Incident: Recently, the company released its 2024 semi-annual report. In 2024 H1, the company achieved operating income of 0.923 billion yuan, a year-on-year increase of 29.60%; net profit attributable to shareholders of listed companies was 75.5945 million yuan, turning a year-on-year loss into a profit; and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss of 55.1349 million yuan.

Actively promote product release. The company actively promotes the listing, selection of new clinical drugs, and “dual channel” reporting of newly launched drugs under negotiation, such as etrapopa ethanolamine tablets, injectable isaconazole sulfate, and torimifene citrate. The improved new drug dexlansoprazole for injection was approved and added to the national health insurance negotiation catalogue, further improving drug accessibility and economy, and benefiting more patients. At the same time, the company has accelerated the clinical value of the drugs posaconazole injection/enteric tablets, polymyxin E sodium mesylate for injection, and pibasilil capsules, which are listed in the national negotiation catalogue, and has achieved rapid revenue growth.

Research and development continues to advance. The marketing application for ASK120067 for first-line treatment indications for NSCLC was accepted by the State Drug Administration in August 2024; the marketing license application for second-line treatment indications has been submitted in addition to relevant research data in accordance with the requirements of the State Drug Administration and is under review and approval. ASKB589 has conducted multiple phase I/II clinical studies, including single drugs, combined chemotherapy, combined PD-1 inhibitors, and chemotherapy to treat more than 200 cases of gastric cancer. Currently, phase III clinical studies on first-line gastric cancer treatment have been carried out in China. In April 2024, the phase I dose escalation clinical trial data for treating advanced solid tumors with ASKC202 was first presented at the 2024 AACR annual meeting. ASKC202 was well tolerated. None of the subjects in any dose group had dose-limiting toxic reactions (DLT), and the vast majority of treatment-related adverse events were grade 1 or 2; ORR and DCR were 62.5% (5/8) and 75.0% (6/8), respectively.

Investment advice: The company has a mature and complete R & D, production and commercialization system. We expect the company to achieve operating income of 1.602/1.814/2.235 billion yuan and net profit to mother of 0.112/0.189/0.334 billion yuan in 2024-2026, maintaining the “gain” rating.

Risk warning: risk of changes in industry policies, risk of new drug development, risk of uncertain marketing of products under development, risk of poor progress in internationalization, risk of market competition, etc.