Investment Rating - The investment rating for the pharmaceutical and biotechnology industry is "Positive" [3] Core Insights - AbbVie has made a strategic investment of $1.925 billion in the CD3/BCMA/CD38 trispecific antibody ISB 2001 from IGI Therapeutics, acquiring exclusive rights in North America, Europe, Japan, and Greater China. This follows a previous investment of $1.055 billion in 2024 for another trispecific antibody, indicating a strong focus on the hematological oncology sector and highlighting investment opportunities in TCE multispecific antibodies [5][14][17] - The pharmaceutical and biotechnology sector has shown a weekly return of 2.82%, outperforming the CSI 300 index by 1.56%, ranking 6th among 31 primary sub-industry indices. The medical services sub-sector had the highest weekly increase of 7.73%, while the pharmaceutical commerce sub-sector had the lowest at 1.12% [4][14] - The innovative drug industry is experiencing a surge in large-scale business development (BD) transactions, indicating a recovery in investment and financing within the biopharmaceutical sector. This trend is expected to boost R&D investments and accelerate project progress, particularly benefiting CXO and upstream life sciences industries [5][14] Summary by Sections 1. Industry Weekly Viewpoints - The pharmaceutical and biotechnology sector's performance has been strong, with significant investments in innovative therapies, particularly in the TCE multispecific antibody space [14] - Recent regulatory updates include the prohibition of a specific surgical technique for Alzheimer's treatment due to insufficient evidence, and the reclassification of a drug from prescription to over-the-counter [14] 2. Market Performance and Valuation - The pharmaceutical and biotechnology industry has underperformed the CSI 300 index by 0.95 percentage points over the past month, with a 1-month increase of 2.20%. However, it has outperformed the index over the past three and six months [25][28] - The current price-to-earnings (P/E) ratio for the industry is 28.97, which is below the historical average of 30.10 [28]

Company Updates - The company announced on June 20 that its new generation insomnia drug, Kewike (Dazodex), has been approved by the National Medical Products Administration for the treatment of adult insomnia characterized by difficulty in falling asleep and/or maintaining sleep, and it is not classified as a controlled substance [1] - Kewike has demonstrated excellent clinical data, addressing existing clinical pain points, and has potential as a blockbuster drug (BIC). It has been approved in 11 countries including the US, UK, Switzerland, and Hong Kong, and is the only DORA class insomnia drug approved by the European Medicines Agency to improve daytime functioning, with good safety profile and no withdrawal reactions or addiction data [1] - The company recently reached a supplemental agreement with Idorsia, agreeing to a one-time cash payment of $50 million and reducing sales milestone payments and royalty rates for Kewike, which is expected to facilitate its commercialization [1] Strategic Collaborations - The company announced a strategic collaboration with NextCure on June 16 to jointly develop SIM0505 (CDH6 ADC), granting global rights outside Greater China to NextCure. The company will receive up to $745 million in related payments during the potential development phase and tiered royalties based on net sales in the licensed regions [2] - SIM0505 utilizes the company's proprietary TOPOi payload and has shown strong anti-tumor effects in various solid tumor models during preclinical studies. It is currently undergoing Phase I clinical trials in China, with NextCure planning to initiate Phase I trials in the US in Q3 2025 [2] Clinical Development - The company completed the first patient dosing in the US for its self-developed tri-antibody SIM0500 (GPRC5D/BCMA/CD3) on June 18. This drug is developed based on the company's proprietary T-cell engaging multi-specific antibody platform and received Fast Track designation from the FDA in April 2024 [2] - A licensing option agreement was reached with AbbVie in 2025, with total milestone payments reaching $1.055 billion. The company has a rich pipeline of ADC and TCE platforms, and attention is recommended on the clinical progress of several early-stage products [2] Financial Forecast and Valuation - The company maintains its earnings forecast for 2025/2026, with the current stock price corresponding to 21.8x/19.5x P/E for 2025/2026. Considering the upward trend in sector valuations, the target price has been raised by 45.5% to HKD 12.8, corresponding to 24.9x/22.3x P/E for 2025/2026, implying a 14.1% upside potential [2]

Core Viewpoint - CICC has raised the target price of Sihuan Pharmaceutical (02096) by 45.5% to HKD 12.8, reflecting a potential upside of 14.1% based on the company's recent breakthroughs in its innovative pipeline, including the approval of a new insomnia drug and a significant licensing deal for SIM0505 [1][2]. Group 1: Recent Developments - Sihuan Pharmaceutical's new insomnia drug, Kewike (Darelisib), has been approved by the National Medical Products Administration for the treatment of adult insomnia characterized by difficulty in falling asleep and/or maintaining sleep [1]. - Kewike is the only DORA class insomnia drug approved by the European Medicines Agency that improves daytime functioning, with a good safety profile and no withdrawal symptoms reported [1]. - The company has reached a supplementary agreement with Idorsia, involving a one-time cash payment of USD 50 million to expedite the commercialization of Kewike [1]. Group 2: Licensing and Clinical Trials - Sihuan Pharmaceutical has licensed global rights for SIM0505 to NextCure, with potential payments up to USD 745 million and tiered royalties based on net sales in licensed regions [2]. - SIM0505 is currently undergoing Phase I clinical trials in China, with NextCure planning to initiate Phase I trials in the U.S. in Q3 2025 [2]. - The company’s SIM0500 (GPRC5D/BCMA/CD3 tri-antibody) has completed its first patient dosing in the U.S. Phase I trial, and it received Fast Track designation from the FDA in April 2024 [2].