1H25 results in line. Henlius reported revenue of RMB2.82bn in 1H25 (+3% YoY), in line with our expectations. Drug sales reached RMB2.57bn, accounting for 49% of our prior full-year forecast. Net profit came in at RMB390mn (+1% YoY), achieving 31% of our full-year estimate. We expect Henlius to book additional upfront payments from BD deals, including partnerships with Dr. Reddy’s (CD38 biosimilar), Sandoz (CTLA-4 biosimilar), and Lotus (Serplulimab). Trastuzumab sales remained resilient at RMB1.44bn, down 2% YoY but up 8% HoH. Serplulimab recorded sales of RMB598mn in 1H25, down 12% YoY and 6% HoH, due to intensifying competition. Overseas product revenue reached RMB41mn in 1H25, and mgmt expects full-year overseas product revenue to grow 50%+ YoY in FY25.
　　Updated data of HLX43 (PD-L1 ADC) at the coming WCLC. As a leading PD-L1 ADC globally, HLX43 has demonstrated competitive early efficacy for IO-resistant NSCLC. Among heavily pre-treated NSCLC patients (median of three prior lines), HLX43 2mg/kg monotherapy achieved 38.1% ORR and 5.4 months of mPFS. Notably, HLX43 showed consistent anti-tumor activity across both sq- and nsq-NSCLC (cORR of 33.3% each), regardless of PD-L1 expression or presence of brain/liver metastases. Updated WCLC abstract showed in 19 EGFR wild-type nsq-NSCLC patients, the ORR reached 47.4% (combined doses, link), with detailed data expected next month at WCLC. irAE was reported in the study, indicating the potential IO effects of HLX43. HLX43 is currently undergoing multiple Ph2 trials across broad indications of NSCLC, HCC, ESCC, CRC, GC, NPC, HNSCC, and others. Ph2 trial in NSCLC is also enrolling in the US. HLX43 demonstrates strong potential for out-licensing.
　　HLX22 is another potential blockbuster. We view HLX22 (HER2 mAb) to be a strong alternative for 1L HER2+ GC. In a Ph2 trial, HLX22+ trastuzumab + chemo showed dramatically improved efficacy over the SoC (trastuzumab + chemo), with mPFS not reached (over 22 months per management indication) vs 8.2 months in the control arm (HR=0.2). Henlius is advancing a global Ph3 MRCT in this indication across China, US, Japan and other countries. A Ph2 trial of HLX22 in combo with Enhertu for breast cancer is also ongoing.
　　Working to advance the global registration of serplulimab. Serplulimab has already received approvals in EU and Southeast Asia. Bridging study of serplulimab in the US for 1L ES-SCLC is expected to be full enrolled soon, with NDA expected in early 2026. Ph3 data in perioperative GC is expected by end-2025. Additionally, serplulimab represents a compelling opportunity in first-line MSS CRC. In a Ph2 trial, serplulimab + chemo + beva showed numerically longer PFS (16.8 vs 10.1 months; HR 0.66) and OS (23.5 vs 20.2 months; HR 0.79) vs chemo + beva. A Ph3 trial in 1L MSS CRC is ongoing in China and other Asian markets, and has been fully enrolled as of Jun 2025.
　　Maintain BUY. With its biosimilars continuing to generate cash inflows both in China and globally, Henlius is evolving into an innovative biologics player, led by HLX43 (PD-L1 ADC). Henlius is also developing a range of early-stage assets, i.e. STEAP1xCD3xCD28 TCE, KAT6 inhibitor, PD-L1/VEGF, EGFR/c- MET ADC, and HER2 bsAb ADC. We revise our DCF-based TP to HK$97.75 from HK$61.98 (WACC 9.13%, terminal growth 3.5%).