Core Viewpoint - Huaxi Securities maintains an "overweight" rating for Rongchang Biopharmaceutical (09995), highlighting the company's strong independent R&D capabilities, stable sales growth of core products, experienced management team, steady progress in clinical indications, and reasonable domestic and international layout, with optimism regarding the company's commercialization capabilities post-product launch [1] Recent Events - On January 12, the company announced an exclusive licensing agreement with AbbVie for its independently developed PD-1/VEGF bispecific antibody drug RC148, granting AbbVie exclusive rights for development, production, and commercialization outside Greater China. The company will receive an upfront payment of $650 million and is eligible for up to $4.95 billion in milestone payments, along with double-digit royalties on net sales outside Greater China [1] International Expansion - Following the authorization of core products RC18 and RC28 in 2025, this recent agreement further validates the company's speed in international expansion. As of January 2026, 17 PD-(L)1/VEGF bispecific antibody drugs are in clinical trials globally, with several BD agreements signed, showcasing the company's R&D capabilities. AbbVie, as a partner, has a diverse product line that complements RC148, enhancing its global positioning [2] Clinical Data - At the 2025 ESMO-IO conference, the company disclosed promising data for RC148, showing an objective response rate (ORR) of 61.9% and a disease control rate (DCR) of 100% in monotherapy. In combination therapy, the ORR reached 66.7% and the DCR was 95.2%. The safety profile is manageable, indicating initial clinical advantages. The company is actively advancing related clinical studies, anticipating further clinical potential [3]

Investment Rating - The investment rating for the company is "Buy" [4] Core Insights - The company has signed an exclusive licensing agreement with AbbVie for its PD-1/VEGF bispecific antibody drug RC148, receiving an upfront payment of $650 million and potential milestone payments up to $4.95 billion, along with double-digit royalties on net sales outside Greater China [1][2] - The collaboration with AbbVie is expected to enhance the company's international clinical development and market expansion, leveraging AbbVie's existing oncology pipeline [2] - Initial clinical data for RC148 shows promising results, with an objective response rate (ORR) of 61.9% for monotherapy and 66.7% for combination therapy, indicating strong potential for further clinical advancement [3] Financial Summary - The company forecasts revenues of 2.75 billion, 3.38 billion, and 4.41 billion CNY for 2025, 2026, and 2027 respectively, reflecting year-on-year growth rates of 60.95%, 22.97%, and 30.40% [7] - The projected net profit for 2026 is expected to be -315.8 million CNY, with a turnaround to a profit of 383.89 million CNY by 2027 [7] - The gross margin is anticipated to remain high, with estimates of 83.65% in 2025 and 82.27% in 2026 [8]

Market Overview - The A-share market saw all three major indices rise, with the Shanghai Composite Index closing at 4165.29 points, up 1.09%. The Shenzhen Component Index increased by 1.75%, and the ChiNext Index rose by 1.82%. The total market turnover reached 3.64 trillion yuan, an increase of over 490 billion yuan compared to the previous trading day, with more than 4100 stocks closing higher [1]. Historical Highs - A total of 185 stocks reached their historical closing highs today, excluding newly listed stocks from the past year. The defense, machinery, and electronics sectors had a significant concentration of stocks hitting new highs, with 28, 27, and 24 stocks respectively. The average price increase for these stocks was 9.28%, with notable gainers including Tianrun Technology, Zhongcheng Technology, and Xingtou Measurement Control, all hitting the daily limit [2]. Top Gainers - Key stocks that saw significant price increases include: - Tianrun Technology: 34.93 yuan, up 30.00% - Zhongcheng Technology: 41.60 yuan, up 30.00% - Xingtou Measurement Control: 130.16 yuan, up 29.99% - Tianli Composite: 119.99 yuan, up 24.96% - Fujida: 56.00 yuan, up 21.74% [3][4]. Institutional Activity - In the market, 20 stocks were net bought by institutions, with 22 stocks net sold. The top net buy was Shanzi Gaoke, with an amount of 484.2 million yuan, followed by Leike Defense at 235 million yuan. On the sell side, Kunlun Wanwei saw the highest net sell at 536 million yuan [5][6]. Northbound Capital - Northbound funds saw net purchases in 13 stocks, with Shanzi Gaoke leading at 532 million yuan. Other notable net buys included BlueFocus and Yanshan Technology, both exceeding 250 million yuan. Conversely, Kunlun Wanwei had the highest net sell at 250 million yuan, despite its stock hitting the daily limit [7][8]. Company Announcements - *ST Yanshi (600696)*: Expected to have an operating income of less than 300 million yuan in 2025, with both net profits before and after deductions being negative, leading to potential delisting [10]. - Honor Biologics signed a licensing agreement with AbbVie, potentially receiving up to 4.95 billion USD in milestone payments [10]. - BlueFocus reported that AI-driven revenue constitutes a small portion of its overall revenue [15].

