Core Viewpoint - The Hong Kong innovative drug sector has experienced a significant rally this year, with the Hong Kong innovative drug index (CSI:931787) rising by 75% until October, but has since entered a cooling phase as investors digest previous gains [3][4]. Group 1: Market Performance - The innovative drug sector saw 23 companies listed in the Hong Kong healthcare sector this year, compared to only 8 last year [3]. - Despite the initial surge, many companies that have not yet entered the Stock Connect are experiencing a decline in stock prices, indicating a challenging path to inclusion [3][4]. Group 2: Stock Connect Mechanism - The Stock Connect allows mainland investors to trade Hong Kong-listed stocks, with significant contributions from southbound funds, accounting for 40%-50% of trading volume in some companies [3][4]. - Companies not included in the Stock Connect face liquidity challenges, as most mainland public funds cannot invest directly [4][5]. Group 3: Challenges for Inclusion - The threshold for entering the Stock Connect has increased due to rising market valuations, with the market capitalization requirement for inclusion in the Hang Seng Composite Index set at approximately HKD 9.32 billion [6]. - Companies previously included in the Stock Connect but later removed face significant hurdles to re-entry, as liquidity issues persist [7][8]. Group 4: Business Development (BD) Fatigue - The market has shown signs of "BD fatigue," where announcements of potential business developments no longer lead to significant stock price increases, as seen with recent collaborations that resulted in stock declines [9][10]. - Investors are now demanding more substantial evidence of project viability and commitment from partners before reacting positively to BD announcements [10]. Group 5: Future Outlook - The market is currently in a quiet phase, with investors waiting for clear signals of recovery before increasing their positions, reflecting a cautious sentiment as year-end approaches [10][11].

Core Viewpoint - The article discusses the recent developments and future prospects of Ying'en Biotech, highlighting its position in the ADC (Antibody-Drug Conjugate) market and the broader trends in the Chinese biotech industry, emphasizing the importance of business development (BD) and the potential for global competitiveness in the sector [1][8]. Company Overview - Ying'en Biotech was listed on the Hong Kong Stock Exchange and achieved a significant market capitalization of HKD 29.932 billion, with its stock price reaching a historical high of HKD 563.500 per share [1]. - The company has a strong focus on ADCs, with 10 clinical-stage pipelines, and is recognized as a "dark horse" in the ADC sector [2][4]. Clinical Development - The company's lead product, DB-1303, has shown significant advantages over the established drug T-DM1 in its Phase III clinical trials, indicating a promising path toward market approval [2][3]. - DB-1303 has received breakthrough therapy designation from both the FDA and CDE, showcasing its potential in treating endometrial cancer, a less competitive indication [3]. Business Development Strategy - Ying'en Biotech has successfully engaged in multiple BD transactions, partnering with notable companies such as BioNTech and GSK, which has positioned it favorably within the industry [7][8]. - The company has a strategic focus on global markets, leveraging its international team and experience to enhance its product development and commercialization efforts [6][7]. Market Trends - The ADC market is projected to grow at a compound annual growth rate (CAGR) of 34% from 2020 to 2024, with the market size expected to exceed USD 13 billion by 2024 [6]. - The article notes a shift in investor sentiment towards Chinese biotech, with a significant increase in BD transactions involving multinational corporations [8][9]. Financial Performance - Despite substantial R&D investments, Ying'en Biotech reported net losses of CNY 387 million, CNY 358 million, and CNY 1.05 billion for the years 2022 to 2024, with a loss of CNY 2.074 billion in the first half of 2025 [12]. - The company maintains confidence in its financial strategy, anticipating that its BD activities will generate significant milestone payments in the coming years [10][12]. Future Outlook - The CEO envisions a future where Chinese ADC companies will be globally recognized for their contributions to patient care, emphasizing the importance of innovation and effective clinical execution [11][12]. - Ying'en Biotech aims to transition from a biotech firm to a pharmaceutical company, focusing on maintaining its R&D integrity while expanding its global presence [10][11].