Core Insights - The company, He Yu Pharmaceutical, is advancing in "source innovation" through strong new drug development, global clinical capabilities, and international collaborations [1][2] - The company has a robust pipeline with 22 drugs in development, over 10 of which are in clinical stages, highlighted during the R&D Day event on October 30 [1][2] R&D Strategy - He Yu emphasizes a dual-driven strategy of "depth + breadth" to enhance its pipeline, focusing on developing differentiated innovative therapies for unmet clinical needs [2][7] - The company has maintained a compound annual growth rate of 54% in R&D investment since its inception, ensuring a strong pipeline of over 10 clinical-stage oncology products [7] Key Products - The core product, Pimicotinib, is the first Chinese-developed CSF-1R inhibitor entering global Phase III clinical trials, with breakthrough therapy designation from multiple regulatory agencies [4][6] - Pimicotinib has shown significant potential in treating TGCT and other indications, with a projected global peak sales exceeding $2 billion [4][5] Clinical Data - Recent data presented at the ESMO Congress 2025 demonstrated Pimicotinib's strong and durable tumor response in TGCT patients, confirming its potential as a best-in-class treatment [5] - The drug is currently under priority review in China and is expected to submit an NDA in the U.S. by the end of the year, with potential approvals in 2026 [6] Pipeline Development - The company is also exploring FGFR and KRAS targets, with the FGFR4 inhibitor, Absk-011, showing promising clinical results in advanced HCC patients [8][9] - Absk-011 has received breakthrough therapy designation and is positioned to become a leading targeted therapy for liver cancer [8][9] Market Potential - Approximately 30% of global HCC patients have FGF19 overexpression, indicating a significant market opportunity for Absk-011 upon approval [9] - The company is advancing multiple promising candidates, including oral small molecule PD-L1 inhibitors and other innovative therapies, enhancing its commercial prospects [9][10] Financial Outlook - He Yu holds over 2 billion yuan in cash and is recognized for enhancing investor returns through stock buybacks while being in the early stages of commercialization [10] - Recent analyst reports have issued "buy" ratings for the company, with target prices indicating substantial upside potential [10]

Group 1 - The core viewpoint is that He Yu-B (02256) is a leader in small molecule innovative drugs, with projected revenues of RMB 650 million, 680 million, and 730 million for 2025-2027, and net profits of RMB 97 million, 111 million, and 142 million respectively, leading to a target price of HKD 22.06, indicating a potential upside of 48.5% from the current price [1] Group 2 - Global BIC product Pimiatin has shown excellent data at ESMO, with an overall response rate (ORR) of 76.2% in the III phase MANEUVER study for patients with giant cell tumor of the tendon sheath, and a significant improvement in joint activity by 23.9% compared to baseline [2] - The NDA for Pimiatin has been submitted domestically, and the FDA NDA submission is progressing, expected to be submitted in Q4 2025 [2] - Pimiatin is also advancing in a II phase study for treating chronic graft-versus-host disease [2] Group 3 - The development of innovative drugs is accelerating, with the oral PD-L1 inhibitor ABSK043 and the KRASG12C inhibitor from Ailis receiving IND approval for treating KRASG12C mutated non-small cell lung cancer (NSCLC) patients [3] - The single-agent treatment of Ipagotin for advanced hepatocellular carcinoma (HCC) has commenced, with the first patient dosed in June 2025, targeting a population with poor prognosis due to FGF19 overexpression [3] - A novel targeted therapy approach for HCC is being developed, with a II phase study showing an ORR of ≥50% and a progression-free survival (PFS) of ≥7 months when combined with Atezolizumab [3]

