Core Viewpoint - The recent clinical trial data presented by Keren Biotechnology at the 2025 European Society for Medical Oncology (ESMO) conference indicates that sac-TMT (TROP2 ADC) is the first drug to achieve both progression-free survival (PFS) and overall survival (OS) benefits in the second-line treatment of EGFR-mutant non-small cell lung cancer (NSCLC), addressing a significant treatment gap in this area [2][6]. Group 1: Clinical Trial Results - The OptiTROP-Lung04 study evaluated the efficacy and safety of sac-TMT compared to platinum-based doublet chemotherapy in patients with locally advanced or metastatic EGFR-mutant NSCLC [4]. - The study enrolled 376 patients, with a median follow-up of 18.9 months, showing a median PFS of 8.3 months for sac-TMT versus 4.3 months for chemotherapy, representing a 51% reduction in the risk of disease progression or death [4]. - The OS for sac-TMT was not reached (NR) compared to 17.4 months for chemotherapy, indicating a 40% reduction in the risk of death, with an objective response rate (ORR) of 60.6% versus 43.1% for chemotherapy [4][6]. Group 2: Safety Profile - The most common treatment-related adverse events (TRAEs) for both sac-TMT and chemotherapy were hematologic toxicities, with no reported cases of interstitial lung disease (ILD) or pneumonia in the sac-TMT group, suggesting a manageable safety profile [4][6]. Group 3: Future Directions - Following the promising results in second-line treatment, Keren Biotechnology has initiated a phase III clinical trial (SKB264-Ⅲ-15) to evaluate sac-TMT in combination with osimertinib compared to osimertinib alone in first-line treatment for patients with EGFR-mutant locally advanced or metastatic NSCLC [7]. - The significant clinical need for effective treatments in EGFR-mutant NSCLC has led to multiple investigational drugs targeting this indication, highlighting the competitive landscape in this therapeutic area [6][7].

Core Viewpoint - The breakthrough in overcoming EGFR-TKI resistance in non-small cell lung cancer (NSCLC) is a common goal for new therapies, with the recent clinical data from Kolonbo Tai's TROP2 ADC sac-TMT showing significant benefits in both progression-free survival (PFS) and overall survival (OS) for EGFR-mutant NSCLC patients in the second-line treatment setting [1][3]. Group 1: Clinical Study Results - The III phase clinical study (OptiTROP-Lung04) evaluated sac-TMT against platinum-based doublet chemotherapy in patients with locally advanced or metastatic EGFR-mutant NSCLC, enrolling 376 patients with a median follow-up of 18.9 months [3]. - The study reported a median PFS of 8.3 months for sac-TMT compared to 4.3 months for chemotherapy, representing a 51% reduction in the risk of disease progression or death [3]. - The OS for sac-TMT was not reached (NR) versus 17.4 months for chemotherapy, indicating a 40% reduction in the risk of death [3]. - The objective response rate (ORR) was 60.6% for sac-TMT compared to 43.1% for chemotherapy, with a median duration of response (mDoR) of 8.3 months versus 4.2 months [3]. Group 2: Safety Profile - The most common treatment-related adverse events (TRAEs) for sac-TMT and platinum-based chemotherapy were hematologic toxicities, with no reported cases of interstitial lung disease (ILD) or pneumonia in the sac-TMT group, indicating a manageable safety profile [4]. Group 3: Future Directions - The results from the study suggest that sac-TMT has achieved statistically significant and clinically meaningful improvements in both OS and PFS compared to chemotherapy, addressing the challenge of obtaining OS advantages after EGFR-TKI resistance [5]. - Kolonbo Tai plans to expand the use of sac-TMT into first-line treatment, with a new III phase clinical study (SKB264-III-15) initiated to evaluate sac-TMT in combination with osimertinib against osimertinib monotherapy in patients with EGFR-mutant NSCLC [7].

