Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 42.53, up from a previous target of HKD 28.95 [7]. Core Insights - The company reported a revenue of HKD 74.34 billion for H1 2025, representing a year-on-year increase of 14%, with net profit rising by 15% to HKD 31.35 billion. The revenue from innovative drugs reached HKD 61.45 billion, up 22% year-on-year, accounting for 83% of total revenue [1]. - The company is expected to achieve a sales revenue of over HKD 100 billion from innovative drugs by 2025, with a revenue share exceeding 80% [3]. - The company has a robust pipeline with over 40 new molecular entities under research and has consistently achieved high-quality external licensing agreements, totaling USD 7.3 billion over the past three years [3]. Revenue Breakdown by Therapeutic Areas - Oncology: Revenue of HKD 45.31 billion (+1% year-on-year), driven by Amivantamab and other milestone payments, with product sales growth exceeding 20% after excluding collaboration revenue [2]. - Anti-infectives: Revenue of HKD 7.35 billion (+5% year-on-year), primarily driven by Adefovir [2]. - CNS: Revenue of HKD 7.68 billion (+5% year-on-year), mainly driven by Inalizumab [2]. - Metabolic and other diseases: Revenue of HKD 14.00 billion (+142% year-on-year), driven by milestone payments for GLP-1 and HS-20094 [2]. Pipeline and Clinical Development Updates - The company is advancing its pipeline with several drugs in various stages of clinical trials, including HS-20093 and HS-20089, which are expected to enter critical clinical phases in the coming years [4]. - The company is actively expanding into skin and kidney autoimmune diseases, with several candidates already in Phase III clinical trials [4]. Profit Forecast and Valuation - The forecasted net profit for 2025-2027 is HKD 52.02 billion, HKD 54.80 billion, and HKD 57.27 billion, respectively, with corresponding EPS of HKD 0.88, HKD 0.92, and HKD 0.96 [5]. - The company’s SOTP valuation is estimated at HKD 2529.44 billion, with innovative drugs valued at HKD 2483.38 billion and generics at HKD 46.06 billion [5][12].

Core Viewpoint - The rise of domestic innovative drugs in China since 2025 is significantly driven by Business Development (BD) strategies, allowing companies to monetize their research through partnerships with multinational pharmaceutical firms [1][2]. Company Overview - A notable player in this space is Anmai Biotech, which is preparing for an IPO in Hong Kong and has gained attention for its BD transactions, accumulating over $2.1 billion in deal value since the end of 2023, ranking second globally in the TCE bispecific antibody sector [1][3]. - The founder, Wu Chenbing, previously served as the Chief Scientific Officer at 3SBio, indicating a strong lineage of expertise and a shift in Chinese biotech from "following" to "leading" in innovation [1][3]. Financial Performance - As of the end of 2024, Anmai Biotech's cash and equivalents are sufficient for only 12 months of operations, highlighting the importance of clinical progress and commercialization capabilities for its transition from a "transaction star" to a "profit benchmark" [2][8]. - The company reported a revenue of 459 million yuan in 2024, with a net profit of 47.7 million yuan, following a loss of 595 million yuan in 2023 primarily due to R&D expenses [7]. Product Pipeline - Anmai Biotech's lead product, EMB-01, is a bispecific antibody targeting EGFR/cMET, which is among the first to enter Phase II trials for colorectal cancer, with a market potential driven by the increasing incidence of the disease [6][7]. - The global bispecific antibody market is projected to grow from $13.4 billion in 2024 to over $220 billion by 2034, with a compound annual growth rate of 32.4% [6]. Strategic Partnerships - The company has engaged in multiple licensing agreements, including a significant deal with Vignette Bio valued at $635 million for EMB-06, and a recent global licensing agreement with Juri for KLK2/CD3 TCE with a potential value of $210 million [7]. Leadership and Expertise - The leadership team includes Dr. Zhu Yonghong, who brings extensive international clinical development experience, complementing Wu Chenbing's background in drug development [4]. - Anmai Biotech's FIT-Ig technology platform, patented in the U.S. in 2018, is a key competitive advantage, addressing stability issues in traditional bispecific antibodies [4][5].

Core Viewpoint - The article highlights the increasing trend of licensing out (BD) transactions in the Chinese innovative pharmaceutical sector, with significant collaborations between local companies and global pharmaceutical giants, indicating a shift in the global perception of Chinese pharmaceuticals [1][3][12]. Group 1: Licensing Out Transactions - Recently, Heng Rui Medicine announced a licensing agreement with Merck (MSD) for its Lp(a) oral small molecule project, granting Merck exclusive rights for development and commercialization outside Greater China [1]. - In the first two months of 2025, there were 16 BD projects from Chinese innovative drug companies, covering areas from oncology to autoimmune diseases [3][4]. - The total amount of BD transactions in 2023 exceeded IPO financing amounts, with a significant increase in the first three quarters of 2024, reaching nearly 8.5 times the financing in primary and secondary markets [5]. Group 2: Role of VC/PE in BD - VC/PE firms are acting as "enablers" for innovative drug companies, helping them connect with overseas demands and expand into international markets [4][5]. - Many investment institutions are not only investing in projects but also assisting drug companies in BD, as the current financing environment poses challenges for both primary and secondary market fundraising [4][5]. - The involvement of VC/PE in BD is seen as a way to enhance the potential for investment exits, although it does not fully resolve the challenges of exiting investments in innovative drug companies [11][12]. Group 3: Buyers in BD Transactions - The primary buyers in BD transactions are multinational pharmaceutical giants like AstraZeneca, Novartis, and Pfizer, as well as local Chinese pharmaceutical companies looking to enhance their innovation capabilities [7][8]. - Multinational companies face a "patent cliff" with significant cash flow reductions, prompting them to seek innovative drug pipelines through BD transactions [7]. - Chinese innovative drug companies are increasingly attracting attention from overseas funds, particularly for first-in-class opportunities, indicating a growing interest in the Chinese market [8]. Group 4: Financial Impact of BD - BD transactions provide substantial short-term cash flow for drug companies, often exceeding the amounts raised through IPOs [10][11]. - Companies like HeYue Medicine reported significant revenue increases attributed to BD agreements, showcasing the financial benefits of such collaborations [10]. - The article notes that while BD transactions can provide immediate funding, they also help mitigate the risks associated with international clinical trials by leveraging the expertise of established biopharma companies [11].