Investment Rating - The report maintains an investment rating of "Outperform the Market" [5] Core Insights - The new drug sector has shown significant movements, with notable increases in stock prices for companies such as Kintor Pharmaceutical, which recently went public in Hong Kong, focusing on unmet clinical needs in oncology and immunology [2][3][21] - The KRAS G12D inhibitor GFH375 from Kintor Pharmaceutical has demonstrated promising clinical data in treating pancreatic cancer and non-small cell lung cancer (NSCLC), with an overall response rate (ORR) of 52% in pancreatic cancer and 68.8% in NSCLC [21][24] Summary by Sections Weekly New Drug Market Review - From September 15 to September 21, 2025, the top five gainers in the new drug sector included Kintor Pharmaceutical (+19.64%), Boan Biotechnology (+8.89%), and others, while the top five losers included Sanofi Pharmaceuticals (-17.16%) and others [1][13] Recommended Stocks to Watch - The report suggests focusing on several potential catalysts in the sector, including academic conferences and insurance negotiations. Key companies to watch include: 1. Differentiated GLP-1 assets: Zai Lab, EQRx, and others 2. Upgraded PD-1 products: CanSino Biologics and others 3. Companies likely to benefit from insurance negotiations: Hengrui Medicine, Kanghong Pharmaceutical, and others [2][17] New Drug Approval and Acceptance - This week, eight new drug applications were approved, and twelve new drug applications were accepted in China [3][25] Clinical Application Approvals - A total of 48 new drug clinical applications were approved, with 32 applications accepted this week [7][29]

Core Viewpoint - The recent financial report of TianKang (301263) shows a significant decline in revenue and profit, indicating potential challenges in the company's operational performance and cost management [1][3]. Financial Performance Summary - Total revenue for the first half of 2025 was 347 million yuan, a decrease of 12.23% year-on-year [1]. - Net profit attributable to shareholders was 37.08 million yuan, down 56.75% compared to the previous year [1]. - Gross margin decreased to 54.14%, down 12.15% year-on-year, while net margin fell to 9.19%, a decline of 53.77% [1]. - The total of selling, administrative, and financial expenses reached 123 million yuan, accounting for 35.48% of total revenue, an increase of 38.66% year-on-year [1]. Cash Flow and Debt Analysis - Cash flow from operating activities showed a drastic decline of 1089.46%, indicating reduced cash receipts from sales and increased cash payments for purchases and expenses [3]. - The company increased its short-term borrowings by 108.25%, reflecting a need for liquidity [3]. - Cash and cash equivalents increased by 284.71%, primarily due to the collection of employee stock ownership funds [3]. Investment and Market Position - The company's return on invested capital (ROIC) was 4.87%, indicating weak capital returns, while the historical median ROIC since listing is 12.42% [4]. - The company relies heavily on marketing-driven performance, necessitating a deeper analysis of the underlying drivers [4]. - The accounts receivable situation is concerning, with accounts receivable to profit ratio reaching 326.87% [4]. Fund Holdings - The largest fund holding in TianKang is the Penghua High-Quality Growth Mixed A fund, with a scale of 1.017 billion yuan and a recent net value of 0.9763, reflecting a 0.69% decline from the previous trading day [4].