Investment Rating - The report maintains a "Buy" rating for the company, expecting a relative increase of over 20% in stock price compared to the market benchmark index within the next six months [6][17]. Core Viewpoints - The company is leading the global progress with its product AK112, which is expected to capture the largest market share in the second-generation IO market [2][4]. - The broad-spectrum anti-cancer effects of PD-1 and VEGF targets are promising, with a significant existing market potential of nearly 60 billion USD globally [3]. - The company has already received approval for two indications of AK112 in China, making it the only PD-1/VEGF dual antibody product available globally [4]. Financial Forecast and Valuation - Projected revenues for the company from 2025 to 2027 are estimated at 35.18 billion, 57.65 billion, and 93.72 billion CNY respectively, with net profits expected to be -1.86 billion, 8.03 billion, and 29.66 billion CNY [6][8]. - The estimated peak overseas sales for AK112, after risk adjustments, could reach approximately 197 billion USD [6]. - The report calculates a reasonable market value of 222.8 billion HKD based on a DCF valuation with a WACC of 8.06% and a perpetual growth rate of 1% [6].

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Insights - The company is positioned as a leader in the dual antibody sector, spearheading a new era in immuno-oncology with its innovative products, particularly AK104 and AK112, which are nearing commercialization [8][13]. - The revenue forecast indicates significant growth, with projected revenues of 3.672 billion, 5.342 billion, and 7.240 billion CNY for 2025, 2026, and 2027 respectively, reflecting a strong upward trajectory [1][24]. - The company has a robust cash reserve of 7.344 billion CNY, which supports ongoing research and development efforts [29]. Summary by Sections Company Overview - The company focuses on developing innovative antibody drugs and has established a comprehensive drug development platform, ACE, with over 20 product pipelines [13][14]. - It has successfully launched the world's first dual immune checkpoint inhibitor, AK104, for cervical cancer in June 2022, and is expanding its product offerings [13][14]. Financial Performance - The company reported total revenue of 2.124 billion CNY in 2024, with a significant increase in product sales revenue to approximately 2.002 billion CNY, marking a year-on-year growth of 24.88% [24][25]. - The gross profit margin remains high at 86.39%, indicating strong profitability relative to industry standards [25][28]. Product Pipeline - AK104 is the only approved PD-1/CTLA-4 dual antibody globally, with multiple indications approved and ongoing clinical trials for additional cancers [33][34]. - AK112 is also positioned to challenge existing therapies, with promising clinical trial results and a strong market potential [8][19]. Market Position and Future Outlook - The company is expected to achieve a market valuation of 160 billion HKD based on the anticipated revenues from its core products [8]. - The report projects a target price of 163.33 CNY per share, indicating a potential upside from the current market price [8].

Core Viewpoint - The innovative drug sector in the Hong Kong market faced unexpected declines, primarily due to concerns over clinical data from Kangfang Biotech, impacting overall market confidence in domestic innovative drugs [1][2][3]. Group 1: Market Performance - The innovative drug sector had been a market leader, with the Shenwan Pharmaceutical Index rising by 2.21% recently, outperforming both the ChiNext Index and the CSI 300 Index [2]. - As of May 30, 2023, several innovative drug ETFs in Hong Kong saw significant year-to-date gains, with the Huatai-PB Hang Seng Innovative Drug ETF up by 42.84%, and others also exceeding 40% [4]. Group 2: Clinical Trial Results - Summit Therapeutics released results from a global Phase III trial for ivonescimab, a PD-1/VEGF dual antibody, which showed statistically significant improvement in progression-free survival (PFS) but did not achieve statistical significance for overall survival (OS) [2][3]. - The lack of statistical significance for OS raised uncertainties regarding the drug's approval in the U.S., leading to a significant drop in Summit's stock price by over 30% [3]. Group 3: Future Outlook - Analysts believe that the innovative drug sector is poised for higher quality development by 2025, supported by ongoing policy backing, AI technology integration, and active licensing transactions [1][7]. - The Chinese innovative drug industry is transitioning from imitation to original innovation, with the number of self-developed first-in-class (FIC) drugs entering clinical trials increasing significantly from 9 in 2015 to 120 in 2024 [6]. - The total amount of licensing out transactions for Chinese innovative drugs is expected to exceed $50 billion in 2024, indicating strong international market potential [6]. Group 4: Investment Recommendations - Analysts suggest that the innovative drug sector has completed the initial phase of development and is now entering a rapid growth phase, with expectations for continued investment and market interest [6][7]. - The pharmaceutical sector is anticipated to experience a comprehensive recovery, with potential for significant upward movement in both performance and valuation [7].