Product sales revenue continues to grow. On August 29, Kangfang Biotech announced the 2024 interim results.

As of June 30, the company achieved total revenue of 1.025 billion yuan, including product sales revenue of 0.939 billion yuan, a year-on-year increase of 23.96% and license fee revenue of 85.318 million yuan; gross profit of 0.943 billion yuan, of which gross profit from product sales was 0.858 billion yuan, an increase of 26.03%; and the company lost 0.249 billion yuan in the first half of the year.

Evosimab has been approved for marketing, and we look forward to the release of head-to-head K drug data. The company's evosimab was approved for marketing in May 2024 to treat EGFR mutant locally advanced or metastatic non-squamous NSCLC with EGFR TKI resistance. Within one week of approval, evosimab achieved the first batch of sales revenue of 0.103 billion yuan as of June 30. At the end of May 2024, the phase III clinical results of the first-line PD-L1 positive NSCLC were obtained with evosimab head-to-head K drug monotherapy. In July, the company submitted SNdA for this indication. It is expected that the company will announce the complete clinical data of this trial at the WCLC conference. In addition, evosimab combined chemotherapy is being efficiently enrolled in phase III clinical trials of first-line NSCLC compared to tirizumab combined with chemotherapy. The company has also initiated phase III clinical trials for first-line cholangiocarcinoma and CD47 for first-line head and neck squamous cell cancer, and plans to conduct phase III clinical trials of combined chemotherapy for first-line pancreatic cancer. Overseas, two global multi-center phase III clinical HarmonI and HarmonI-3 trials are continuing to enroll, and it is expected that evosimab will become a cornerstone product for tumor immunotherapy.

Sales of cardonilizumab are strong, and two major first-line NDAs have been accepted. In the first half of the year, cardonilizumab sales revenue was 0.706 billion yuan, an increase of 16.50% over the previous year. In January 2024, the first-line indication of cardonilizumab for gastric cancer was accepted, and in April 2024, the first-line indication of cardonilizumab for cervical cancer was accepted. In addition, the company continues to expand the range of indications for cardonilizumab. Currently, it has deployed 16 indications through combined medication. Phase III clinical trials such as first-line PD-L1 negative NSCLC, post-operative support for hepatocellular carcinoma, second-line gastroesophageal cancer, and intermediate to advanced liver cancer are underway. It is expected that the expansion of indications will further boost the sales volume of cardonilizumab.

Follow-up pipelines are abundant, and R&D progress continues. The indications for piamprizumab third-line nasopharyngeal cancer have been approved, and SNdA has been submitted for first-line nasopharyngeal cancer; the PSCK9 drug inucimab (AK102) and the IL-12/IL-23 drug iroximab (AK101) are currently in the NDA review phase. The VEGFR-2 drug proximab (AK109), the CD47 drug levalizumab (AK117), and the IL-4Rα drug mandoximab () are currently in phase III clinical phase III. IL-17 AK111 AK120 CD73/LAG-3 AK137 and HER3 ADC AK138D1 have submitted IND applications.

Investment advice: We expect the company to achieve operating income of 2.774/4.053/5.9 billion yuan in 2024/2025/2026, achieve net profit of 0.341/0.427/0.701 billion yuan, and maintain the “recommended” rating.

Risk warning: Market competition increases risk; risk of product development falling short of expectations; risk of overseas legal and regulatory risk; risk of changes in review requirements; risk of changes in health insurance policies and entry policies.