Group 1 - The second batch of 249 Macau designated drugs has been approved for use in Hengqin, enhancing the availability of medications for Macau residents in the Guangdong-Macau Deep Cooperation Zone [1] - The first batch included 296 drugs approved for use in April 2024, bringing the total to 367 drugs and 545 specifications available for designated medical institutions [1] - The second batch includes medications for cardiovascular diseases, metabolic diseases, respiratory diseases, and infections, expanding the variety of available treatments [1] Group 2 - Gansu Province's drug regulatory authority has announced five typical cases of drug-related violations, emphasizing the enforcement of drug safety and health regulations [2] - Cases include the use of inferior drugs by a clinic and the sale of prescription drugs without a licensed pharmacist present [2] Group 3 - Six innovative drugs are proposed for inclusion in breakthrough therapy designations, including IN10018, MRG004A, ATG-022, LM-302, RC148, and BI 1810631, indicating ongoing advancements in drug development [3] - These drugs target various conditions, including cancer and other serious diseases, showcasing the focus on innovative therapies [3] Group 4 - Merck has received approval for a new 200-day dosing regimen for its antiviral drug Prevymis (Letermovir), aimed at preventing CMV infections in at-risk adult patients [4] Group 5 - Changchun High-tech's subsidiary has received approval for clinical trials of Cabergoline tablets, a dopamine receptor agonist for treating hyperprolactinemia, with no similar products currently on the market [5] - This approval is expected to facilitate the clinical development of the product to meet unmet medical needs [5] Group 6 - Tiantan Biological has completed Phase I clinical trials for its recombinant human coagulation factor VIII-Fc fusion protein, showing a significantly extended half-life compared to existing products [6] - The product currently has no domestic or imported competitors available [6] Group 7 - Iwubio has initiated Phase I clinical trials for its dermatitis diagnostic patch, which is designed to assist in diagnosing allergic contact dermatitis [7] - The product is classified as a Class 1 therapeutic biological product, with further clinical trials planned [7] Group 8 - Xinghao Pharmaceutical reported a 32.01% decline in net profit for the first half of 2025, with revenue of 308 million yuan, a decrease of 4.08% year-on-year [8] Group 9 - Nanwei Medical announced a 17.04% increase in net profit for the first half of 2025, with revenue of 1.565 billion yuan, reflecting a growth of 17.36% [9] - The company plans to distribute a cash dividend of 5.00 yuan per share to shareholders [9] Group 10 - Zhonghui Biological's stock surged over 160% on its first trading day, closing at 33.28 HKD per share, significantly above its IPO price of 12.9 HKD [10] - The company's market capitalization exceeded 13 billion HKD [10] Group 11 - Libo Bio has completed nearly 100 million yuan in Pre-A round financing, led by Tian Shili Capital and Panlin Capital, indicating strong investor interest in RNA-targeted drug development [11] Group 12 - Fosun Pharma has granted global development and commercialization rights for its investigational product XH-S004 to Expedition, with potential milestone payments totaling up to 6.45 billion USD [12] Group 13 - Peking University Medicine faces significant revenue and profit declines due to the termination of its long-term service contract with Peking University International Hospital, with projected losses of approximately 600 million yuan in sales and 40 million yuan in net profit [13] - The company is exploring new directions for transformation, but faces uncertainty regarding its future operations [13]

Financial Data and Key Metrics Changes - For Q2 2025, the company reported R&D expenses of $11 million, an increase from $9.1 million in the same period last year, primarily due to higher expenses related to the PHOENIX trial and manufacturing costs [8][9] - G&A expenses rose to $6.5 million from $1.4 million year-over-year, mainly due to increased share-based compensation [9] - The net loss for the quarter was $16.3 million, compared to a net loss of $9.5 million in the same period last year, with a significant portion of the increase attributed to non-cash share-based compensation of $7.6 million [9][10] - As of the end of Q2, the company had $149.2 million in cash and equivalents, with a projected four-year cash runway [10] Business Line Data and Key Metrics Changes - The company is advancing its drug teneraband, which is in global phase three trials for Stargardt's disease and geographic atrophy, with significant progress reported in both trials [4][5] - The Dragon trial for Stargardt's disease has completed interim analysis, and the FDA has recommended proceeding without modifications, with completion expected in Q4 2025 [6][15] - The global phase three study for geographic atrophy has completed enrollment with 529 subjects [7] Market Data and Key Metrics Changes - The company has received multiple designations for teneraband, including breakthrough therapy and orphan drug designations in the US, Europe, and Japan, indicating a significant unmet medical need [5] Company Strategy and Development Direction - The company aims to position teneraband as the first oral treatment for degenerative retinal diseases, focusing on completing its phase three trials and preparing for potential regulatory submissions [8][10] - The management is strategically expanding the Dragon two trial to additional countries to accelerate enrollment [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing trials and the potential for accelerated approval based on robust statistical significance from the interim data [15][26] - The company anticipates a cash burn of approximately $40 to $45 million over the next two years as it approaches key clinical milestones [46] Other Important Information - The company raised $15 million in gross proceeds from a registered direct offering on August 8, which supports its ongoing operations and trial commitments [7][10] Q&A Session Summary Question: Status of FDA discussion regarding interim data from the Dragon trial - Management confirmed that they have met with the FDA and are on track to potentially file for accelerated approval based on interim data, but a confirmatory follow-up study will still be required [14][15] Question: Upcoming presentations or data readouts - Management indicated that they plan to present eye data at the AAO conference in late October, but will keep efficacy data confidential until after submission [27][28] Question: Timing of data release after the Dragon trial finishes - Management expects to show statistically significant differences in lesion growth rates between treatment and placebo groups, which is critical for approval [36] Question: Current estimate timeline for reaching target enrollment in the Dragon-two trial - Management stated that enrollment is expected to complete by the end of the year, with strategic timing to avoid competition with the Dragon one trial [42] Question: Drivers for rising operating expenses - Management noted that the majority of the increase in operating expenses is due to share-based compensation, which is non-cash related, and expects cash burn to increase as they approach key milestones [46]