Group 1 - The core viewpoint is that He Yu-B (02256) is a leading player in small molecule innovative drugs, with projected revenues of RMB 650 million, 680 million, and 730 million for 2025-2027, and net profits of RMB 97 million, 111 million, and 142 million respectively, leading to a target price of HKD 22.06, indicating a potential upside of 48.5% from the current price [1] Group 2 - Global BIC product Pimiatin has shown excellent data at ESMO, with an overall response rate (ORR) of 76.2% in the III phase MANEUVER study for patients with giant cell tumor of the tendon sheath, and a significant improvement in joint activity by 23.9% compared to baseline [2] - The NDA for Pimiatin has been submitted domestically, and the FDA NDA submission is progressing, expected to be submitted in Q4 2025 [2] - Pimiatin is also advancing in a Phase II study for treating chronic graft-versus-host disease [2] Group 3 - The development of innovative drugs is accelerating, with the oral PD-L1 inhibitor ABSK043 and the KRASG12C inhibitor from Ailis receiving IND approval for treating KRASG12C mutated non-small cell lung cancer (NSCLC) patients [3] - The single-agent treatment of Ipagotini for advanced hepatocellular carcinoma (HCC) is underway, with the first patient dosed in June 2025, targeting a population with poor prognosis due to FGF19 overexpression [3] - A novel targeted therapy approach for HCC is being developed, with a Phase II study showing an ORR of ≥50% and a progression-free survival (PFS) of ≥7 months when combined with Atezolizumab [3]

Core Viewpoint - He Yu-B (02256) experienced a significant increase of over 8% in early trading, reaching a price of 19.4 HKD, with a trading volume of 58.4651 million HKD. The report from China Merchants Securities International highlights the potential of the drug pitmiritinib, developed by He Yu, as the most effective CSF-1R small molecule globally, which is set to launch in both China and the U.S., promising ongoing sales revenue for the company. The firm anticipates that Merck has high expectations for this molecule, projecting peak sales revenue close to 1.5 billion USD globally. Citigroup previously noted that the company's valuation reflects only the value of its two late-stage candidates, pitmiritinib and ipatacitinib, while the market has yet to fully recognize the high licensing potential of its differentiated innovative drugs [1][1][1]. Group 1 - He Yu-B's stock rose by 8.2%, reaching 19.4 HKD with a trading volume of 58.4651 million HKD [1] - The drug pitmiritinib is expected to launch in both China and the U.S., providing continuous sales revenue for the company [1] - Merck has high expectations for pitmiritinib, with projected peak sales revenue nearing 1.5 billion USD globally [1] Group 2 - Citigroup indicated that the current valuation of He Yu-B only reflects the value of its two late-stage candidates, pitmiritinib and ipatacitinib [1] - The market has not yet fully recognized the high licensing potential of He Yu-B's differentiated innovative drugs [1]

Core Viewpoint - The stock of He Yu-B (02256) has seen a significant increase of over 8%, currently trading at 19.4 HKD, driven by positive market sentiment regarding its drug development [1] Group 1: Company Performance - He Yu-B's drug, Pimitinib, is recognized as the most effective CSF-1R small molecule globally and is set to launch in both China and the U.S., which will provide the company with ongoing sales revenue sharing [1] - The stock's trading volume reached 58.4651 million HKD, indicating strong investor interest [1] Group 2: Market Expectations - According to a report from China Merchants Securities International, Merck has high expectations for Pimitinib, with potential peak sales revenue approaching 1.5 billion USD globally [1] - Citigroup previously noted that the company's valuation reflects only the value of its two late-stage drug candidates, Pimitinib and Ipatasertib, suggesting that the market has not fully recognized the high licensing potential of its differentiated innovative drugs [1]

Core Viewpoint - The report from China Merchants Securities Hong Kong initiates coverage on HeYue-B (02256) with a "Buy" rating, estimating a fair equity value of HKD 21 billion and a target price of HKD 32.5 for the next 12 months, highlighting the company's long-term growth potential and efficient small molecule development capabilities [1] Group 1: Product Development and Market Potential - HeYue's developed drug, Pimitinib, is expected to be launched in both China and the U.S., providing continuous sales revenue through profit-sharing [1] - The company is actively targeting two significant gene families, FGFR and KRAS, with FGFR4 as a late-stage clinical asset poised to become a new targeted small molecule in liver cancer [1] - The global sales peak for Pimitinib is projected to reach USD 1.5 billion, providing sustained cash flow for HeYue [1] Group 2: Clinical Advancements and Pipeline - HeYue has demonstrated the best efficacy globally for TGCT in the development of CSF-1R inhibitors, with superior safety and response rates compared to similar molecules [1] - The company has received over USD 150 million in cash from its collaboration with Merck, including milestone payments and sales revenue sharing, marking a significant achievement for a Chinese biotech firm in global commercialization [1] - HeYue has a robust pipeline with 22 candidate drugs, including 12 in clinical stages and 10 in preclinical stages, showcasing its leading recognition of frontier targets and clinical development capabilities [3] Group 3: Focus on FGFR and RAS Targets - The company has been deeply engaged in the FGFR target area for ten years, focusing on selective FGFR4 inhibitors and FGFR2/3 inhibitors, addressing unmet needs in liver and gastric cancers [2] - The selective FGFR4 inhibitor, Ipagotinib, is currently in critical Phase III clinical trials, potentially becoming the first approved selective inhibitor targeting FGFR4 globally [2] - HeYue is also developing early-stage molecules targeting G12D and pan-RAS, which will enhance its offerings in precision oncology [2]

