs) were the most licensed modalities, with significant deal values indicating their strategic importance [50][52]. - The report notes a trend of US and EU biopharma companies establishing centers of excellence in China to leverage local innovation [56][59]. Looking Ahead to 2026: Risks, Opportunities, and Geopolitical Trajectories - The BIOSECURE Act may introduce friction in cross-border collaborations but is primarily focused on downstream execution rather than early-stage asset generation [74]. - Despite potential disruptions, the demand for early-stage assets is expected to remain strong, particularly in precision oncology and cell and gene therapy [71][73]. - The report suggests that China's early-stage asset advantage is likely to persist due to rising US costs and funding constraints [74].

Group 1: Financial Performance - DualityBio reported revenue of RMB1.23 billion for 1H25, representing a 23% year-over-year increase, primarily driven by licensing and collaboration payments [1] - R&D spending decreased by 7% year-over-year to RMB349 million in 1H25, while administrative expenses rose by 71% year-over-year to RMB126 million, mainly due to IPO-related costs [1] - Adjusted net profit reached RMB146 million, reflecting a 14.2% year-over-year increase, excluding the fair value impact of preferred shares from the IPO [1] - As of June 2025, the company maintained a solid cash balance of RMB3.75 billion, sufficient to support continued R&D and pipeline expansion [1] Group 2: Product Development and Pipeline - DualityBio and BioNTech plan to file NDAs for DB-1303/BNT323 targeting HER2-expressing cancers by the end of 2025, marking a significant step towards commercialization [2] - DB-1311/BNT324 has shown promising efficacy in heavily pre-treated CRPC patients, achieving a rPFS of 8.3 months, and a 70.4% ORR in 3L+ SCLC [2] - DB-1310 demonstrated a PFS of 8.3 months in 4L+ EGFR-TKI-resistant NSCLC, outperforming competing therapies [2] - The company is advancing its next-generation bispecific ADC pipeline, including DB-1419 and DB-1418/AVZO-1418, both in Ph1/2 development [3] Group 3: Strategic Positioning - DualityBio is positioned as a front-runner in ADC and next-generation IO combinations, advancing multiple Ph1/2 trials evaluating BNT327 in combination with their ADCs across various tumor types [2] - Initial data from the TROP2 ADC + BNT327 combination showed superior tumor growth inhibition compared to monotherapy, with a low TRAE discontinuation rate of 4.5% [2] - The company is also developing DB-2304 for autoimmune diseases, targeting SLE/CLE in Ph1 trial [3] Group 4: Investment Outlook - The company maintains a "BUY" rating, with a target price increase from HK$270.34 to HK$367.06 based on a DCF valuation [4]

Core Insights - DualityBio has a strong pipeline of antibody-drug conjugate (ADC) candidates, showcasing its innovation capabilities in the ADC space [1][2] - The company has established multiple strategic partnerships with global biopharmaceutical firms, enhancing its development efforts and validating its platform [3] - Revenue projections indicate significant growth, with expectations of reaching RMB2.0 billion by FY25E, primarily from licensing and collaborations [4] Group 1: ADC Product Pipeline - DB-1303/BNT323 (HER2 ADC) is expected to file for FDA accelerated approval by 2025 for HER2-expressing endometrial cancer [1] - DB-1311/BNT324 (B7-H3 ADC) shows promising early results with a 70.4% response rate in 3L+ SCLC patients [1][2] - DB-1310 (HER3 ADC) has demonstrated a median progression-free survival (mPFS) of 8.3 months in heavily pre-treated 4L+ EGFR-TKI resistant NSCLC [2] Group 2: Strategic Partnerships - DualityBio has formed partnerships with major companies like BioNTech, BeiGene, and GSK, resulting in a total deal value exceeding US$6.0 billion [3] - The partnerships focus on various ADC programs, including B7-H3, HER2, and TROP2 ADCs, which enhances the company's market position [3] - The replicable partnership model is seen as a sustainable path for future innovation and growth in the ADC sector [3] Group 3: Financial Projections - Total revenue is projected to reach RMB2.0 billion in FY25E, with expectations of product sales revenue starting in 2027E [4] - The target price for DualityBio is set at HK$270.34 based on a discounted cash flow (DCF) valuation [4]