Core Viewpoint - Morgan Stanley's latest research report evaluates the innovative drug pipeline value of Fosun Pharma (600196) and its subsidiary, Hualan Biological Engineering (02696), indicating a total valuation contribution of approximately 72 billion RMB, suggesting nearly 80% upside potential from the current valuation of over 40 billion RMB, with a target price of around 145 HKD for Hualan Biological Engineering [1] Group 1 - Hualan Biological Engineering has established a diversified product portfolio consisting of antibodies and antibody-drug conjugates (ADCs), while also expanding into bispecific/trispecific antibody fields [1] - The company's stock price has surged over 200% this year, primarily driven by the potential of its innovative pipeline in clinical trials, particularly HLX43 (PD-L1 ADC) and HLX22 (HER2 monoclonal antibody) [1] - The report highlights the promising prospects for out-licensing and increased diversity in product pipelines and international collaborations [1] Group 2 - HLX43 is positioned well for second-line/third-line treatment of EGFR wild-type non-small cell lung cancer (NSCLC), with a peak sales estimate of 3.9 billion USD in the U.S. market, showing encouraging objective response rates (ORR) of 46.7% and 30% in specific patient groups [2] - Hualan Biological Engineering is seeking FDA approval for HLX43 based on single-arm data for third-line treatment indications and is currently conducting a Phase II international multicenter clinical trial [2] - The company plans to initiate Phase III clinical trials within a year and is exploring additional indications for HLX43 in first-line NSCLC treatment [2] Group 3 - HLX22 has shown early signs of significant progression-free survival (PFS) and overall survival (OS) benefits in a Phase II trial for first-line HER2-positive gastric cancer, with adjusted peak sales estimates of 2.7 billion USD in the U.S., Japan, and Europe [3] - Hualan Biological Engineering is exploring the combination of HLX22 with Enhertu for HR-positive/HER2-negative breast cancer, with proof of concept data expected in the second half of 2026 [3] Group 4 - Serplulimab (PD-1) is expected to enter the Biologics License Application (BLA) stage in the U.S. in the first half of 2026, being the first PD-1 monoclonal antibody to show efficacy in first-line extensive-stage small cell lung cancer (ES-SCLC) [4] - The drug is also undergoing Phase III trials for new adjuvant treatment in pMMR/MSS colorectal cancer and gastric cancer, with unique positioning expected to capture significant market share despite competition [4] - Morgan Stanley anticipates that 73% of the valuation growth for Hualan Biological Engineering will stem from the global potential of its core candidates: HLX43, HLX22, and Serplulimab [4]