Tianfeng: Maintain a "buy" rating on CSPC Pharma (01093), optimistic about the company's innovation, and expect long-term value realization.

Tianfeng released a research report stating that it maintains a "buy" rating on CSPC PHARMA (01093), predicting the company's operating income for the years 2025-2027 to be 28.398, 30.145, and 32.242 billion RMB respectively, with net profit attributable to the parent company being 5.521, 5.940, and 6.457 billion RMB. The company released its mid-year performance for 2025, achieving an income of 13.273 billion RMB, a decrease of 18.5% year-on-year; and a net profit of 2.548 billion RMB, a decrease of 15.6% year-on-year. The decline in performance is mainly attributed to the comprehensive implementation of centralized procurement, which had a significant impact on the revenue of the pharmaceutical business. Key points from Tianfeng: Pressure on sales of pharmaceutical products, but significant growth in licensing income In the first half of 2025, the revenue from pharmaceutical business was 10.248 billion RMB (including licensing income of 1.075 billion RMB), a decrease of 24.4% year-on-year. Excluding licensing income, product sales revenue decreased by 32.3% year-on-year. Among them, there was a significant decline in revenue for neurological, oncology, anti-infection, cardiovascular, etc., with decreases of 28.3%, 60.8%, 28.2%, 29.3% respectively. Several innovative drugs are expected to be submitted for market approval from 2025-2027, which is expected to drive revenue growth in the pharmaceutical sector. The drugs expected to be submitted for market approval in the next 3 years include: SYS6010 (EGFRADC), KN026 (HER2 bispecific antibody), Paclitaxel (albumin-bound), JSKN003 (HER2 ADC), JMT101 (EGFR monoclonal antibody), TG103 (Fc-GLP1), etc. Licensing income has become a strong source of revenue and profit for the company. The first payment of 120 million USD for the licensing of SYH2086 in July 2025 has not been confirmed yet, but is expected to continue to contribute to licensing income. The company has successfully landed 6 BD (business development) projects since 2024, including Lp(a), MAT2A, ROR1 ADC, Ertuxetan liposomes, AI drug discovery platform, oral GLP-1, highlighting the value of the eight research and development platforms. At the same time, several products of the company have entered key clinical stages, and potential BD projects are worth looking forward to. EGFRADC SYS6010 has started Phase III clinical trials overseas for EGFR mutations, and the registration pathway for wtNSCLC is actively being discussed. EGFRADC SYS6010 has received early-stage data recognition from regulatory authorities in China and the United States, and has obtained multiple certifications. SYS6010 has been granted three fast-track designations (FTD) by the U.S. FDA, covering EGFR mutation-positive, EGFR high-expressing squamous-cell, and non-squamous NSCLC patients without EGFR mutations. SYS6010 has also received BTD (Breakthrough Therapy Designation) from NMPA (National Medical Products Administration), for its use as a monotherapy in patients with advanced NSCLC who have failed previous treatment with EGFR-TKIs and platinum-based chemotherapy. The first domestic HER2 bispecific antibody KN026 has been submitted for market approval The new drug market application for HER2 bispecific antibody KN026 (trastuzumab injection) developed in cooperation with Genor Biopharma was accepted by the China National Medical Products Administration in September 2025, with indications for use in HER2-positive patients with locally advanced, recurrent, or metastatic gastric/gastroesophageal junction adenocarcinoma who have received at least one prior systemic therapy (which must include trastuzumab in combination with chemotherapy). This market approval application is mainly based on a pivotal Phase II/III clinical trial (KC-WISE). The first interim analysis results of the Phase III clinical study showed that, compared to current standard treatments, KN026 in combination with chemotherapy significantly improves clinical efficacy, prolongs progression-free survival and overall survival, and has no new safety risks, with low rates of cardiac toxicity and low immunogenicity. There are still several ongoing clinical trials with expected data readouts in 2025 1. ESMO KN026-Gastric Cancer-Phase III-Late Breaking Abstract in October 2025; Semetrexed-Solid Tumors-Phase I-Poster; JMT203-Cachexia-Phase I-Poster; Semetrexed combined with Ertuxetan liposomes-Advanced Esophageal Squamous Cell Carcinoma-Phase II-Poster; Albumin-bound Sorafenib (INN)-Breast Cancer-Phase II-Poster in December 2025. 2. ESMO Asia-JMT101 combined with Paclitaxel albumin 2L and above for EGFR lung squamous cell carcinoma II/III in December 2025. 3. SABCS: Albumin-bound Sorafenib (INN)-Breast Cancer-Phase I update; SYHX2011-Advanced breast cancer-Phase III in December 2025. Risk warnings: Clinical progress lower than expected, impact of medical insurance catalog adjustments on sales, risks associated with centralized procurement.