Investment highlights: Event: The company announced on October 29 that it signed a cooperation and licensing agreement with Kadmon in the US to cooperate in the development of VEGFR-2 all-human monoclonal antibody and PDL-1 all-human monoclonal antibody products. The company will obtain an exclusive license for R&D, production and commercialization of these two products in mainland China, Hong Kong, Macau and Taiwan. The total amount of the agreement is 40 million US dollars (the cooperation amount for a single technology product is 20 million US dollars, the payment method is milestone payment, and the initial payment is 2 million US dollars each). Comment: 1) Monoclonal antibodies have become the mainstay of cancer treatment, and Kadmon's monoclonal antibody technology is strong. Monoclonal antibody technology has evolved from the initial application value of mouse monoclonal antibodies with limited application value to the recent new CAR-T technology, and has become the mainstay of cancer treatment methods. The VEGFR-2 all-human monoclonal antibody can be used as a targeted drug for tumor treatment in the treatment of gastric cancer, colorectal cancer, etc.; the all-human monoclonal antibody for PDL-1 can be used as an immunosuppressant for the treatment of melanoma, solid tumors, and lung cancer. Kadmon has excellent biomedical quality and strong R&D capabilities. It sells 3 drugs in the US and is developing multiple monoclonal antibody drugs for cancer treatment. In terms of VEGFR-2 antibodies, Kadmon has screened out an all-human antibody, B1A1, which is more bioactive than Remolu, a monoclonal oncology drug already on the market. Currently, Kadmon has collaborated with Pharmacomin Kant to complete the construction of a main cell bank for B1A1 antibodies. In terms of PDL1 antibodies, Kadmon has also screened out a number of whole-human anti-PDL1 antibodies with excellent biological activity. Currently, Kadmon has collaborated with PharmacomingKant, and it is expected that the main cell bank for anti-PDL-1 antibodies will be completed in the 2nd quarter of 2016. 2) The layout of the biopharmaceutical field is accelerating, and monoclonal antibodies have become pioneers in strategic development. The company's strategy is to focus on proprietary Chinese medicines, specialty raw materials, pharmaceutical intermediates, and new chemical agents as two wings, and enter the biopharmaceutics field and the chemical pharmaceutical field. Biopharmaceuticals lead the development of international pharmaceuticals, and monoclonal antibodies are cutting-edge technology in the field of biopharmaceuticals. They are a field that the company is very optimistic about, and have become pioneers in the company's strategic development. The company invested in Kadmon, drawing on its experience in market development and novel drug operation, and conducted discussions on cooperation to carry out pre-clinical research on related drugs under development in China. This monoclonal antibody cooperation agreement shows that the company's pace is accelerating, and will achieve the company's breakthrough in the field of biopharmaceuticals, which is conducive to seizing industry opportunities. Valuation rating: As a state-owned enterprise, the company has completed equity incentives, introduced war investment, expanded the entire Chinese medicine industry chain, and actively deployed chemicals and biopharmaceuticals. Expectations of continued mergers and acquisitions are strong, and a long-term upward channel has been opened. The EPS for 15-17 is expected to be 0.31, 0.42, and 0.56 yuan respectively. If the tables are taken into account, the EPS is 0.31, 0.73, and 0.89 yuan respectively, maintaining the buying rating. Risk warning: Kadmon's R&D progress falls short of expectations.