Investment Rating - The report maintains a "Positive" outlook for the pharmaceutical and biotechnology industry in China [5] Core Insights - Domestic innovative drugs are expected to lead the tumor immunotherapy 2.0 era, with bispecific antibodies becoming a global focus and business development (BD) transaction volumes reaching new highs. The global value of Chinese innovative drugs is being rapidly uncovered [3][6] - A significant collaboration was established between Rongchang Biopharma and AbbVie, involving the PD-1/VEGF bispecific antibody (RC148), which includes a $650 million upfront payment and potential milestone payments of up to $4.95 billion, along with double-digit royalties on net sales outside Greater China. This partnership accelerates the internationalization of RC148 and highlights the potential of the tumor pipeline [6] - The report emphasizes the increasing interest from multinational pharmaceutical companies in domestic bispecific antibody drugs, indicating that these innovative drugs will be a key growth engine in the tumor immunotherapy 2.0 era [6] Summary by Sections Industry Overview - The pharmaceutical and biotechnology industry is positioned for growth, particularly in the area of innovative drugs and tumor immunotherapy [5] Investment Recommendations and Targets - Key investment targets include Rongchang Biopharma (688331), 3SBio (01530), 3SBio Guojian (688336), Innovent Biologics (01801), CanSino Biologics (09926), Kintor Pharmaceutical (06990), and Eucure Biopharma (09606), all of which are not rated yet [3] Recent Developments - The collaboration between Rongchang Biopharma and AbbVie is a pivotal event, marking a significant step in the global commercialization of innovative drugs [6]

Core Insights - The announcement of a $5.6 billion licensing agreement between Rongchang Biopharma and AbbVie marks a significant milestone for Chinese innovative drugs entering the global market, indicating a shift from follower to leader in the dual antibody space [1][3] - Concurrently, Kangfang Biopharma's partner, Summit Therapeutics, submitted a Biologics License Application (BLA) for Ivoris monoclonal antibody to the FDA, further highlighting the progress of Chinese dual antibodies on the international stage [1][4] - However, the termination of a licensing agreement by Yiming Oncology with Instil Bio serves as a cautionary tale for the challenges faced by Chinese companies in global expansion [1][10] Group 1: Major Developments - Rongchang Biopharma's agreement with AbbVie includes an upfront payment of $650 million and potential milestone payments of up to $4.95 billion, along with double-digit royalties on net sales outside Greater China [3] - Kangfang Biopharma's Ivoris monoclonal antibody is positioned to address a significant unmet clinical need in treating EGFR-mutant non-small cell lung cancer, with the FDA expected to make a decision by Q4 2026 [4][5] - The competitive landscape for PD-1/VEGF dual antibodies is intensifying, with major pharmaceutical companies increasingly focusing on a few validated "winners" in the market [2][9] Group 2: Industry Trends - The recent high-value transactions in the dual antibody space reflect a growing recognition of the clinical and commercial potential of Chinese innovative drugs, with transaction amounts reaching new heights [9] - The competitive dynamics are shifting, as the number of potential international buyers decreases due to the concentration of capital and interest in a limited number of validated products [10][13] - The success of PD-1/VEGF dual antibodies is seen as pivotal for the future of cancer treatment, with ongoing clinical trials exploring their combination with other therapies to enhance efficacy [14]

