Summary of YD Pharma Conference Call Company Overview - YD Pharma's total assets reached HKD 24.9 billion in 2024, with revenue of HKD 11.64 billion and net profit attributable to shareholders of HKD 2.47 billion, marking a 17.7% year-on-year growth in the pharmaceutical segment [2][5] - The company operates in three main areas: nuclear medicine for oncology, cardiovascular intervention technology, and formulation technology [2][6] Financial Performance - In 2024, YD Pharma's revenue grew by 12.8% year-on-year in RMB terms, with a net profit increase of 34% [4] - The company declared a dividend of HKD 910 million, with a net profit of HKD 1.76 billion excluding fair value changes [5] - The nuclear medicine and cardiovascular intervention segments saw a revenue increase of 148.3% [2][6] Business Segments Nuclear Medicine - The nuclear medicine segment has established a global integrated production and research layout, with significant revenue from the Hepatocyte Injection reaching nearly HKD 500 million [2][7] - The Chengdu production base was completed, enhancing production capabilities for all research pipeline products [7][30] Cardiovascular Intervention - The company focuses on both acute rescue and chronic disease management, with products like Coenzyme Q10 and a second-generation aldosterone receptor antagonist contributing to growth [12] Respiratory and Critical Care - The core product, Ceno, continues to lead the oral market, with plans for various inhalation formulations [9] - A new nasal spray for allergic rhinitis, Raltex, is set to launch in 2025 [9] Research and Development - YD Pharma has 15 innovative products in the registration phase, covering five collaborative projects and seven cancer types [8] - Three products are in Phase III clinical trials, with one international multi-center trial already submitted for approval [8] Sepsis Treatment - Sepsis is a major focus, with YD Pharma's product SC3,141 targeting the overactive immune response associated with the condition [10][11] - The company plans to advance research in this area, addressing a significant public health issue [10] Market Potential - The FDA approved a new indication for the 190 microsphere product for primary liver cancer, expected to significantly boost global sales, particularly in China [16][19] - The domestic sales peak for this product is projected to reach at least RMB 5 billion due to the high incidence of liver cancer in China [19][34] Future Outlook - YD Pharma anticipates a challenging year in 2025 due to the impact of the tenth batch of centralized procurement, but aims for positive revenue growth [39] - The company expects to achieve higher growth rates in 2026, potentially reaching double-digit growth [39] Additional Insights - The Chengdu production base is designed to meet high safety standards and will support the nuclear medicine segment's growth [30] - YD Pharma is exploring partnerships for global sales of its nuclear medicine products, aiming to compete with larger pharmaceutical companies [36][37]

Core Viewpoint - The company is experiencing stable growth in traditional business while new sectors are contributing significantly to high growth, particularly in nuclear medicine, cardiovascular precision intervention, pharmaceutical technology, and biotechnology [1] Group 1: Nuclear Medicine Development - The demand for nuclear medicine is increasing due to aging populations and rising cancer incidence, leading to market expansion for diagnostic and therapeutic applications [1] - The core commercial product, Yttrium-90 microspheres, is expected to grow over 140% in 2024, supported by training of over 1,100 doctors across more than 70 hospitals and inclusion in 45 health insurance plans [1] - The company has 12 innovative RDC products in its pipeline, with 4 approved for clinical research and 3 in Phase III trials, including TLX591-CDx for prostate cancer and TLX250-CDx for renal cell carcinoma [1] Group 2: New Product Opportunities - The company has a diverse range of existing products, but the inclusion of Lishuan in the 10th batch of national procurement is expected to exert short-term pressure on performance [2] - New products in sepsis (STC3141) and ophthalmology are anticipated to have significant market potential, with STC3141 projected to reach peak sales of 10 billion yuan based on a 20% market share and a unit price of 8,000 yuan [3] - The company is also advancing in the ENT field with multiple products in development, including a nasal spray expected to be approved by the end of 2024 [3] Group 3: Financial Projections - Revenue projections for 2025-2027 are estimated at 12.203 billion, 13.292 billion, and 14.663 billion HKD, with net profits of 2.076 billion, 2.422 billion, and 2.764 billion HKD respectively, indicating a low valuation compared to peers [4] - The current price-to-earnings (PE) ratios are projected at 15, 13, and 11 times for the respective years, compared to an average of 25, 23, and 20 times for comparable companies, suggesting the company is undervalued [4]

Investment Rating - The report maintains an investment rating of "Outperform the Market - A" [7] Core Insights - The treatment of sepsis has significant unmet clinical needs, with recent success in the Phase II clinical trial of STC3141 by Yuan Da Pharmaceutical, marking a breakthrough in sepsis treatment [2][19] - Sepsis is a life-threatening syndrome caused by infection leading to organ dysfunction, with a high mortality rate. In 2017, there were approximately 48.9 million cases globally, resulting in about 11 million deaths [2][21] - Current treatments for sepsis primarily focus on symptomatic care, including antibiotics, vasopressors, and supportive therapies, with no effective curative options available [23] - The market for sepsis treatment is vast due to the severe unmet needs, highlighting the potential for new therapeutic developments [2][21] Summary by Sections 1. Weekly New Drug Market Review - From May 12 to May 16, 2025, the top five companies in the new drug sector by stock price increase were Junshengtai (19.78%), Deqi Pharmaceutical (18.34%), Jiahe Biotech (14.48%), Keji Pharmaceutical (14.46%), and Fuhong Hanlin (12.34%). The top five companies with the largest declines were Gilead Sciences (-17.10%), Canaan Pharmaceuticals (-8.72%), Yunding New Medicine (-7.77%), Zexing Pharmaceutical (-7.18%), and Chuangsheng Group (-6.96%) [1][15] 2. Key Analysis of the New Drug Industry - Sepsis treatment has critical unmet clinical needs, with Yuan Da Pharmaceutical's STC3141 achieving significant clinical endpoints in its Phase II trial in China [2][19] - Sepsis is characterized by a dysregulated host response to infection, leading to organ dysfunction and high mortality rates. Early treatment can improve survival rates [20] - In China, approximately 2.93 million cases of sepsis were reported in 2017, with 709,315 related deaths, indicating a high burden of disease [21] - Current therapies are mainly symptomatic, including antibiotics and supportive care, with no effective treatment options available [23] - The development of new drugs for sepsis is challenging, with many clinical trials failing to meet expectations. However, some therapies, such as STC3141, have shown promising early results [26][31] 3. New Drug Application Approvals and Acceptances - No new drug or new indication applications were approved this week, but eight new drug applications were accepted [4] 4. New Drug Clinical Application Approvals and Acceptances - This week, 40 new drug clinical applications were approved, and 30 new drug clinical applications were accepted [5] 5. Domestic Market Focus Events - Notable events included the initiation of a Phase III trial by BeiGene for its BTK-targeting drug BGB-16673, and the acceptance of new indication applications for drugs by Kelun-Biotech and Zexing Pharmaceutical [11] 6. Overseas Market Focus Events - Key events included AbbVie receiving FDA approval for its c-Met-targeting ADC drug, and GSK's acquisition of Boston Pharmaceuticals for $2 billion [12]

