Key points of investment

Results for the first half of 2024: No drug sales revenue in the first half of 2024, sales expenses were 5.769 million yuan, up 280% year on year; management expenses were 21.367 million yuan, down 46% year on year; R&D expenses were 87.924 million yuan, down 41% year on year; as of June 30, 2024, the company's cash balance was 0.492 billion yuan.

Commercialization of deuterium enzalutamide is imminent: In the first half of 2024, CDE completed the review of the pharmacological toxicology, clinical, statistical, clinical pharmacology and compliance departments of deuterium enzalutamide softgels (HC-1119), and drug registration checks have been completed. The company is actively preparing for commercialization. Currently, the head of the marketing core team is in place. At the same time, it is rapidly establishing a commercial channel network, preparing commercial batch drug production, and fully preparing for the launch of new drugs. If the product is approved, it will be the first domestically produced innovative drug approved to be marketed to treat abiraterone/mCRPC after chemotherapy.

The research pipeline is progressing smoothly:

1) HP518: The first oral AR PROTAC drug under clinical trial in China. It is currently being enrolled in clinical trials for advanced prostate cancer I/II; Australian clinical phase I data was selected for the January 2024 ASCO-GU conference and selected for the American ASCO annual conference; in June 2024, it was granted fast track certification by the FDA for the treatment of breast cancer. As of June 30, 2024, no similar target products have been approved for marketing at home or abroad.

2) HP501 (URAT1 inhibitor): Clinical II/III trials are being actively promoted for the treatment of hyperuricemia/gout; the IND application for combined drug use in China (combined with xanthine oxidase inhibitors) was approved by the NMPA in April 2024.

3) Other project progress: HP537 (p300/CBP inhibitor) is in phase I, and the US clinical trial application was approved by the US FDA in July 2024; HP560 (BET inhibitor) is in phase I to treat myelofibrosis; HP568 (ER target) is currently in IND reporting, intended for ER+ breast cancer; HP515 (THRbeta agonist) in IND registration, intended for non-alcoholic steatohepatitis (NASH).

Profit forecast: The company's core products will be launched soon, and we expect revenue of 0.163 and 0.363 billion yuan for 25-26.

Maintain a “buy” rating.

Risk warning: Risk of clinical development failure, risk of sales falling short of expectations, risk of clinical development progress falling short of expectations.