In August 2023, suvotinib was approved to be listed in China, becoming the first domestic innovative drug for the treatment of EGFR exon 20 insertion mutation NSCLC. ORR=60.8%, in Chinese registered clinical trials has Beat-in-class potential compared with similar products; overseas registered clinical trials and first-line indications clinical trials are progressing steadily.

Golixitinib publishes key clinical data, and we expect to submit NDA within this year. The R & D investment continues to increase, the R & D team continues to expand, the construction of commercial teams is carried out in an orderly manner, and a number of innovative varieties have great market potential. In summary, maintain the "buy" rating.

Shuvotini: it has been approved to go on the market in China, the curative effect is potentially the best of its kind, and a number of clinical trials have been carried out in an orderly manner.

(1) approved to market in China: on August 22, 2023, suvotinib was approved by CDE for advanced or metastatic NSCLC of EGFR exon 20 insertion mutation (ex20ins) after platinum-containing chemotherapy, which was not tolerant to platinum-containing chemotherapy, and became the first domestic innovative drug approved for this indication. On August 26, Shuvotini officially began supplying drugs to hospitals and pharmacies across the country, setting a new industry record for fastest shipments from non-owned factories.

(2) the efficacy of the same kind is potentially the best: at the 2023 ASCO Conference, the company announced the data of the suvotinib China registered Clinical trial (WU-KONG6). At the dose of 300mg/qd, it achieved ORR=60.8%,DCR=87.6%, in patients with platinum treatment failure / intolerance and showed excellent efficacy in patients with near / distal ring and brain metastasis. non-head-to-head data have Best-in-class potential.

(3) A number of clinical trials have been carried out in an orderly manner: the ① II International Multicenter critical Clinical trial (WUKONG1) is currently being carried out in the United States, Europe, South Korea, Australia and other countries and regions, and we expect suvotinib to be approved for listing in the United States in 2024. ② has also carried out an international multicenter clinical study on first-line EGFR ex20ins indications (WU-KONG28). The preliminary results of suvotinib in advanced EGFR-sensitive mutant NSCLC patients with failed EGFR-TKIs treatment were presented at the ③ 2023 ASCO conference. MPFS was 5.8months and mDoR was 6.5months. The phase II clinical trial of suvotinib combined with gorixitinib in the treatment of patients with EGFR mutant NSCLC who failed to receive standard treatment was approved in January 2023.

Golixitinib publishes key clinical data. The company released data from the International Multicenter critical study (JACKPORT8 Part B) of Gorixitinib in the treatment of r PTCL at the 2023 ASCO Conference. Of the 88 patients included in the efficacy evaluation, the ORR assessed by IRC reached 44.3%, of which CRR reached 23.9%. The longest DoR was 16.8 months and continued to be in remission. On August 29, Golixitinib was proposed to be included in the priority review.

We expect Golixitinib to submit NDA,2023 in China within 2023 and to submit NDA in the United States by the end of 2023 and early 2024 in the United States, which is expected to become the world's first and only highly selective JAK1 inhibitor for T-cell lymphoma.

The R & D investment continues to increase, and the R & D team continues to expand. 2023H1 spent 343 million yuan on research and development, + 4.20% year-on-year, including 144 million yuan for Shuvotinib, 73 million yuan for Golixitinib and 51 million yuan for DZD8586. As of June 30, 2023, the company has 238 R & D personnel, + 31.5% compared with the same period last year.

The construction of commercial teams will be carried out in an orderly manner. During the reporting period, the company established a professional and efficient commercialization team, including marketing, clinical promotion, product access, medical affairs, business channels and business planning and operation teams, and formulated a commercialization strategy for the launch of the products. it provides a solid foundation for the commercialization of Golixitinib.

Risk factors: the company's drug research and development speed is not as fast as expected or the risk of R & D failure; the company's drug review takes a long time and the market time is not as long as expected; the risk of commercial sales of the company's products is not as expected; the company's innovative drugs are not included in the national health insurance catalogue in time or the price is reduced by the health insurance negotiation; the risk of the company's international expansion is not as expected; the growing competition with the indication products aggravates the risk.

Earnings Forecast, valuation and rating: the company is an innovative pharmaceutical company focusing on global new drug research and development and commercialization. Suvotinib non-head-to-head efficacy data is better than all competitions, is a potential Best-in-class treatment of EGFR ex20ins mutation NSCLC products, domestic has been approved to market, the global clinical trial orderly progress; Golixitinib is the world's first JAK inhibitor for hematoma to enter a registered clinical phase, is expected to be in the Sino-US double newspaper NDA in 2023. DZD8586, DZD1516, DZD2269 and other early clinical products have differentiated competitive advantages. According to the company's mid-2023 report, considering that Shuvotini has been approved to be listed on the market and is not expected to be included in the national health insurance in 2024, the company adjusts the company's 2023x2024max 2025 EPS forecast to-1.37Compay 1.97qure 0.88 yuan (the original forecast was-1.61zyme 1.76ram 0.63 yuan). Using the absolute valuation method, through the DCF model, we estimate the reasonable equity value of the company at RMB 19.7 billion, of which β = 1.2 (average value of Nuocheng Jianhua, Beida Pharmaceutical, Zeli Pharmaceutical, Microcore Biology, HUTCHMED (China) Limited, INNOVENT BIO and Yifang Biology), WACC=8.38% (Rf takes the yield of 10-year treasury bonds 2.6%, and the compound yield of Shanghai and Shenzhen 300 rises slightly, the risk premium is 5.5%, and the tax rate is 15%) Consider the company's follow-up pipeline layout to take Group2.0%, corresponding to the target price of 48 yuan, to maintain the "buy" rating.