SKB264 has made positive clinical progress both domestically and globally. Trop2 ADCSKB264/MK2870/SAC-TMT, the core product of Colombotech, submitted a marketing application for TNBC 3L indications at the end of 2023 and included in priority review; the marketing application for eGFRM NSCLC 3L was accepted in August 2024.

Phase 3 registered clinical trials for SKB264 treatment of TNBC 1L, HR+/HER2-BC 2L+, and NSCLC 1L are ongoing. Furthermore, SKB264 read excellent clinical data at this year's ASCO annual meeting. The company's partner MSD has launched 10 SKB264 phase 3 clinical trials worldwide. As one of MSD's important assets in the ADC field, SKB264 is expected to become the core product of the next generation of IO+ADC therapies in the case of single drugs or combination K drugs.

Early pipelines are moving forward. MSD has exercised its exclusive right to choose SKB571, obtained SKB571's rights outside of Greater China, and paid the company $37.5 million. SKB571 is a novel dual-antibody ADC in the preclinical stage. It mainly targets various solid tumors such as lung cancer and gastrointestinal tumors, and will submit an IND application in the near future. Another of the company's early molecules, SKB518, entered Phase 1 clinical trials in June 2024. At the same time, MSD has withdrawn its global interest in SKB315, and the company will continue to advance the subsequent development of SKB315.

We have plenty of cash on hand and are actively planning domestic commercialization. Colombotai achieved revenue of 1.383 billion yuan (+32%) in the first half of 2024, mainly from license and cooperation agreement revenue; gross profit of 1.077 billion yuan (+59%), and net profit to mother of 0.31 billion yuan (loss of 0.031 billion yuan for the same period last year). R&D expenses for the first half of the year were 0.652 billion yuan (+33%), management expenses were 0.066 billion yuan (-26%), and sales expenses were 0.041 billion yuan (0 for the same period last year). As of June 30, 2024, the company's cash and financial assets were approximately $2.9 billion ($2.53 billion at the end of 2023). The increase was due to cooperative revenue in the first half of the year and placement of Hong Kong stocks. The company currently has more than 110 commercial team members. As SKB264, A166, A167 and other products are expected to be approved for sale from the second half of this year to the first half of next year, it is expected that the commercialization team will continue to expand.

Risk warning: Innovative drug development has failed or is progressing less than expected; commercialization falls short of expectations.

Investment advice: Raise profit forecasts and maintain the “better than the market” rating.

Since the company has no products approved for listing, the revenue mainly comes from MSD's cooperation funds, and the first half of the year's cooperative revenue is high, we raised our profit forecast for the next three years. We expect 2024-26 revenue of 1.648, 1.555, 2.393 billion yuan (previous values 0.86, 0.984, 1.93 billion yuan), up 7.0%, -5.7%, and 53.9% year-on-year; 2024-26 net profit -0.296, -0.558, -0.247 billion yuan (previous value- 0.682, -0.7, -0.461 billion yuan), maintaining the “superior to the market” rating.