Investment Rating - The report maintains an investment rating of "Outperform the Market - A" [7] Core Insights - The treatment of sepsis has significant unmet clinical needs, with recent success in the Phase II clinical trial of STC3141 by Yuan Da Pharmaceutical, marking a breakthrough in sepsis treatment [2][19] - Sepsis is a high-mortality clinical syndrome caused by infection, with an estimated 48.9 million cases and 11 million deaths globally in 2017 according to WHO [2][21] - Current treatments for sepsis primarily focus on symptomatic care, with no effective therapeutic options available [23] - The market for sepsis treatment is vast due to the severe unmet clinical needs, highlighting the potential for new drug developments [2][26] Summary by Sections 1. Weekly New Drug Market Review - From May 12 to May 16, 2025, the top five companies in the new drug sector by stock price increase were Junshengtai (19.78%), Deqi Pharmaceutical (18.34%), Jiahe Biotech (14.48%), Keji Pharmaceutical (14.46%), and Fuhong Hanlin (12.34%) [1][15] - The top five companies by stock price decrease included Gilead Sciences (-17.10%), CanSino Biologics (-8.72%), Yunding New Medicine (-7.77%), Zai Lab (-7.18%), and Chuangsheng Group (-6.96%) [1][15] 2. Key Analysis of the New Drug Industry - Sepsis treatment faces serious unmet clinical needs, with Yuan Da Pharmaceutical's STC3141 achieving clinical endpoints in its Phase II trial in China [2][19] - Sepsis is characterized by a dysregulated host response to infection, leading to life-threatening organ dysfunction [20] - In China, approximately 2.93 million cases of sepsis occur annually, with around 709,315 related deaths [21] - Current therapies are mainly symptomatic, including antibiotics, vasopressors, and supportive care, with no effective treatment options available [23] - The development of new drugs for sepsis is challenging, with many innovative therapies failing in clinical trials [26] 3. New Drug Application Approvals and Acceptances - No new drug or new indication applications were approved this week, but eight new drug applications were accepted [4] 4. New Drug Clinical Application Approvals and Acceptances - This week, 40 new drug clinical applications were approved, and 30 new drug clinical applications were accepted [5] 5. Key Domestic Market Events - Notable events included the initiation of a Phase III trial by BeiGene for its BTK-targeting drug BGB-16673 and the priority review application for a new indication by Kelun-Biotech for SKB264 [11] 6. Key Overseas Market Events - AbbVie announced FDA approval for its c-Met-targeting ADC drug Telisotuzumab Vedotin, marking a significant milestone in the treatment of non-small cell lung cancer [12]

Core Viewpoint - The report from CICC maintains the profit forecast for Yuan Da Pharmaceutical (00512) at 2.131 billion yuan for 2025 and 2.235 billion yuan for 2026, following the successful achievement of clinical endpoints in the Phase II trial of the global innovative product STC3141 for sepsis treatment [1][2]. Group 1: Market Potential and Clinical Need - The theoretical market space for sepsis drugs is vast, with approximately 49 million new cases annually and over 20% mortality rate among patients, contributing to around 20% of global deaths [2]. - In China, the incidence of sepsis in intensive care units ranges from 20.6% to 50.8%, with about one-third of patients experiencing in-hospital mortality [2]. - The average treatment cost for sepsis patients in high-income countries exceeds $32,000, highlighting the significant unmet clinical needs due to the complex pathophysiology of the disease [2]. Group 2: STC3141 Clinical Trial Success - STC3141 is an innovative drug developed by the company, designed to reverse organ damage caused by excessive immune responses in sepsis by neutralizing extracellular histones and neutrophil extracellular traps [3]. - The Phase II clinical trial (CTR20233109) involved 180 sepsis patients receiving standard treatment, with results showing a significant decrease in the Sequential Organ Failure Assessment (SOFA) score by day 7 in the treatment group, particularly in the high-dose group, demonstrating statistical significance and clinical relevance [3]. - The safety and tolerability of STC3141 were found to be good, and the company is encouraged to monitor the complete data readout and publication [3]. Group 3: Strategic Implications - STC3141 is expected to fill the clinical gap in sepsis treatment, offering a differentiated mechanism focused on immune homeostasis, which could provide significant clinical benefits [4]. - The company has a well-established product line in respiratory and critical care, and the commercialization of STC3141 is anticipated to synergize with its existing pipeline [4].