Results for the first half of 2024:2024H1, the company achieved operating income of 6.506 billion yuan, an increase of 44.2% year on year; R&D expenses were 1.196 billion yuan, up 28.7% year on year, accounting for 18.4% of revenue; net profit to mother was 2.726 billion yuan, up 111.5% year on year.

Innovation and transformation were successful, and revenue and profit increased: in the first half of 2024, the company's revenue of innovative drugs and cooperative products was 5.032 billion yuan, an increase of about 80.6% over the previous year, accounting for 77.4% of revenue. The company's seven approved innovative drugs and nine corresponding indications have all been included in the national health insurance catalogue. As of June 30, 2024, there are more than 50 clinical trials of innovative drugs being carried out, involving more than 30 innovative drug products; in addition to being driven by internal R&D, the company is also actively seeking external licensing opportunities for its own pipeline products, and the BD agreement signed with GSK received a down payment of $0.185 billion, which is included in the cooperative revenue.

Product revenue in the anti-tumor sector reached approximately RMB 4.475 billion, accounting for 68.8% of total revenue.

1) Third-generation EGFR-TKI amirol (ametinib mesylate tablets), the two indications for second-line treatment of EGFRT790M+ advanced NSCLC and first-line treatment of EGFR+ advanced NSCLC, were included in the 2022 edition of national health insurance in January 2023; in July of this year, EGFR mutant NSCLC applied for adjuvant treatment indications after surgery; in August, EGFR mutant lung cancer indications with no disease progression after radical radiotherapy containing platinum were listed;

2) On the ADC side, HS-20093 (B7-H3 ADC) signed an exclusive license agreement with GSK and was recognized as a breakthrough therapy by the FDA in August. The first phase of the ARTEMIS-001 clinical trial involved more than 200 patients to evaluate the safety, tolerability, and initial antitumor activity of HS-20093 for locally advanced or metastatic solid tumors (including recurrent or refractory ES-SCLC). The test results will be announced at the 2024 World Lung Cancer Conference (WCLC) to be held in September 2024. A phase II trial for treating bone and soft tissue sarcoma was presented at the 2024 ASCO annual meeting.

Establishing a leading position in the field of treatment of major and unmet needs 1) Metabolism and other diseases: Revenue is approximately RMB 0.597 billion, accounting for 9.1% of total revenue. The new Class 1 drug HS-10501 tablets developed by the company were clinically approved in January 2024 to treat type 2 diabetes and adult obesity; at the 2024 ADA (American Diabetes Association) annual meeting, HS-20094 (GLP-1/GIP) phase IIa results showed good safety and tolerability, and showed efficacy in reducing sugar and weight loss.

2) Anti-infective sector: Revenue is approximately RMB 0.701 billion, accounting for 10.8% of total revenue.

3) In the field of central nervous system diseases: Revenue was approximately RMB 0.733 billion, accounting for 11.3% of total revenue.

Internationalization has reached a new level, overseas trips are gradually realized, and BD is rich in pipeline reserves:

1) As of June 30, 2024, the company has introduced a total of 11 cooperation projects, 9 of which are in the clinical stage, and the remaining 2 projects have entered the commercialization stage. In the first half of 2024, the company generated BD project expenses and included R&D expenses of about 0.13 billion yuan. According to the licensing agreement signed between Hanson and GSK on December 20, 2023, Hanson received a down payment of the BD license fee from GSK to be included in the partnership revenue of $0.185 billion.

2) In terms of external cooperation, in 2024, Hanson Pharmaceuticals reached a total of 3 BD collaborations: in March, it expanded cooperation on HS-20117 (eGFR/c-Met ADC) drugs within the global cooperation region; in April, it reached a cooperation with Quanxin Biotech to develop and commercialize the HS-20137 monoclonal antibody in China (including Hong Kong, Macau and Taiwan); and obtained the rights of Lupeng Pharmaceutical LP-168 (BTKi) in China (including Hong Kong, Macau and Taiwan) in August.

Profit forecast: The company has a rich innovation pipeline. We expect the company's revenue from 2024 to 2026 to be 12.25, 12.64, 14.885 billion yuan, with year-on-year growth rates of 21.24%, 3.21%, and 17.73%; net profit to mother is 4.1, 3.8, and 4.65 billion yuan, with year-on-year growth rates of 25.13%, -7.37%, and 22.39%; maintaining a “buy” rating.

Risk warning: risk of clinical development failure, risk of deteriorating competitive landscape, risk of sales falling short of expectations, industry policy risk, etc.