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Kangfang Biotech released its 2024 mid-year report. The first half of the year achieved revenue of 1.025 billion yuan, a year-on-year decrease of 72.13%. Among them, product revenue was 0.939 billion yuan, an increase of 23.96% over the previous year, achieving net profit to mother of -0.239 billion yuan (2.525 billion yuan for the same period in 2023).

Increased product revenue, decreased licensing revenue

The company's product revenue reached 0.939 billion yuan in 2024H1, of which Cardonelli achieved revenue of 0.706 billion yuan, an increase of 16.50% over the previous year, and revenue for post-line cervical cancer indications; after being approved for non-small cell lung cancer indications after EGFR treatment progressed in May 2024, it achieved 0.103 billion yuan in revenue. License revenue for the current period decreased. 2024H1 license revenue was 0.085 billion yuan, and 2023H1 was 2.919 billion yuan.

Oncology and non-oncology products have entered the harvest period

The cancer product line Cardonil declared marketing applications for first-line gastric cancer and first-line cervical cancer in January and April 2024, respectively. In the first-line PD-L1 negative non-small cell lung cancer phase III clinical enrollment, Evosil obtained positive results compared to Pabolizil in phase III clinical patients with first-line PD-L1 positive NSCLC, and submitted a marketing application in July 2024. Partner SUMMIT promoted 2 overseas phase III clinical trials. In the non-oncology business, the company's marketing applications for PCSK9 monoclonal antibodies and IL-12/IL-23 monoclonal antibodies are under review. The new indications for the products already on the market and the new products are expected to drive the company's revenue growth.

Maintain a “buy” rating

We expect the company's revenue for 2024-2026 to be 2.822/4.4/6.412 billion yuan, respectively, up -37.66%/55.96%/45.72% year-on-year; net profit to mother of -0.345/0.24/0.61 billion yuan, gradually reversing losses. EPS will be -0.40/0.28/0.70 yuan/share, respectively. In view of the company's leading progress in the launch of dual-antibody products, they are optimistic about the company's long-term development and maintain a “buy” rating.

Risk warning: First-line indications for AK104 fell short of expectations; AK104 price drop exceeded expectations; AK112 overseas progress fell short of expectations; risk of rapid iteration of advanced therapies