Key points of investment

Incident: Recently, the company released its 2022 semi-annual report. During the reporting period, the company invested 330 million yuan in R&D (+28% year on year), 181 R&D personnel (+32% year on year), and management expenses of 47 million yuan (+22% year on year).

Comment: The company is deeply involved in differentiation and pioneering drug research and development, and suvotinib received “breakthrough therapy” from the FDA

Certification, continuous verification of best-in-class (BIC) strength, golicitinib received the FDA's “fast track”

The certification, while PTCL proved its superior results, was preparing to develop self-exempt indications such as dry eye. FIC drugs DZD8586, differentiated innovative drugs DZD2269, and DZD1516 progressed smoothly, reflecting the company's R&D platform advantages in translational medicine, EGFR drug research, brain penetration, FIC drug development, etc.

Profit forecasting and valuation: The company is deeply involved in translational medicine, focuses on the development of pioneering drugs and breakthrough treatments, and has formed a rich product line to maintain a high level of competitiveness in the industry. With the progress of international key clinical trials related to suvotinib and golicitinib and the continuous advancement of the subsequent FIC/BIC R&D pipeline, the company is expected to have a variety of globally approved innovative drugs. We adjusted our profit forecasts. We expect the company's EPS for 2022-2024 to be -1.99 yuan, -2.43 yuan, and -2.57 yuan respectively, maintaining a “prudent increase” rating.

Risk warning: New drug development falls short of expectations, product sales fall short of expectations, etc.