Interim report on ABBISKO-B(02256): Rely on the "hematopoietic advantage" to increase safety margin, rely on hardcore innovation to enhance configuration value.

On July 29th this year, the intraday highest stock price of ABBISKO-B (02256) reached 11.74 Hong Kong dollars, setting a new high for the company in nearly 4 years, with the stock price increasing by 155.22% since the beginning of the year. The rising stock price has brought significant returns for secondary market investors, and And Yuga has been continuously using cash through share buybacks to reward investors. In March this year, the And Yuga board approved the company's use of 200 million Hong Kong dollars to repurchase shares on the market, and as of June 30th this year, the company had repurchased 9.545 million shares, totaling 75.3 million Hong Kong dollars. In fact, the Hong Kong stock market's innovative drug sector has experienced a wave of explosive rallies this year. From the latest 2025 mid-term financial report disclosed by And Yuga, investors can easily see that as innovative research and development and internationalization expectations continue to materialize, the company has successfully achieved sustainable scale innovation revenue and profits, generating abundant cash flow and providing substantial funding guarantees for the company's medium to long-term innovation research and development, further improving the company's "innovation-profit" positive cycle. The continuous rise in stock prices in the first half of this year reflects the market's high recognition of the company's value. Sustainable realization of scale profitability expectations In the first half of this year, And Yuga was able to achieve the continuous realization of scale profitability expectations, with the key driver being the core product Pitimitinib, whose commercial value continues to be released. As the first CSF-1R inhibitor independently developed in China to enter global Phase III clinical trials for TGCT, Pitimitinib has now been granted breakthrough therapy designation by regulatory agencies in China, the United States, and Europe. As a global potential BIC drug in the CSF-1R inhibitor track, Pitimitinib not only demonstrates outstanding performance in the treatment of TGCT, but also has greater potential in multiple indications such as cGVHD. Because of the outstanding potential of this drug as a "billion-dollar molecule", the company reached a "high down payment, high milestone, high profit sharing" BD transaction with the well-known multinational pharmaceutical company Merck by the end of 2023, and received an initial payment of 70 million US dollars in early 2024. In November last year, the global Phase III MANEUVER study results of Pitimitinib were positive. In the first half of this year, after receiving priority review approval in China in May, the NDA application for Pitimitinib for the treatment of TGCT was approved again by the Chinese NMPA in June. At present, the drug has a high certainty of approval in the domestic market. In addition, Pitimitinib has also been granted BTD by the Chinese NMPA and the US FDA, and PRIME designation by the European Medicines Agency (EMA) for the treatment of inoperable TGCT patients. At the same time, it has also been granted Fast Track designation (FTD) by the US FDA and Orphan Drug designation (ODD) by the EMA. The certification of Pitimitinib by major global authorities indicates that its commercial launch is imminent. On April 1st this year, And Yuga announced that Merck had exercised its global commercialization option for Pitimitinib (ABSK021) in accordance with the licensing agreement signed by both parties in December 2023, with an exercise fee of 85 million US dollars. This has become one of the direct driving factors for And Yuga to achieve sustained profitability in the first half of this year. According to the financial report, the company achieved total revenue (including income and other revenue and gains) of 657 million RMB in the current period, a year-on-year increase of 20%; at the same time, the company recorded a net profit attributable to shareholders of 328 million RMB in the current period, a year-on-year increase of 59%, with adjusted net profit reaching 336 million RMB. In fact, in addition to the option payment made by Merck, the BD cooperation between the two parties has brought And Yuga more than 150 million US dollars in cash. According to the previous agreement, And Yuga will continue to receive research milestone payments and sales milestone payments from Merck, with a potential total payment of up to 606 million US dollars, not including double-digit net sales royalties. These funds will all become the company's ongoing cash flow, bringing clear profit realization to the company. It is clear that the strong innovative research and development capabilities and global BD capabilities have gradually transformed And Yuga's clinical research and development into fruitful commercial