ZhaoYin International: Focus on the development progress of authorized drugs and recommend buying 3SBIO(01530) and others.

Guotai Junan International released a research report stating that the MSCI China Healthcare Index has risen by 58.6% since the beginning of 2025, outperforming the MSCI China Index by 24.2%. Recently, the pharmaceutical sector has experienced a slight pullback (MSCI China Healthcare Index has fallen by 10% since October), and the bank believes this will bring opportunities for bottom fishing. With the recovery of capital market financing, the increase in the scale of innovative drug out-licensing transactions, and the resurgence of domestic demand for innovative drug research and development, the domestic innovative drug sector is showing signs of recovery. In addition, with the interest rate cuts in the United States, the CXO industry is expected to see earnings recovery in 2H25E. Furthermore, the report recommends investors to focus on the overseas clinical progress of authorized innovative drug pipelines. It recommends buying 3SBIO (01530), GUSHENGTANG (02273), GIANT BIOGENE (02367), WUXI XDC (02268), SINO BIOPHARM (01177), and INNOVENT BIO (01801). The report states that the ESMO conference disclosed several heavyweight clinical data. The key points of focus are as follows: 1) SKB264 (Corbio)-SKB264 is currently the only drug in Phase III clinical trials that has shown statistically significant overall survival (OS) for EGFR-TKI-resistant NSCLC. In the OptiTROP-Lung04 Phase III trial, SKB264 monotherapy for second-line patients did not reach a median OS yet, compared to 17.4 months for the chemotherapy group, HR=0.56. 2) lvonescimab (AKESO): In HARMONi-6, for first-line sqNSCLC, the mPFS of AK112 combined with chemotherapy is 11.1 months vs. pemetrexed+chemotherapy 6.9 months (HR=0.60), OS data is not mature yet. Summit has revised the HARMONi-3 trial protocol and will separately evaluate the efficacy for sqNSCLC and nsqNSCLC, with an expected release of mPFS results for sqNSCLC cohort in 2H26. 3) 707 (3SBIO): In first-line colorectal cancer, the uORR of 707 at a dose of 5mg/kg Q3W + chemotherapy reached 82.6%, with a cORR of 65.2%. In comparison, in a phase II trial, AKESO's ivonescimab (20mg/kg Q2W) combined with chemotherapy had an ORR of 81.8% in first-line colorectal cancer. The bank points out that the DRIVE of stock price for BD is weakening and recommends focusing on the progress of authorized pipelines overseas. Recently, innovative drug BD has continued to progress, but stock prices have shown weakness. The bank believes this is mainly due to valuation and expectations. INNOVENT BIO announced a global strategic partnership with Takeda Pharmaceutical on drugs such as IBI363 (PD-1/IL-2). Regarding IBI363, INNOVENT BIO will bear 40% of the global research and development costs and share 40% of the commercial rights in the U.S. The bank believes that Takeda's risk-sharing model with Takeda reflects the bank's strong confidence in IBI363 and also highlights the bank's high level of importance and investment in global strategy. Although Takeda's presence in the solid tumor field is limited, its excellent global clinical and commercialization capabilities will support the value discovery of IBI363. The bank recommends investors to focus on the overseas clinical progress of authorized pipelines for the reasons that 1) clinical progress has a high level of certainty and will serve as a catalyst for stock price growth, 2) the ultimate value realization comes primarily from milestone payments and sales sharing generated from the successful commercialization of the products, rather than just upfront payments from out-licensing transactions. The bank expects Pfizer to announce the overseas clinical plan for 3SBIO's 707 within the year, with a focus on the combination of 707 and multiple ADC products from Pfizer.