Key points of investment

Incident: The company released its 2021 annual report. During the reporting period, the company achieved operating income of 10.29 million yuan, a year-on-year decrease of 62.95%, net profit loss of 670 million yuan (net loss of 587 million yuan in 2020), net loss of net profit of 682 million yuan after deduction of non-return mother's net profit (net loss of 393 million yuan in 2020).

Comment: The company is deeply involved in differentiation and pioneering drug development, and DZD9008 received “breakthrough therapy” from the FDA

Certification: DZD4205 received FDA “fast track” certification, and DZD1516 published excellent brain penetration data at SABCS, reflecting the company's R&D platform advantages in translational medicine, EGFR drug research, and brain penetration.

Profit prediction and rating: The company is deeply involved in translational medicine, focuses on the development of pioneering drugs and breakthrough treatments, and has formed a rich product line to maintain a high level of competitiveness in the industry. As DZD9008 and DZD4205 related international key clinical trials progress and subsequent R&D pipelines continue to advance, the company is expected to have a variety of globally approved innovative drugs. As R&D investment is strengthened, we have adjusted our profit forecasts. We expect the company's EPS for 2022-2024 to be -2.09 yuan, -2.47 yuan, and -2.65 yuan respectively, maintaining the “prudent increase” rating.

Risk warning: New drug development falls short of expectations, macroeconomic policy risks.