To cancel the related-party transaction to protect the interests of investors. Innovent previously announced its wholly-owned subsidiary Fortvita would sell 20.39% of shares for a transaction price of US$20.5mn, with the subscribing party being Lostrancos. Dr. Yu Dechao, the Chairman and Executive Director, will hold 82.93% of Lostrancos. Fortvita will serve as Innovent's platform to drive international business, primarily focusing on early-stage pipelines. Due to shareholder concerns regarding this related-party transaction, the Company terminated the transaction on 3 Nov. We believe this move demonstrates Innovent's full respect for the opinions of investors and protects the interests of shareholders. Mgmt. indicates Fortvita currently has no plans for equity financing. We are confident that Innovent will maintain good corporate governance.

Strong product sales growth continued. In 3Q24, Innovent continued its strong sales momentum, with total product sales increasing 40%+ YoY to more than RMB2.3bn. In 9M24, Innovent recorded more than RMB6.0bn revenue from product sales, representing 74% of our previous full-year estimate, in line with our expectations. According to Eli Lilly, sales of sintilimab in 3Q24 reached a record high of US$150mn (+22% QoQ, +30% YoY), bolstered by broad NRDL coverage. In 9M24, sales of sintilimab were US$390mn (or RMB2.8bn), +39% YoY. We expect sintilimab to maintain its leading position in China and forecast sales of sintilimab to reach RMB3.69bn in 2024E (+34% YoY). The non-IFRS EBITDA loss narrowed significantly to RMB161mn in 1H24 from RMB267mn in 1H23. With fast- growing product sales and consistently improving operating efficiency, we expect Innovent to continue narrowing its loss and to achieve EBITDA breakeven in 2025E.

Broad commercial portfolio to drive further growth. Innovent's portfolio now includes 11 marketed products, with the approval of taletrectinib (ROS1 TKI) in 2H24, bringing the number of commercial products to 12. Additionally, Innovent has four assets under NDA review, including mazdutide (GLP-1/GCGR, for obesity and diabetes, to be approved in 1H25 and 2H25, respectively), IBI311 (IGF-IR, for thyroid eye disease), limertinib (3G EGFR-TKI, for NSCLC), and IBI112 (IL-23p19, for psoriasis). With a robust portfolio and strong commercial capabilities, mgmt. targets to realize RMB20bn sales in 2027.

Out-licensing potential for innovative drug candidates. IBI363, a potential FIC PD-1/IL-2 bsAb, has demonstrated encouraging signals in IO-failed and cold tumors, especially in the highly underserved IO-resistant sq-NSCLC. For MSS/pMMR CRC, when combined with bevacizumab, IBI363 showed promising anti-tumor efficacy and tolerability. Furthermore, the FDA awarded IBI363 a fast track designation for melanoma. We anticipate significant out-licensing opportunities for IBI363. Innovent is currently advancing a Ph2 trial of IBI363 across multiple solid tumors in the US. IBI343 (CLDN18.2 ADC) demonstrated encouraging early signals in PDAC, and has received a fast track designation from the FDA for PDAC. Upon successful PoC readout in PDAC, we see substantial out- licensing potential for IBI343. Innovent is conducting a Ph1 trial of IBI343 in the US.

Maintain BUY. Innovent aims to develop its global business, while protecting the interests of its broad shareholder base. We remain confident towards Innovent's strong product sales, improving cost efficiency, and potential of overseas development. We maintain our DCF-based TP unchanged at HK$55.21 (WACC: 10.0%, terminal growth rate: 3.5%).