Core Viewpoint - The report from China Merchants Securities Hong Kong initiates coverage on HeYue-B (02256) with a "Buy" rating, estimating a fair equity value of HKD 21 billion and a target price of HKD 32.5 for the next 12 months, highlighting the company's long-term growth potential and efficient small molecule development capabilities [1] Group 1: Product Development and Market Potential - HeYue's developed drug, Pimitinib, is positioned as the most effective CSF-1R small molecule globally and is set to launch in both China and the U.S., promising ongoing sales revenue for the company [1] - The company is actively targeting two significant families of important targets, FGFR and KRAS, with FGFR4 as a late-stage clinical asset expected to become a new targeted small molecule in the liver cancer field [1] - The global sales peak for Pimitinib is projected to reach USD 1.5 billion, providing a continuous cash flow for HeYue, with the drug being a key asset in Merck's pipeline [1] Group 2: Clinical Advancements and Pipeline - HeYue has demonstrated the best efficacy globally for TGCT in the development of CSF-1R inhibitors, with safety and response rates surpassing similar molecules [1] - The company has established a robust pipeline with 22 candidate drugs, including 12 in clinical stages and 10 in preclinical stages, showcasing its leading recognition of frontier targets and developing clinical capabilities [3] - The selective FGFR4 inhibitor, currently in pivotal Phase III trials, targets advanced liver cancer patients with FGF19 overexpression, marking a potential first in the global market if successful [2] Group 3: Strategic Focus on Targeted Therapies - The company has been focusing on the FGFR target for a decade, with a deep layout in selective FGFR4 inhibitors and FGFR2/3 inhibitors, addressing unmet needs in liver and gastric cancers [2] - The ongoing research on RAS targets, including early-stage molecules for G12D and pan-RAS, is expected to enhance the company's offerings in precision oncology [2] - The development of next-generation FGFR inhibitors and oral PD-L1 small molecules is anticipated to exceed market expectations through better data disclosure and potential business development transactions [3]

Group 1 - The company is set to achieve its first commercial product with the development of small molecule therapies, focusing on FIC and BIC, and is expanding into non-tumor and macromolecule fields [1] - The company expects to transition from long-term losses to profitability in 2024 through external licensing agreements [1] - Pimitinib, a BIC CSF-1R inhibitor, has submitted an NDA application in China and is expected to launch in 2026, marking the company's first commercial product [1] Group 2 - Pimitinib has shown best-in-class ORR and significant safety advantages in key Phase III trials for TGCT, with the NMPA accepting its application for market approval [1] - The company has established exclusive commercialization cooperation with Merck for Pimitinib in several regions, reflecting confidence in the product's commercial potential [1] - The company is advancing I/II phase clinical trials for ABSK061, a selective FGFR2/3 inhibitor, with the first patient expected to be enrolled by June 2025 [2] Group 3 - The company is developing ABSK043, a PD-L1 small molecule inhibitor, which is currently the fastest progressing oral PD-L1 inhibitor globally, showing good safety and anti-tumor activity [2] - The company has initiated three II phase clinical trials for ABSK043 in combination therapies for various types of NSCLC and gastric cancer [2] - The company has a target price of 21.68 RMB, indicating a potential 41% upside from its market value as of September 17, 2025 [3]

