Befotinib and KRAS G12C inhibitors have been approved and are expected to enter the commercial release phase

Befotinib has been included in the medical insurance list for first-line and second-line treatments for NSCLC. The commercial rights for third-generation EGFR TKI befotinib were granted to Betta Pharmaceuticals, and second-line treatment indications have been included in the 2023 medical insurance catalogue; first-line NSCLC indications were successfully included in the 2024 medical insurance catalogue through this year's health insurance negotiations, and it is expected to achieve good sales growth in 2025.

The NSCLC indications for the KRAS G12C inhibitor G12C inhibitor Gesolese (D-1553) developed independently by the company were approved for marketing. In China, about 2.9-4.3% of NSCLC patients have KRAS G12C mutations. This group of patients progresses rapidly and has poor prognosis. The benefits from existing non-targeted treatment options are limited, and there are unmet clinical needs. Currently in mainland China, only the second-line treatment for NSCLC patients with KRAS G12C mutations has been approved for marketing with the same target. No imported drugs with the same target first occupy the domestic market. The competitive landscape is good, and sales prospects are worth looking forward to.

TYK2 inhibitor data is excellent, and there are varieties under development such as oral SERD, which has room for imagination

The company's D-2570 (TYK2) psoriasis phase II clinical trial data is excellent. The data performance of D-2570 is also superior to similar TYK2 inhibitors that have been marketed, and is comparable in effect to antibody biopharmaceuticals (such as anti-IL-17A, anti-IL-23 antibodies) (non-head-to-head). When D-2570 was treated for 12 weeks, the response rate of PASI 75 was 85.0%-90.0% in the low, medium, and high dose groups, which was significantly higher than 12.5% in the placebo group, reaching the main end point of this study. In terms of other efficacy indicators, the PASI 90 response rate for the three dose groups was 70.7%-77.5%, and the placebo group was 5.0%. The PASI 100 response rate was 39.0%-50.0%, and the placebo group was 2.5%. The response rate for sPgA 0/1 was 80.5%-87.5%, and 20.0% in the placebo group.

HR+/HER2 patients corresponding to endocrine treatment are the most common molecular subtype among breast cancer patients. According to the national cancer report recently released by the China National Cancer Center in 2024, breast cancer is the second most common type of cancer in women, with a (rough) incidence rate of 51.17/100,000 people. It is estimated that 0.357 million new cases will occur each year. HR+/HER2 patients account for 70%, and the patient base is large.

D-0502 is an oral selective estrogen receptor degrading agent (SERD) independently developed by the company to treat breast cancer with positive estrogen receptor (ER) and negative human epidermal growth factor receptor 2 (HER2). Currently, the single drug is undergoing phase III registered clinical trials in China, and the progress is in the first tier among domestic products.

D-0120 is a URAT1 inhibitor independently developed by the company to treat hyperuricemia and gout.

The drug has successfully completed phase IIa clinical trials in China, and clinical trials in China and the US are currently progressing according to plan. The results of the phase IIa test showed that D-0120 had remarkable curative effects. The rate of reducing blood uric acid was as high as 80%, showing excellent uric acid lowering effects.

Profit forecasting and investment ratings

Considering D-1553's successful approval for listing, the company is expected to receive the milestone payment from Chia Tai Tianqing. We raised the company's revenue in 2024 from 0.09 billion yuan to 0.13 billion yuan, and the net profit to mother in 2024 from -0.467 billion yuan to -0.292 billion yuan. At the same time, considering that the company granted D-1553 to Chia Tai Tianqing, including production and commercialization rights in mainland China, the company's projected revenue for 2025 was lowered from 0.428 billion yuan to 0.23 billion yuan. The estimated operating income and net profit to the mother in 2026 are 0.357 billion yuan and -180 million yuan respectively. Maintain a “buy” rating.

Risk warning: Risk that sales of marketed products fall short of expectations, risk that R&D progress falls short of expectations, risk of not being profitable, new drug development test results and commercialization conditions are uncertain