康方生物：研发管线初步展现世界级潜力

Investment Rating - The report assigns a Buy rating to the company with a target price of HKD 77.7, representing a 19% upside from the current price of HKD 65.2 [5] Core Views - The company's R&D pipeline demonstrates world-class potential, particularly with its key products AK104 (PD-1/CTLA-4) and AK112 (PD-1/VEGF), which have shown significant clinical progress and market potential [2][3] - The company's revenue in H1 2024 increased by 24% YoY to RMB 940 million, driven by strong sales of AK104 (RMB 710 million, +16.5% YoY) and AK105 (RMB 130 million) [2] - Despite a net loss of RMB 240 million in H1 2024, the company maintains a strong cash position of RMB 2.4 billion, supported by two successful placements in 2024 raising HKD 1.17 billion and HKD 1.92 billion respectively [2] Product Pipeline Summary AK104 (PD-1/CTLA-4) - Achieved PFS (12.7 vs 8.1 months, HR 0.62) and OS (not reached vs 22.8 months, HR 0.64) endpoints in first-line cervical cancer, with significant efficacy across all populations, including PD-L1 low/negative expression (CPS <1, 23% reduction in death risk) [3] - Approved for first-line gastric cancer in October 2024, showing OS benefit (15 vs 10.8 months, HR 0.62), addressing the unmet need in PD-L1 low/negative gastric cancer (mOS 17.6 months vs 11 months for PD-1) [3] - Multiple Phase III trials ongoing for gastric cancer post-PD-(L)1 progression, hepatocellular carcinoma, and non-small cell lung cancer (NSCLC) [3] AK112 (PD-1/VEGF) - Approved in May 2024 for EGFR-mutated NSCLC post-treatment progression, with Summit global Phase III trial completed and FDA Fast Track designation [3] - Achieved PFS endpoint (11.14 vs 5.82 months, HR 0.51) in first-line PD-L1-positive NSCLC vs Pembrolizumab, with NDA submitted in July 2024 [3] - Expanded Summit Phase III trial to include non-squamous NSCLC with a sample size of 1,080 patients, alongside ongoing trials for biliary tract cancer, pancreatic cancer, and head and neck squamous cell carcinoma [3] Other Key Products - AK105 (PD-1): Under review for first-line nasopharyngeal carcinoma and submitted for first-line hepatocellular carcinoma [3] - AK102 (PCSK9): Approved in October 2024 [3] - AK101 (IL-12/IL-23): Submitted for moderate-to-severe plaque psoriasis in August 2023 [3] - AK111 (IL-17): Completed Phase III enrollment for psoriasis and ongoing for ankylosing spondylitis [3] - AK117 (CD47): Global first Phase III trial for solid tumors [3] Financial Summary - Revenue for 2024E is projected at RMB 2.5 billion, with a 32.6% YoY growth expected in 2025E to RMB 3.3 billion [4] - Gross margin remains strong at 91.3% in H1 2024, with R&D expenses increasing by 3% to RMB 590 million [2] - Net loss for 2024E is estimated at RMB 184 million, with a turnaround to RMB 775 million net profit expected in 2026E [4] Valuation - The target price of HKD 77.7 is derived using a DCF model with a WACC of 10.0% and perpetual growth rate of 3.0%, incorporating AK112's overseas potential (USD 6 billion sales, 60% success probability) [3]