Investment Rating - The report initiates coverage with a "Buy" rating for the company [8][9]. Core Views - The company is a small molecule innovative drug developer on the verge of launching its first commercial product, Pimicotinib, which has shown significant efficacy and safety in clinical trials [6][8]. - The company is expected to transition from long-term losses to profitability in 2024, driven by licensing agreements and product commercialization [6][23]. - The partnership with Merck for Pimicotinib is a key growth driver, with potential milestone payments and sales royalties expected to enhance revenue [23][24]. Financial Data and Profit Forecast - Revenue projections for 2023 to 2027 are as follows: - 2023: 190 million RMB - 2024: 504 million RMB - 2025E: 612 million RMB - 2026E: 756 million RMB - 2027E: 627 million RMB - Net profit forecasts indicate a turnaround from a loss of 432 million RMB in 2023 to a profit of 28 million RMB in 2024, reaching 151 million RMB by 2026 [7][9]. - The expected PE ratios for 2025 to 2027 are 165X, 69X, and 78X respectively [9]. Product Pipeline and Development - The company has established a comprehensive pipeline with 22 candidate drugs, including 12 in clinical stages, focusing on oncology and expanding into non-oncology areas [30][34]. - Pimicotinib, a CSF-1R inhibitor, is positioned to be the first commercial product, with NDA submissions in China and the US expected in 2025 [34][43]. - Other notable candidates include Epagolatinib for liver cancer and ABSK061 for achondroplasia, showcasing the company's diverse therapeutic focus [8][34]. Market Position and Competitive Landscape - The company is recognized for its differentiated product offerings, with Pimicotinib demonstrating superior efficacy compared to existing treatments in clinical trials [40][41]. - The competitive landscape for CSF-1R inhibitors includes several approved drugs, but Pimicotinib's unique profile positions it favorably for market entry [38][37]. Management Team - The management team possesses extensive experience in drug development and international collaboration, enhancing the company's strategic capabilities [21][22].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [2][8]. Core Insights - The company is a small molecule innovative drug developer, poised to launch its first commercial product, Pimicotinib, which has shown promising results in clinical trials and is expected to generate significant revenue starting in 2024 [5][7][19]. - The financial projections indicate a substantial increase in revenue and profitability, with expected revenues of RMB 504 million in 2024 and RMB 612 million in 2025, transitioning from losses to profits [6][24]. - The partnership with Merck for Pimicotinib is a key driver for revenue growth, with potential milestone payments and sales royalties expected to enhance financial stability [24][26]. Financial Data and Earnings Forecast - Revenue projections for 2023 to 2027 are as follows: RMB 19 million in 2023, RMB 504 million in 2024, RMB 612 million in 2025, RMB 756 million in 2026, and RMB 627 million in 2027, with significant year-on-year growth rates [6][8]. - The net profit forecast shows a turnaround from a loss of RMB 432 million in 2023 to a profit of RMB 28 million in 2024, reaching RMB 63 million in 2025 and RMB 151 million in 2026 [6][8]. - The company’s price-to-earnings (PE) ratios are projected to be 369.2 in 2024, 164.9 in 2025, and 69.3 in 2026, indicating a strong growth trajectory [6][8]. Product Pipeline and Development - Pimicotinib, a CSF-1R inhibitor, is set to be the company's first commercial product, with NDA submissions in China and the US expected in 2025 [7][46]. - The company has a robust pipeline with 22 candidate drugs, including FGFR inhibitors and PD-L1 small molecules, indicating a diversified approach to drug development [31][53]. - The clinical data for Pimicotinib in treating TGCT shows a 54% overall response rate (ORR) in pivotal trials, outperforming competitors [43][44]. Market Position and Competitive Landscape - The company is positioned to capitalize on unmet medical needs in oncology, particularly with Pimicotinib addressing TGCT and cGvHD, where current treatment options are limited [42][48]. - The collaboration with Merck enhances the company's market presence and commercial capabilities, providing a competitive edge in the pharmaceutical landscape [24][47]. - The report highlights the differentiation of the company's products, suggesting a strong potential for sustained partnerships and revenue generation [10].