Biotech, which focuses on cancer and self-prevention, attacks high-threshold targeted drugs. The company was co-founded by Wang Yaolin and a number of overseas returnees. The core team all have medical or pharmaceutical backgrounds, strong academic backgrounds, and rich industry experience. Currently, the company has a total of 5 varieties in clinical trials or in the marketing stage, including high-threshold drugs such as third-generation EGFR TKI, KRASG12C inhibitors, and oral SERD, covering major indications in the two major fields of cancer and immune metabolism. Among them, 1 has been approved for marketing, 4 are in clinical trials, and cooperation has been reached with well-known domestic and foreign pharmaceutical companies such as Betta Pharmaceuticals, Chia Tai Tianqing, Pfizer, and MSD;

Oncology field: Aim at difficult targets and lay out large indications with urgent needs. Befotinib, a collaboration between the company and Betta Pharmaceuticals, has been approved for first-line and second-line treatment for patients with advanced EGFR mutation NSCLC (non-small cell lung cancer). Compared with similar products, it has advantages in survival data and intracranial efficacy. Furthermore, adjuvant treatment indications are in phase III clinical phase; the company and Zhengda Tianqing collaborated with Gesulexib as a KRAS G12C inhibitor. The second-line treatment for NSCLC with advanced EGFR mutation has been submitted for NDA and is expected to be approved within the year. First-line treatment for NSCLC with KRAS G12C mutations, CRC (colorectal cancer), and PC (pancreatic cancer) are all in phase II clinical trials. Currently, no KRAS G12C inhibitors have been approved for marketing in China, and Gesulexib is expected to be the first approved product in China; D-0502 is an oral SERD developed by the company, and currently no similar products have been approved for marketing in China. D-0502 is in clinical phase III and is the fastest progressing oral SERD in China;? Self-immunity and metabolism: Domestic progress is ahead, targeting the two major 10 billion markets. The company currently has URAT1 inhibitor D-0120 and TYK2 inhibitor D-2570, which are used for the treatment of hyperuricemia, gout, and psoriasis, respectively. They are all indications with high prevalence, huge domestic market, and high clinical unmet demand. Judging from the development progress, the company's products are in the first and second tier of domestically produced drugs.

We predict that the company's net profit for 2024-2026 will be -0.31, -0.226, and -0.337 billion yuan, respectively. We have made an absolute estimate of the company's free cash flow. The reasonable market value of the company is 5.046 billion yuan, and the corresponding target price is 8.75 yuan, giving it a “buy” rating for the first time.

Risk warning

Innovative drug development progress falls short of expectations, increased product competition causes sales to fall short of expectations, and the risk that the company's medium- to long-term profitability will decline.