Core Viewpoint - China Biopharmaceutical (01177) maintains a buy rating with a target price of HKD 9.4, based on a DCF model with a WACC of 10.01% and a perpetual growth rate of 2.0% [1] Financial Projections - Expected revenue growth rates for China Biopharmaceutical are +19.1% in 2025, +4.4% in 2026, and +10.6% in 2027 [1] - Adjusted net profit growth rates are projected at +81.3% in 2025, -30.0% in 2026, and +11.3% in 2027 [1] - The firm has not factored in potential contributions from external licensing agreements to revenue and profit due to cautious considerations [1] Clinical Results of TQC3721 - TQC3721, a PDE3/4 inhibitor, showed promising results in a Phase II clinical trial, significantly improving lung function and symptoms in patients with moderate to severe COPD [2] - In the trial, patients receiving 3mg and 6mg doses of TQC3721 had FEV1 peak values higher than the placebo group by 100ml and 147ml, respectively [2] - The 6mg group also demonstrated a significant improvement in FEV1AUC (0-12h) by 87ml compared to the placebo [2] - The safety profile of TQC3721 was favorable, with no significant adverse effects observed in gastrointestinal, cardiovascular, or liver and kidney functions [2] Comparative Analysis - TQC3721's clinical data suggests it has best-in-class potential, with FEV1 peak values comparable to those of the approved drug ensifentrine [3] - The patient population in TQC3721's trial had a worse baseline compared to those in ensifentrine's trial, indicating a greater potential for clinical benefit in real-world COPD patients [3] - In the subgroup of patients using LAMA, the 6mg group of TQC3721 had a FEV1 peak value higher than the ensifentrine group by 104ml [3] Market Potential - The COPD market is substantial, with nearly 480 million affected globally and over 100 million in China, making it a significant health and economic burden [4] - The recent FDA approval of ensifentrine, the first new mechanism COPD drug in over 20 years, highlights the market's potential, with sales reaching USD 0.71 million and USD 1.03 million in Q1 and Q2 2025, respectively [4] - The acquisition of Verona by Merck for USD 10 billion underscores the significant market opportunity for PDE3/4 inhibitors [4] - TQC3721, being the second globally in development and the only one in Phase III, is seen as having substantial potential for overseas licensing [4]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 9.40, indicating a potential upside of 20.5% from the current price of HKD 7.80 [4][10]. Core Insights - The clinical data for the PDE3/4 inhibitor TQC3721 shows promising results, with significant improvements in lung function and symptoms for patients with severe COPD after 4 weeks of treatment [1][2]. - TQC3721 is positioned as the second globally in development and the only PDE3/4 inhibitor currently in Phase III clinical trials, suggesting substantial market potential and opportunities for licensing [10][12]. - The financial projections indicate a revenue growth of 19.1% for FY25E, with adjusted net profit expected to increase by 81.3% in the same year [3][13]. Financial Summary - Sales revenue (in million RMB) is projected to grow from 26,199 in FY23A to 34,380 in FY25E, reflecting a year-on-year growth of 19.1% [3][17]. - Adjusted net profit is expected to rise from 2,589 in FY24A to 6,267 in FY25E, marking an increase of 81.3% [3][13]. - The adjusted earnings per share (EPS) is forecasted to reach RMB 0.33 in FY25E, with a corresponding adjusted P/E ratio of 21.6 [3][10]. Clinical Data Highlights - In the Phase II clinical trial, TQC3721 demonstrated a peak FEV1 improvement of 147ml compared to the placebo group, aligning with the results of the approved competitor, ensifentrine [2][10]. - The safety profile of TQC3721 is favorable, with no significant adverse effects reported in gastrointestinal, cardiovascular, or renal functions during the trials [1][10]. Market Context - The global COPD market is substantial, with nearly 480 million affected individuals, and TQC3721's development is timely given the increasing demand for effective treatments [10][12]. - The competitive landscape is highlighted by the recent FDA approval of ensifentrine, which underscores the potential for TQC3721 to capture market share as it progresses through clinical trials [10][12].