Summary of Conference Call Notes Industry Overview - The focus of the conference call is on the **innovation pharmaceutical industry** and its investment opportunities, particularly in the context of the Hong Kong stock market, represented by the **Hang Seng Healthcare Index**, which has seen a **42% increase** year-to-date [1][2]. Key Points and Arguments 1. **Investment Opportunities in Innovation**: The current market conditions favor innovation as the optimal investment choice, with many companies showing strong stock performance [1]. 2. **Challenges in Other Industries**: Transitioning to other industries poses challenges due to hidden operational data, leading to performance verification pressures [2]. 3. **Policy Impact**: The impact of U.S. tariffs and policies under Trump is noted, emphasizing that these do not significantly alter the competitive landscape [3]. 4. **Regulatory Changes**: The recent investigation of a former drug regulatory chief is expected to have minimal impact on the industry due to his short tenure [4]. 5. **Healthcare Expenditure Trends**: Healthcare expenditure from January to April shows a **3.9% year-on-year increase**, with a stable income growth of **5%** for residents, while expenditures decreased by **3%** [6][11]. 6. **Patient Visits Data**: The total patient visits in hospitals from January to April reached **6.88 billion**, with a **7% increase** noted [7]. 7. **Hospital Financial Performance**: Tertiary hospitals experienced a **6.9% decrease** in funding costs, indicating a stabilization in financial performance [7]. 8. **Emerging Trends in Patient Care**: There is a notable increase in visits for critical conditions such as oncology and cardiology, with double-digit growth observed [9][10]. 9. **Impact of COVID-19**: The treatment numbers for COVID-19 have decreased significantly, with a **60% drop** in treatment visits compared to the previous year [13]. 10. **Retail Pharmacy Performance**: Retail pharmacy sales have declined by **72%** in May, indicating a challenging environment for drugstores [14]. 11. **Breakthrough Therapy Designation**: There are currently **126** domestic innovative drugs under breakthrough therapy designation, with a significant number already launched domestically and internationally [18][20]. 12. **Investment Recommendations**: The focus is on large-cap stocks in the Hong Kong market and specific A-share companies like **Suda Pharmaceuticals** and **Qianhong Biopharma**, which show solid fundamentals and potential for growth [22][23]. Other Important Insights - **Healthcare Policy Changes**: The synchronization of medical insurance payments is expected to improve cash flow for hospitals [6]. - **Market Dynamics**: The overall pharmaceutical industry is outperforming other sectors, with a notable trend of investment shifting towards innovative therapies [12]. - **Future Projections**: The number of breakthrough therapies expected to be approved in 2024 is projected to be **52**, indicating a robust pipeline for innovative treatments [20]. This summary encapsulates the critical insights and data points discussed during the conference call, providing a comprehensive overview of the current state and future outlook of the innovation pharmaceutical industry.

Core Viewpoint - The company maintains its profit forecasts for 2025 and 2026 at 0.45 billion and 3.20 billion respectively, while upgrading the target price by 22.8% to HKD 11.3, indicating a potential upside of 17.7% from the current stock price [1] Group 1 - The company presented the latest phase II clinical trial data for the FGFR4 inhibitor Irpagratinib (ABSK-011) combined with Atezolizumab for treating advanced hepatocellular carcinoma patients at the ESMO GI conference [2] - The combination therapy showed impressive efficacy and good safety in both first-line and later-line advanced hepatocellular carcinoma patients, with an objective response rate (ORR) of ≥50% and a median progression-free survival (mPFS) of ≥7 months in the 220mg BID dosage group [3] - In patients previously treated with immune checkpoint inhibitors (ICI), the ORR reached 52.9% with an mPFS of 8.3 months, and the treatment was well-tolerated with a 45.5% incidence of grade 3 or higher treatment-emergent adverse events (TEAE) [3] Group 2 - The company is advancing the domestic registration clinical trial for Irpagratinib, with the first patient dosed on June 16, and the therapy received breakthrough therapy designation from the National Medical Products Administration (NMPA) in May [4] - The company received an $85 million global commercialization option exercise fee from Merck for Pimigatinib (ABSK021), which is expected to significantly benefit the company's 2025 performance [5] - The domestic application for Pimigatinib has been accepted by the NMPA for treating giant cell tumor of tendon sheath, with priority review and breakthrough therapy designations already granted [5]