Goldman Sachs: Innovent Biologics to use randomized trial to guide IBI363 first-line strategy; management reiterates 2030 profit target

What do the first-line lung cancer data for IBI363 indicate?

In a phase I study in first-line non-small cell lung cancer, preliminary median progression-free survival was 7 months and 8.5 months in the IBI363 1.5 mg/kg and 3 mg/kg groups, respectively; the median had not yet been reached in the group reduced from 3 mg to 1.5 mg/kg.
Management believes the data support further study, but each of the three cohorts had only just over 20 patients, and medians could fluctuate as the samples change. Longer follow-up showed that overall safety appeared manageable. The main grade 3 and higher adverse events were attributed to combination chemotherapy, while IL-2-related joint pain, rash and other symptoms were well controlled.
The company regards immunotherapy resistance as the cornerstone of its IBI363 strategy. The competitive landscape in first-line lung cancer continues to evolve, and management and its partner Takeda agree that the global phase III decision will be data-driven.

Management places greater weight on the ongoing randomized controlled trial comparing IBI363 plus chemotherapy with pembrolizumab plus chemotherapy. Each arm is planned to enroll 100 patients, primarily patients with TPS below 50%.
This comparison will provide a more important basis for the global phase III decision in first-line non-small cell lung cancer than the current preliminary data from small samples.

Management said recently reported third-quarter product sales showed strong growth in tyrosine kinase inhibitors included in the reimbursement list, solid overall performance from cardiovascular and metabolic products, and encouraging adoption of mazdutide.
Looking ahead to 2027, the company expects continued growth from mazdutide, the PCSK9 product tafolecimab and the oncology business, with a new contribution from abemaciclib. Management believes China's GLP-1 market could exceed 20 billion yuan, and that 2027 is a key window for mazdutide to capitalize on its first-mover advantage.
Generic drugs and new GLP-1 drugs will bring competition; management believes the market is still expanding and that mazdutide's growth comes primarily from new users, making competitive pressure manageable.

Management reiterated its target of 8 billion to 10 billion yuan in net profit and a reported net margin of 20% to 25% in 2030, and believes overseas product launches from 2030 onward could further improve margins.
Goldman Sachs assigns a buy rating and a 12-month target price of HK$122.28; its risk-adjusted discounted cash flow valuation uses a 10% discount rate and a 3% perpetual growth rate. Risks cited by the bank include intensifying competition in China's PD-1/L1 market, uncertainty over approval timing for key drug candidates, and research and development failures.