Cnstock APP learned that CICC released a research report stating that due to the increase in performance as a result of increased down payment cooperation, the profit forecast for Hansoh Pharma (03692) in 2024 was raised by 30.5% to 4.472 billion yuan, and the profit forecast for 2025 was raised by 17.8% to 4.19 billion yuan. The rating of "outperform industry" was maintained, and according to the SOTP valuation method, considering the upward revision of profit forecasts and the temporary pressure on the company's generic drug sector, the target price was raised by 18.6% to 21.12 Hong Kong dollars. The company's revenue during the period was 6.506 billion yuan, a year-on-year growth of 44.2%; the net profit attributable to the mother was 2.726 billion yuan, a year-on-year growth of 111.5%, which exceeded the bank's expectations, mainly due to the first payment accounting for products licensed outside.

CICC's main points are as follows:

The proportion of revenue from innovative drugs continues to increase.

In the first half of 2024, the company's revenue from innovative drugs and cooperative products was 5.032 billion yuan, an increase of 80.6% year-on-year, and the proportion increased to 77.4% (+15.6pct YoY). Among them, the revenue from cooperative products was about 1.3 billion yuan, mainly the down payment for the B7H3 ADC licensed to GSK. Excluding this down payment, the company's revenue was about 5.2 billion yuan, an increase of about 15% year-on-year. Segment-wise: 1) the revenue of the anti-tumor business was 4.475 billion yuan (+75.2% YoY), and the bank expects that the revenue of Iremy in the first half of 2024 will maintain a 20% year-on-year growth; 2) the revenue of the anti-infective business was 0.701 billion yuan (+16.8% YoY), the revenue of the central nervous system business was 0.73 billion yuan (+4.6% YoY), and the revenue of other businesses was 0.597 billion yuan. Sales expenses in the first half of 2024 were 1.72 billion yuan (+3.1% YoY), management expenses were 0.35 billion yuan (+3.1% YoY), and R&D expenses were 1.2 billion yuan (+28.7% YoY).

The R&D pipeline is progressing rapidly.

The company's core product Iremy has added two new indications for NSCLC treatment and maintenance treatment for stage III inoperable NSCLC patients after concurrent radiotherapy, and the NDA has been accepted; the company's GLP-1/GIP dual-target has announced positive results for the phase IIa trial, and the bank expects it to start the phase III clinical trial in the second half of 2024. In the early-stage projects, the company has 4 key innovative drugs approved for clinical trials, namely HS-10501 (type 2 diabetes and adult obesity), HS-10398 (immunoglobulin A nephropathy and membranous nephropathy), HS-10504 (advanced NSCLC), and HS-20137 (psoriasis). In terms of external cooperation, in 2024, the company expanded its cooperation with PUMAS for the EGFRxcMET dual antibody, introducing HS-20137 from Qiongxin Bio and LP-168 (BTKi) from Lupin for non-tumor indications in the greater China region.

Focus on the further increase in the volume of innovative drugs in 2024 and the early clinical pipeline data.

In 2023, the company's 7 approved innovative drugs have been included in the national medical insurance catalog. The company expects that the proportion of innovative drug revenue in 2024 will exceed 70%. The bank believes that in 2024, the company will continue to improve its per capita efficiency based on its existing commercial team. The company has a rich pipeline of innovative drugs to support future revenue growth. The core indications of the oncology sector are still in the expansion stage, and the GLP-1/GIP dual-target clinical phase III trial is about to be initiated. At the same time, the central nervous system and metabolic pipeline products are actively progressing. It is recommended to pay attention to the release of clinical data.