Innovent reported 1H25 revenue of RMB5.95bn (+51% YoY), with product sales of RMB5.23bn (+37% YoY), achieving 51% of our prior full-year forecasts and exceeding our expectations. Sintilimab sales rose 15% YoY to US$275mn (per Eli Lilly), while new products-i.e. PCSK9 mAb and IGF-1R-drove product growth in 1H25. Profitability improved materially in 1H25, with non-IFRS net profit reaching RMB1.21bn and EBITDA amounting to RMB1.41bn, compared to a loss in 1H24. Under non-IFRS, gross margin expanded to 86.8% in 1H25 (vs 84.9% in FY24) and SG&A ratio fell to 44.2% (vs 50.9% in FY24), underscoring operating leverage. Mgmt aims to achieve non-IFRS EBITDA profitability in FY25 excluding the US$80mn upfront income from Roche. We forecast FY25 net profit of RMB997mn. As of Jun 2025, Innovent had a strong cash position of RMB14.6bn.
　　IBI363 (PD-1/IL-2) progresses toward global Ph3 MRCT. IBI363 has demonstrated competitive PFS and survival benefit in IO-resistant sq- and nsq-NSCLC, as well as encouraging activity in cold tumors such as melanoma and MSS colorectal cancer (CMBI report, link). The recent FDA clearance to initiate a global Ph3 MRCT-comparing IBI363 (3mg/kg) vs docetaxel in IO-resistant sq-NSCLC-marks a key milestone in the asset’s global development. In parallel, a pivotal Ph2 trial in 1L melanoma is ongoing, while a Ph3 trial in 3L MSS CRC is set to begin in 2H25 in China. Innovent is also advancing IBI363 into earlier lines of therapy, with Ph1b/2 PoC data in front-line NSCLC and CRC expected in 2026. Positive results could further validate IBI363 as a next-generation IO backbone. To broaden its clinical footprint, Innovent has also registered a Ph2 study in neoadjuvant NSCLC (1.5mg/kg) and initiated a bevacizumab combination trial in late-line EGFRm NSCLC and ovarian cancer. We also see IBI363’s significant ADC-combination potential and scope for a sizable out-licensing deal.
　　Expanding ADC pipeline with strategic depth. Innovent is advancing a broad ADC pipeline, spanning monoclonal ADCs (i.e. CLDN18.2 and HER2), bispecific ADCs (i.e. EGFR/B7H3), and dual-payload ADCs (i.e. CEACAM5 dp), which are being developed with future IO combination strategies in mind. IBI343 (CLDN18.2 ADC) has entered into Ph3 trial in 3L+ PDAC in China, in addition to its ongoing Ph3 study in 3L+ gastric cancer. Innovent also plans to discuss with authorities regarding the start of a global Ph3 study of IBI343 in 2L+ PDAC, and is currently conducting a Ph1b trial of IBI343 in front-line PDAC.
　　Growing innovative pipeline in non-oncology. Following the launch of mazdutide for obesity in Jul, we expect a strong uptake in sales of the product in 2H25. We expect IBI311 (IGF-1R), IBI306 (PCSK9) and IBI112 (IL-23p19) to become important revenue drivers in Innovent’s non-oncology portfolio. We would like to highlight IBI3032 as a differentiated oral GLP-1, demonstrating 5-10 times higher oral exposure than peers at the same dose, along with superior efficacy in an obese cynomolgus monkey mode.
　　Maintain BUY. With strong results in 1H25, we revise our DCF-based TP　from HK$102.95 to HK$109.48 (WACC: 9.0%, terminal growth rate: 4.0%).