Investment Rating - The report indicates a strong investment opportunity for Rongchang Biopharma following the signing of a significant licensing agreement with AbbVie, which is expected to enhance the company's financial position and market presence [2][25]. Core Insights - Rongchang Biopharma has signed an exclusive licensing agreement with AbbVie for the novel PD-1/VEGF bispecific antibody drug RC148, which includes an upfront payment of $650 million (approximately 4.5 billion RMB) and potential milestone payments totaling up to $4.95 billion (approximately 34.5 billion RMB) [2][8]. - The total transaction value is close to $4 billion, marking a record for the company in terms of external licensing agreements [3][8]. - The PD-1/VEGF bispecific antibody market is identified as a "golden track" for Chinese innovative drugs going global, with increasing upfront payments reflecting the growing value of these assets [9][10]. Industry Overview - The number of BD licensing deals for Chinese innovative drugs has surged from 85 in 2023 to 157 in 2025, with a compound annual growth rate of 35.9% [11]. - The total transaction value for these deals has skyrocketed from $32 billion in 2023 to $135.7 billion in 2025, representing a growth of over three times [13]. - The industry is entering an accelerated growth phase, with a year-on-year growth rate of 161% for BD licensing deals in 2025, significantly outpacing previous years [15]. Financial Performance - Rongchang Biopharma's revenue for the first three quarters of 2025 reached 1.72 billion RMB, reflecting a year-on-year increase of 42.27% [16]. - Despite ongoing net losses exceeding 1 billion RMB from 2022 to 2024, the company has shown improvement, with losses narrowing to 551 million RMB in the first three quarters of 2025 compared to 1.071 billion RMB in the same period of 2024 [17][19]. - The anticipated upfront payment from the AbbVie deal is expected to further improve Rongchang Biopharma's profitability and cash reserves, potentially leading to profitability in 2026 if the payment is fully received [19]. Product Pipeline - Rongchang Biopharma's key products include Taitasip (IL-4Rα antibody) and Vidisicimab (HER2 ADC), which are currently the main sources of revenue [20]. - The RC148 bispecific antibody is a focus for the company, currently in I/II clinical stages, and the collaboration with AbbVie is expected to accelerate its global development [23].

Core Viewpoint - Rongchang Biopharmaceutical has signed an exclusive licensing agreement with AbbVie for the novel PD-1/VEGF bispecific antibody drug RC148, which is expected to significantly enhance the company's financial position and growth prospects [3][20]. Group 1: Licensing Agreement Details - The agreement grants AbbVie exclusive rights to develop, manufacture, and commercialize RC148 outside Greater China, with Rongchang receiving an upfront payment of $650 million (approximately 4.5 billion RMB) [3][7]. - The total potential transaction value could reach $4.95 billion (approximately 34.5 billion RMB), including milestone payments and royalties based on net sales [3][7]. - This transaction marks a record for Rongchang in terms of both upfront payment and total deal value, surpassing previous agreements [7][20]. Group 2: Industry Trends - The number of BD (business development) licensing agreements for Chinese innovative drugs has surged, with transactions increasing from 85 in 2023 to 157 in 2025, reflecting a compound annual growth rate of 35.9% [9]. - The total transaction value for these agreements is projected to rise from $32 billion in 2023 to $135.7 billion in 2025, representing over a threefold increase [11]. - The average upfront payment has also seen significant growth, increasing from $2.5 billion to $7 billion, a rise of 180% [11][13]. Group 3: Company Financial Performance - Rongchang's revenue for the first three quarters of 2025 reached 1.72 billion RMB, marking a year-on-year growth of 42.27% [14]. - Despite the revenue growth, the company has reported net losses exceeding 1 billion RMB from 2022 to 2024, with a reduced loss of 551 million RMB in the first three quarters of 2025 compared to 1.071 billion RMB in the same period of 2024 [15][16]. - The anticipated upfront payment from the AbbVie agreement is expected to further improve Rongchang's profitability and cash reserves, potentially leading to profitability in 2026 if the payment is fully received [16].

