Core Insights - Nomura Securities reports that the fundamentals of Chinese pharmaceutical companies are continuously improving, with a significant increase in investor interest due to advancements in drug research and development [1] - The trend of Chinese pharmaceutical companies entering into licensing agreements with global pharmaceutical firms is expected to continue, supported by increased R&D investments and high efficiency in preclinical and clinical stages [1] - Analysts note a decrease in geopolitical risks, highlighting that WuXi AppTec is excluded from the updated U.S. Biosecurity Law, U.S. pharmaceutical companies are positively inclined towards licensing Chinese drugs, and Chinese firms play an indispensable role in drug development [1] - The recent pullback in pharmaceutical stock prices is viewed as a good buying opportunity [1]

Core Insights - The company, Nuo Cheng Jian Hua, announced a record-breaking over $2 billion external licensing collaboration in the field of autoimmune diseases, marking a significant milestone in China's small molecule licensing history [1][2] Group 1: Licensing Agreement Details - The agreement involves core product Aobutini and two other preclinical small molecules, with Zenas, a US pharmaceutical company, as the partner [1] - Nuo Cheng Jian Hua will receive an upfront payment of $100 million and milestone payments, including those expected to be achieved by 2026, totaling over $2 billion [1] - Zenas will issue 7 million shares of common stock to Nuo Cheng Jian Hua, valued at approximately $181 million based on Zenas' closing price of $25.9 per share on October 8 [1] Group 2: Product Rights and Clinical Trials - Nuo Cheng Jian Hua retains exclusive global rights for Aobutini in oncology while granting Zenas exclusive rights for the development, production, and commercialization of Aobutini in multiple sclerosis and non-oncology areas outside Greater China and Southeast Asia [2] - The company has initiated a Phase III clinical trial for Aobutini targeting primary progressive multiple sclerosis in Q3 2025, with plans to start a trial for secondary progressive multiple sclerosis in Q1 2026 [2] Group 3: Strategic Importance and Market Reaction - This collaboration is the second international deal for Nuo Cheng Jian Hua in 2025, following a $500 million agreement with Kangnuo Ya in January [3] - The company views this licensing deal as a crucial step in its internationalization strategy, aiming to achieve the internationalization of three to four products in the next three to five years [3] - Despite the record transaction amount, the market reacted negatively, with Nuo Cheng Jian Hua's stock price dropping nearly 7% in A-shares and over 11% in Hong Kong shares on October 9 [3]

Investment Rating - Initiate with OUTPERFORM rating [1][2] Core Views - Hansoh Pharma is a leading innovative pharmaceutical company in China, focusing on oncology, anti-infection, central nervous system diseases, metabolic diseases, and autoimmune diseases, with a robust pipeline of over 30 clinical-stage innovative drug projects and 50 ongoing clinical studies [3][9] - The company has seen a significant increase in innovative drug revenue, projected to exceed 10 billion RMB in 2025, accounting for over 80% of total revenue [3][17] - The oncology segment is a key growth driver, with revenue expected to reach 8.12 billion RMB in 2024, representing 66% of total revenue [27] Summary by Sections 1. Company Overview - Established in 1995, Hansoh Pharma has over 30 years of experience in the pharmaceutical industry, with a focus on R&D, production, and commercialization [9][10] - The company has a strong global management team with extensive industry experience [13][14] 2. Oncology Segment - The oncology segment is well-established, with a comprehensive product system covering various disease types and treatment stages [4][27] - The core product, Amivantamab, has gained significant market share and is expected to continue driving growth [27][29] 3. Innovative Drug Pipeline - The company has a diverse pipeline with over 40 innovative drug candidates across various therapeutic areas, including ADCs and dual antibodies [20][24] - Recent collaborations with multinational corporations have strengthened the company's R&D capabilities and expanded its pipeline [5][25] 4. Financial Projections - Revenue projections for FY25-27 are 13.76 billion RMB, 14.86 billion RMB, and 16.5 billion RMB, respectively, with net profits of 4.62 billion RMB, 4.69 billion RMB, and 5.2 billion RMB [6][17] - The company has increased its R&D investment significantly, with a projected R&D expense ratio of 22% in 2024 [15][17] 5. Market Position and Strategy - Hansoh Pharma is positioned as a leading player in the Chinese pharmaceutical market, with a focus on innovative drug development and international expansion [3][9] - The company aims to leverage its strong R&D capabilities and strategic partnerships to enhance its market presence and drive future growth [5][20]