CICC: Maintains "outperform" rating on INNOVENT BIO (01801) with a target price of HKD 58.

CICC released a research report stating to maintain the "outperform industry" rating for INNOVENT BIO (01801), basically maintaining the forecasted revenue and net profit attributable to mothers for 2024. Taking into account the down payment revenue brought by this authorization, the revenue forecast for 2025 is raised by 5.4% to 10.986 billion yuan, while the net profit attributable to mothers for 2025 is basically unchanged at 495 million yuan. Introducing revenue forecast for 2026 of 13.001 billion yuan, and net profit attributable to mothers forecast of 1.278 billion yuan. The target price is 58 Hong Kong dollars. On January 2, 2025, INNOVENT BIO announced a global exclusive cooperation and licensing agreement with Roche, granting Roche the global rights to develop, manufacture, and commercialize the ADC targeting DLL3, IBI3009. According to the agreement, the company will receive an upfront payment of 80 million US dollars, potential milestone payments of up to 1 billion US dollars for development and commercialization, and future sales-based royalties of up to double-digit percentages. Key points from CICC are as follows: DLL3 is a popular target for cancer types such as small cell lung cancer (SCLC). DLL3 is low expressed in normal tissues but highly expressed in SCLC and other neuroendocrine tumors. Especially for SCLC patients, with poor prognosis and strong invasiveness, traditional treatments such as chemotherapy and PD-L1 antibodies have limited survival benefits, and DLL3 is highly expressed in up to 85% of SCLC, making it a potential therapeutic target. In recent years, various technical paths have been explored around the DLL3 target, including bispecific antibodies, trispecific antibodies, ADCs, CAR-T, nuclear drugs, etc., with frequent early pipeline transactions. In May 2024, Amgen's Tarlatamab received FDA accelerated approval for the treatment of SCLC, becoming the first approved DLL3/CD3 bispecific antibody, demonstrating the druggability of the target. IBI3009 is one of the potential best-in-class and leading DLL3 ADCs in development progress. According to the company's announcement, based on the company's proprietary TOPi platform, IBI3009 has shown promising anti-tumor activity and good safety characteristics in multiple tumor-bearing mouse models (especially chemotherapy-resistant models). IBI3009 has obtained IND approval in Australia, China, and the United States, and completed the first dose of Phase I clinical study in December 2024. According to the agreement, the two parties will cooperate in early development, with Roche responsible for global clinical development. It is recommended to pay attention to the subsequent clinical progress and data readouts. The commercial pipeline continues to enrich, and multiple growth points in 2025 are worth looking forward to. Since November 2024, the company has successively announced the inclusion of Toleziso monoclonal antibody injection (PCSK9) in the National Medical Insurance Catalogue in 2025, the approval for the indication of Xindi Li monoclonal antibody combined with fulqinib for endometrial cancer, and the acquisition of the domestic sales rights for Lilly's patebreadinib, etc. In addition, on January 3, the company announced the approval of Teretinib (ROS1) in China for the treatment of all lines of lung cancer, with a high cORR of up to 91% in treatment-naive patients. The Bank expects the pipeline to bring incremental value in 2025, and also recommends paying attention to multiple research and commercialization milestones for the company in 2025. Risks Failure in research and development, external cooperation falling short of expectations, commercialization falling short of expectations, and price reductions due to centralized procurement.