Drugs under development target not meeting clinical needs. Yifang Biotech was established in 2013, leading clinical pipeline progress. Its core competitiveness lies in its ability to develop innovative drugs, comprehensively improve the success rate of the company's products under development, and shorten the drug development cycle. The clinical development progress of core products is among the highest in the world or China.

Befortinib and the KRAS G12C inhibitor D-1553 are close to commercialization, paving the way for the company's development. The two drugs under development are close to commercialization, which is expected to provide a stable cash flow for the company. Currently, befortinib marketing applications are being approved. D-1553 is undergoing registered clinical trials and is expected to be marketed by the end of 2023. The commercial interest in third-generation EGFR TKI befortinib has been authorized to Betta Pharmaceuticals. Single-arm registered clinical trials of befortinib as a second-line treatment for NSCLC and first-line NSCLC registration trials have been completed, and the marketing application has been accepted by NMPA. D-1553 has published data from many early clinical studies, and clinical progress is progressing smoothly. We expect the two drugs to be approved for listing in the past 2 years, which is expected to provide the company with stable cash flow and lay the foundation for the company's development.

Clinical trials of oral SERD D-0502 and URAT1 inhibitor D-0120 are progressing steadily, which is expected to open up room for the company to grow

The two drugs under development target major indications, have high commercial value, and are expected to greatly increase the company's revenue expectations. D-0502 has entered phase III clinical trials and is expected to be completed in 2025; D-0120 has initiated phase IIb clinical trials. D-0502 is an oral SERD drug that has advantages in dosage form and use compared to the already marketed fluvestrel group (intramuscular injection). D-0120 is used to treat gout patients. The incidence of gout has increased rapidly in recent years. In 2020, the number of patients with hyperuricemia and gout in China reached 170 million. However, the safety of therapeutic drugs that have already been marketed is insufficient, and there is an urgent need for a drug that is safe and effective for long-term use. URAT1 is a key development target for various companies, and Yifang Biotech's next-generation URAT1 inhibitor D-0120 has shown good efficacy and safety in early clinical trials.

Overseas clinical trials of various drugs under development are being carried out simultaneously, which is expected to break the company's growth ceiling. Yifang Biotech's various clinically active drugs will carry out single-drug and combined clinical trials overseas. We expect that with the early disclosure of data one after another, if licensing cooperation is reached overseas, the company is expected to share the global drug market and further increase its growth. Among them, D-1553 is being studied overseas for multiple solid tumors with a single drug and clinical exploration of its combined use with keytruda, D-0502 monopharmaceutical and CDK4/6 inhibitors, and combined trials of D-0120 with allopurinol are also underway.

Profit Forecasts and Investment Ratings

We expect the company's revenue from 2022 to 2024 to be 100 million, 25 million yuan, 90 million yuan, and achieve net profit of -484 million yuan, -497 million yuan, and -474 million yuan. Corresponding to a reasonable market capitalization of RMB 21,439 billion and a target price of RMB 37 billion, covered for the first time, it was given a “buy” rating.

Risk warning: operating risks, product development risks, product commercialization risks, policy and regulatory risks, measuring subjective risks. The company has recently experienced changes in stock prices