Market Overview - The biopharmaceutical sector experienced a decline of 0.9% on January 14, with Rongchang Biopharmaceutical leading the drop [1] - The Shanghai Composite Index closed at 4126.09, down 0.31%, while the Shenzhen Component Index closed at 14248.6, up 0.56% [1] Stock Performance - Notable gainers in the biopharmaceutical sector included: - Aidi Pharmaceutical, closing at 19.83 with a rise of 16.72% and a trading volume of 242,400 shares, totaling 462 million yuan [1] - Wufan Biopharmaceutical, closing at 57.38 with an increase of 4.35% and a trading volume of 47,900 shares, totaling 272 million yuan [1] - Kangbuno, closing at 71.99 with a rise of 4.17% and a trading volume of 49,300 shares, totaling 355 million yuan [1] - Rongchang Biopharmaceutical saw a significant decline, closing at 103.34 with a drop of 9.72% and a trading volume of 196,700 shares, totaling 2.091 billion yuan [2] Capital Flow - The biopharmaceutical sector experienced a net outflow of 656 million yuan from institutional investors, while retail investors saw a net inflow of 407 million yuan [2] - Notable capital flows included: - Watson Biopharmaceuticals with a net inflow of 63.73 million yuan from institutional investors [3] - Kanghua Biopharmaceuticals with a net inflow of 18.92 million yuan from institutional investors [3] - Overall, retail investors contributed a net inflow of 4.07 billion yuan to the sector [2]

Core Viewpoint - Rongchang Biopharmaceutical (688331.SH) experienced a significant decline in stock price, closing at 103.34 yuan, down 9.72% [1] Group 1: Analyst Reports - Huatai Securities analysts Dai Wen, Yuan Zhongping, and Li Hang published a report on January 13, maintaining a WACC of 6.5% and a perpetual growth rate of 2.5%, adjusting the DCF-based target price for A-shares to 151.79 yuan (previously 140.42 yuan) [1] - The A/H premium was adjusted to 16.46%, consistent with the past three months' A/H premium for Rongchang Biopharmaceutical, up from the previous 8.95% [1] - The target price for H-shares was adjusted to 142.72 HKD (previously 141.13 HKD), with a "buy" rating maintained for both A-shares and H-shares [1] Group 2: Clinical Development and Product Pipeline - Huazhong Securities analysts Tan Guochao and Ren Wanying also published a report on January 13, expressing optimism about the clinical advancement of RC148, the progress of the company's pipeline, and the stable sales growth of its listed products, maintaining a "buy" rating [1]

Core Viewpoint - The innovative drug sector is experiencing a decline, with several key stocks and ETFs showing significant drops in value, indicating a potential shift in market sentiment towards this industry [1][2]. Group 1: Stock Performance - Rongchang Biopharmaceutical has seen a decline of over 10% in its stock price [1]. - Other companies such as Baile Tianheng, Xinlitai, and Maiwei Biopharmaceutical-U have also dropped more than 3% [1]. - Multiple innovative drug-related ETFs have decreased nearly 2% in value [1]. Group 2: Market Analysis - Some brokerages suggest that core assets in the innovative drug sector will continue to appreciate, highlighting emerging opportunities in small nucleic acids and in vivo CAR technologies [2]. - The long-term trend of innovative drug business development (BD) is seen as a pathway for Chinese innovative drug capabilities to gain recognition on the global stage [2]. - Core assets that have been licensed to multinational corporations (MNCs) are expected to realize their value as clinical progress continues [2]. - Future focus should remain on cutting-edge technology platforms and closely monitor advancements in clinical data [2].