Key investment points

Incident: Sales revenue grew rapidly, and operating cash flow turned positive. The total revenue of 2024Q3 reached 1.002 billion US dollars (+28% year over year, same below), and the revenue of 2024Q1-Q3 was 0.75/0.93/1 billion US dollars respectively (+7.6% month-on-month in Q3), contributing more than 76% to the European and American markets. Among them, global sales of zebutinib reached 0.69 billion dollars (+93%) and US sales of 0.504 billion dollars (+87%), mainly due to increased use of the product in CLL patients; European sales of 0.097 billion dollars (+141%). Sales of tirelizumab in 2024Q3 were $0.167 billion (+16% YoY). 2024Q3 R&D expenses were 0.496 billion US dollars (+10%), the R&D cost rate was 52% (55% in the same period last year); the sales management expenses ratio was 48% (45% in the same period last year). As of the first three quarters, GAAP had a net loss of $0.121 billion ($0.215 billion in the same period last year), and the results were in line with our expectations.

Leaders in the BTKi field, Bcl2i and BTK CDAC have established leading positions in hematoma: 1. Zebutinib accounts for about 29% of the global BtKi market (about 34% for acatinib and 34% for ibutinib), quickly seizing the ibutinib market. 2. Sonrotoclax (potential best-in-class Bcl2i):

Compared to Vinecla, it has a longer-lasting remission rate and a shorter half-life without cumulative toxicity. Phase 3 registration studies for 1L CLL are ongoing and are expected to become the new standard treatment for 1L CLL. It is expected that 2025H1 will begin the first batch of patients enrolled in the global phase III clinical trials of R/R CLL and R/R MCL. 3. BGB-16673 (BTK CDAC): More than 350 patients have been clinically enrolled, and it has been recognized as a fast track by the US FDA. We expect 2025H1 to launch phase III clinical trials to treat R/R CLL.

With tirelizumab as the core, expand new molecules for solid tumors: early potential FIC/BIC molecules include: 1. Lung cancer: EGFR x MET triple antibody, MTA synergy PRMT5 inhibitor, EGFRCDAC; 2. Female tumor: CDK4 inhibitor, CDK2 inhibitor, B7H4 ADC; 3. GPC3 x 4-1BB dual antibody, CEA ADC, MUC-1 x CD16A dual antibody, pan-KRAS inhibitor, FGFR2b ADC; 4. Inflammation and Immunity: IRAK4 CDAC.

Profit forecast and investment rating: Considering the continued rapid growth in sales of the company's core products, we maintain the forecast of the company's revenue of 25.53 billion yuan, 34.06 billion yuan, and 42.38 billion yuan for 2024/2025/2026. The company's catalyst continues to be realized, overseas markets are further opened up, growth certainty is high, and the “buy” rating is maintained.

Risk warning: Sales revenue falls short of expectations; overseas registration and development failure; and AbbVie's patent disputes, etc.