Clinical development of spoximab is progressing rapidly, and preparations are being made for commercialization. The marketing application for the treatment of moderate to severe atopic dermatitis (AD) of Connoya's core product, IL4R monoclonal antibody (CM310), was accepted by the FDA in December 23 and included in priority review. It is expected to be approved in the second half of '24, making it the first domestically produced IL4R monoclonal antibody approved for marketing. Furthermore, spoximab revealed excellent long-term follow-up data for AD in adults. Marketing applications for CrSWnP and allergic rhinitis indications have also been accepted by the CDE. Among other indications, phase 3 clinical trials for adolescent AD, prurigo nodular, etc. are ongoing. Sproximab is leading the way in development, covering a wide range of people, and is expected to become a major product in the field of self-protection.

As of July 2024, the company's commercialization team is close to 200 people and is actively preparing for commercialization of sipcibalizumab.

The pipeline layout is rich, and clinical progress is progressing smoothly. The company's CLDN18.2 ADC (CMG901) early clinical data is excellent. Our partner AstraZeneca has initiated a global multi-center phase 3 clinical trial for 2/3L gastric cancer, and phase 2 clinical exploration of combined medication in solid tumors such as pancreatic cancer and gastric cancer. CM313 (CD38 monoclonal antibody) has excellent IIT clinical data for ITP indications, and continues to advance ph1b/2a clinical trials for SLE indications. CM512 and CM536 have reached an external licensing agreement and are about to enter clinical development.

Expenses are controlled reasonably, and there is plenty of cash on hand. Conoah achieved revenue of 0.055 billion yuan (-83%) in the first half of 2024. The decline was mainly due to the confirmation of a down payment for cooperation with AstraZeneca in the same period last year; net profit to mother was -0.337 billion yuan (0.048 billion yuan in the same period last year). The company's R&D expenses were 0.331 billion yuan (+33%), and management expenses were 0.09 billion yuan (+9%). As of June 30, 2024, the total amount of the company's cash and cash equivalents was about 2.58 billion yuan, a decrease of only about 0.14 billion yuan compared to the end of 2023.

The company has plenty of cash, reasonable expenditure control, and sufficient resources to promote the development and commercialization of products under development.

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

Investment advice: Maintain an “better than the market” rating.

The company's blockbuster product is expected to be approved for marketing within the year, becoming the first IL4R monoclonal antibody to be approved for marketing in China; in addition to atopic dermatitis, sipkibasumab is also leading the way in many self-immunization indications. The company's early R&D pipeline progressed smoothly, and there was plenty of cash on hand. We maintain our profit forecast for the next three years. We expect 2024-26 revenue of 0.104/0.649/1.383 billion yuan, a year-on-year increase of -70.6%/524.5%/112.9%, net profit to mother -0.641/-0.775/ -0.354 billion yuan, maintaining a “superior to the market” rating