results, continuously driving the company's innovative research and development, shortening development cycles, and laying a solid foundation for the successful landing of multiple FIC/BIC blockbuster products in the future. Enhancing the innovation cycle and consolidating the development foundation The reason why the valuation of And Yuga has achieved a leap forward this year lies in the strong commercialization expectations of its core product Pitimitinib. However, the gradually perfected "innovation-profit" cycle established through core innovative research and development cannot be ignored. The financial report shows that in the first half of this year, And Yuga confirmed research and development investment of 228 million RMB, stable income and cash flow growth, providing strong support for the company's innovative research and development, laying the foundation for the company to explore the global differentiated innovative drug market, and accelerating the company's advancement into the top tier of the global Biopharma industry. In recent years, And Yuga has focused on precision therapy and immunotherapy for tumors, covering hot targets such as EGFR, FGFR, CSF-1R, and PMRT5, and has established a pipeline of 22 globally competitive differentiated innovative drugs, many of which have "best in class" or "global first-in-class" potential. Among them, Epegartinib (ABSK011), which is expected to become a global FGFR4 inhibitor similar FIC drug, is undoubtedly outstanding. On May 26th this year, And Yuga officially announced that Epegartinib (ABSK011) has been included as a breakthrough therapeutic variety, intended for the treatment of FGF19 overexpression advanced liver cancer patients who have failed previous treatments with immune checkpoint inhibitors (ICI) and multi-target tyrosine kinase inhibitors (mTKI). Following Pitimitinib (Pimicotinib/ABSK021), this is the second heavyweight variety from And Yuga to be included as a breakthrough therapy. As the world's first small molecule inhibitor targeting abnormal activation of the FGF19/FGFR4 signaling pathway, ABSK-011 has attracted widespread attention from the global industry and market due to its significant efficacy and superior compliance and economic advantages compared to other FGFR4 targeted drugs since its debut at the 2023 ESMO Congress. From a market perspective, according to GlobalData's forecast, by 2029, the global liver cancer market will be approximately 5.3 billion US dollars, with immunotherapy accounting for about 72.2% of the market share, reaching 3.8 billion US dollars. Referring to the small molecule kinase inhibitor sorafenib, whose ORR for the indication of liver cancer is less than 20%, its global sales still exceeded 500 million US dollars in 2021, reflecting the large unmet treatment demand in the current market. And Yuga's ability to excel lies in innovation and breakthroughs in molecular design. It is reported that through thousands of experiments, the And Yuga research team has screened out highly selective compounds, successfully avoiding the side effects brought about by off-target FGFR1/2/3. Therefore, as the second heavyweight product from And Yuga to be included as a breakthrough therapy, Epegartinib has high drug certainty and, with its leading position in the competitive landscape, has already achieved a "overtaking on the curve" at the R&D level, with the potential to become the first breakthrough drug for the treatment of FGF19 overexpression HCC patients. In addition to FGFR targets, And Yuga's innovative pipeline includes multiple high-quality pipeline projects in early clinical and preclinical stages. In the first half of this year, And Yuga once again presented four latest preclinical research results at this year's AACR conference, releasing its independently developed EGFR Exon20ins inhibitor ABSK112, PRMT5*MTA inhibitor ABSK131, and the latest preclinical research results of KRAS inhibitors in the form of posters, showcasing its research achievements in the field of small molecule innovation to the global academic community. All of these demonstrate And Yuga's certainty in terms of global commercialization and differentiated original innovation, and And Yuga is expected to unlock more valuation potential through multiple potential FIC/BIC products in its pipeline. Compared to the valuation of innovative drug companies in the commercialization stage in the Hong Kong stock market, the PS valuations of ASC Medicine and AKESO are 26.65 times and 60.53 times, respectively. In contrast, And Yuga is currently in the early stages of commercialization, with a substantial cash position of 2.3 billion RMB and the ability to continuously reward shareholders through share buybacks. The company's current PS valuation is only 14.01 times, indicating great growth potential, aligning with the current market's logic of long-term investment in scarce innovative drug targets with high returns. It is worth investors' long-term attention.