CITIC Securities released a research report stating that it maintains HANSOH PHARMA (03692) as "outperforming the industry," and is Bullish on the company's future expansion abroad, maintaining a Target Price of HK$21.12. Due to the authorization cooperation's initial payment possibly being confirmed in 2025, the firm has lowered its expectations for 2024 authorization revenue, while maintaining its expectations for 2025 authorization fees, thus reducing the 2024 profit forecast by 9.7% to 4.04 billion yuan, while keeping the 2025 profit forecast unchanged. On December 18, 2024, the company announced granting Merck global exclusive licensing for HS-10535 (oral GLP-1 receptor agonist).

CICC's main points are as follows:

A GLP-1 collaboration with MSD has been reached, with a total transaction amount exceeding 2 billion dollars.

According to the agreement, Merck obtains global exclusive licensing rights for the development, production, and commercialization of HS-10535; the company will receive a $0.112 billion upfront payment, up to $1.9 billion in milestone payments, and royalties based on product sales. Under certain conditions, the company may jointly promote or exclusively commercialize HS-10535 in China. The firm expects this transaction will enhance the company’s performance in 2025.

Several GLP-1 products are in development, and progress is ahead of domestic companies.

The company has invested in the GLP-1 field with polyethylene glycol-liraglutide injection (GLP-1 once-weekly formulation, Type II diabetes, launched in 2019), HS-20094 (GIP/GLP-1R dual-target weekly formulation, diabetes/weight loss Phase II), HS-10501 (oral GLP-1R agonist, obesity/diabetes Phase I), and the newly authorized HS-10535 (oral GLP-1R agonist, preclinical). The firm believes this collaboration represents MSD's high recognition of the company's GLP-1 R&D capabilities. From Q1 to Q3 of 2024, global sales of GLP-1 drugs have exceeded $30 billion and are in a rapid growth phase, with multiple clinical trials indicating that dual/multi-target and oral GLP-1RA drugs have advantages in efficacy or compliance; the firm is Bullish on the company’s existing GLP-1 pipeline layout.

In recent years, the company's BD pace has accelerated, continuously broadening the R&D pipeline.

After achieving two major collaborations with GSK on HS-20089 (B7-H4 ADC) and HS-20093 (B7-H3 ADC) by the end of 2023, the company continues to efficiently execute its BD strategy in 2024: 1) Expanding cooperation with Promis to develop ADC based on HS-20117 (EGFR/c-Met ADC); 2) Obtaining development and commercialization rights for HS-20137 (IL-23p19) in Greater China from Quanxin Biotech; 3) Acquiring development and commercialization rights for LP-168 (BTKi) non-tumor indications in Greater China from Lupu Pharmaceutical. To date, the company has accumulated over 20 BD projects and is accelerating its international expansion through overseas licensing.

Risks: Product commercialization lower than expected; intensified competitive landscape; clinical data below expectations.