Core recommendation logic: The company's ADC platform has been verified, and we are optimistic about the overseas licensing of the core Nectin-4 ADC and the potential for future expansion in overseas markets. The company's core product, Nectin-4 ADC 9MW2821, has excellent data in post-treatment of urothelial carcinoma, showing BIC potential; considering that in urothelial cancer treatment, NECTIN-4 ADC combined with PD-1 monoclonal antibody therapy is expected to replace platinum chemotherapy as first-line standard treatment, and has the potential to further enter MIBC perioperative treatment, we believe that many MNCs with PD-1/PD-L1 and no Nectin-4 ADC need this type of product to supplement their layout in the field of urothelial carcinoma The company's Nectin-4 ADC 9MW2821 is currently relatively advanced, has excellent disclosed data, and has great potential for overseas licensing and release in the future.

The ADC technology platform has been verified, the core product Nectin-4 ADC is authorized overseas, and there is great potential for future overseas market expansion.

1) In terms of clinical data, the company's Nectin-4 ADC 9MW2821 has excellent early clinical data, which initially shows BIC potential. In post-treatment of urothelial cancer that has previously received immune checkpoint inhibitors and platinum treatments that have failed, the ORR of the company's NECTIN-4 ADC9MW2821 reached 62%, which is superior to the ORR of the similar product Seagen's Nectin-4 ADC Enfortumab vedotin in different studies in a non-head-to-head comparison (about 40-44%).

2) In terms of overseas licensing potential, Nectin-4 ADC has a good global competitive pattern, leading product progress, and great potential for overseas licensing in the future. In first-line urothelial cancer, Seagen Nectin-4 ADC combined with PD-1 monoclonal antibody therapy has shown excellent efficacy (nearly doubled in MPFs and MoS compared to standard chemotherapy). In the future, it is expected to replace platinum chemotherapy as the first-line standard treatment for urothelial cancer, and its phase 3 perioperative phase 3 clinical trial for MIBC is already underway; considering that urothelial cancer is a major type overseas (about 820,000 cases of bladder cancer in the US and 200,000 cases of bladder cancer in Europe were diagnosed with bladder cancer in 2023, about 200,000 patients in Europe were diagnosed with bladder cancer, (More than 90% of these are urothelial cancers). We believe that many MNCs with PD-1/PD-L1 and no Nectin-4 ADC require this type of product to supplement their layout in the field of urothelial carcinoma. The company Nectin-4 ADC is currently relatively advanced, has excellent disclosed data, and has great potential for overseas licensing in the future.

3) In terms of market space, in overseas markets, we expect that after 9MW2821 is listed overseas in the future, under neutral assumptions, the peak sales in the US market for first-line treatment indications for urothelial cancer is expected to reach US$840 million, the peak sales in the European market is expected to reach US$70 billion; the peak sales of MIBC's perioperative treatment indications in the US market is expected to reach US$530 million, and the peak sales value in the European market is expected to reach US$340 million. In the domestic market, the company's Nectin-4 ADC9MW2821 urothelial cancer indication market sales peak is expected to reach 2.25 billion yuan.

A number of major innovative drugs are rapidly advancing, and the richness of innovation pipelines is constantly increasing; many biosimilar drugs are gradually being implemented, and the domestic+overseas market layout is expected to continue to contribute to cash flow.

In terms of innovative drugs: In addition to Nectin-4 ADC, TROP-2ADC and B7-H3 ADC in the company's ADC pipeline have entered phase 1 clinical trials. In addition, the albumin-boosting drug 8MW0511 is about to enter the BLA stage. Self-developed ophthalmic VEGF monoclonal antibody 9MW0211 is currently in phase 3 clinical trials. Various products such as CD47/PD-L1 double antibody 6MW3211, ST2 monoclonal antibody 9MW1911, TMPRSS6 monoclonal antibody, IL-11 monoclonal antibody, and α-toxin monoclonal antibody are in early clinical development stage.

In terms of biosimilar drugs: Currently, adalimumab and desulizumab 9MW0311 (an indication for osteoporosis) have been approved for marketing, desulizumab 9MW0321 (an indication for cancer bone metastasis) is in the BLA stage, and abancip is in phase 3 clinical development. At home, in the future, the above products are expected to benefit from the company's strong marketing team to accelerate product release; overseas, the company is expected to accelerate its global commercialization process through overseas partners. The layout of domestic+overseas markets is expected to continue to contribute cash flow to the company's innovative R&D in the future.

Investment suggestions: Without considering overseas markets and authorized revenue that has not actually been generated, we expect the company's revenue from 2023 to 2025 to be 160 million yuan, 650 million yuan, and 1.37 billion yuan, respectively, and net profit of -770 million yuan, -630 million yuan, and -240 million yuan respectively; considering the company's rich innovative drug pipeline, future product launch prospects are good, and maintain the buy-A investment rating. In the case of being relatively conservative and not considering the overseas market of Nectin-4 ADC9MW2821, the company's domestic market space is assessed. Combining the two valuation methods of absolute valuation and relative valuation, we believe that the company's reasonable valuation range is 151.7 to 16.38 billion yuan, while taking the average, the corresponding valuation is 15.77 billion yuan, corresponding to the six-month target price of 39.49 yuan.

Risk warning: the risk of innovative drug development not progressing as expected or failing; the risk that the overseas progress of innovative drugs does not meet expectations; the risk that competition will increase due to the launch of similar new drugs or biosimilar drugs; the risk that sales of new drugs will fall short of expectations; and the risk that medical insurance price cuts will exceed expectations.