Company Reports

Innovent is a leading biotech company in China with strong roots in oncology, and has anchored its core PD-1 drug Tyvyt. However, its recently approved dual agonist GLP-1 drug in 2025 will be its long-term valuation driver, given that the PD-1 in China is now mature. We expect mazdutide, Innovent's GLP-1, to account for 25% of total revenue in 2027 from less than 5% in 2025. Mazdutide's advantage comes from its license agreements with Eli Lilly and first-mover advantage in China's GLP-1 market, which we estimate to have less than 1% penetration in 2025.

Innovent is a leading biotech company in China with strong roots in oncology, and has anchored its core PD-1 drug Tyvyt. However, its recently approved dual agonist GLP-1 drug in 2025 will be its long-term valuation driver, given that the PD-1 in China is now mature. We expect mazdutide, Innovent's GLP-1, to account for 25% of total revenue in 2027 from less than 5% in 2025. Mazdutide's advantage comes from its license agreements with Eli Lilly and first-mover advantage in China's GLP-1 market, which we estimate to have less than 1% penetration in 2025.

Innovent and Pfizer have entered a global licensing and collaboration agreement to research and develop 12 early-stage oncology programs, focusing on next-generation antibody-drug conjugates and multispecific antibodies.

Innovent's second-half 2025 revenue grew 30% year on year to CNY 7.1 billion driven by mazdutide, its GLP-1 drug, while full-year operating margin swung to profitability and increased by 1,340 basis points.

We initiate coverage of Innovent Biologics with a narrow moat rating, Very High Uncertainty Rating, and an HKD 108 fair value estimate, which reflects a 20% upside based on the Feb. 11 closing price.

Innovent is a leading biotech company in China with strong roots in oncology, anchored its core PD-1 drug Tyvyt. However, its recently approved dual agonist GLP-1 drug in 2025 will be its long-term valuation driver given the PD-1 in China is now mature. We expect mazdutide, Innovent's GLP-1, to account for 25% of total revenue in 2027 from less than 5% in 2025. Mazdutide's advantage comes from its license agreements with Eli Lilly and first-mover advantage in China's GLP-1 market, which we estimate to have less than 1% penetration in 2025.

We will discontinue analyst coverage of Innovent on or about Nov. 12, 2025.

The Trump Administration is drafting a potential executive order that would put "severe restrictions" on investigational drugs from China. Global biopharma companies have been buying these clinical-stage assets/pipelines from Chinese biotech companies.

Innovent's first-half 2025 revenue grew 50.6% year on year while adjusted operating margin improved to 12.5%, driven by gross margin expansion from a faster rollout of new products and benefits from operating leverage.

Innovent is a leading biotech company in China with strong roots in oncology, anchored by its core PD-1 drug Tyvyt. The price cut for PD-1 drugs has stabilized gradually. Hence, we expect stable revenue growth from Tyvyt in the next three years as Tyvyt has more indications approved.

US President Donald Trump said that the US tariffs on pharmaceutical imports may increase to 150% or even further to 250% in one to one and a half years.

Innovent's weight management drug, Mazdutide (GCG/GLP-1), has received approval from China's National Medical Products Administration. Management also showcased its core pipelines on its research and development day.

Innovent’s 2024 revenue CNY 9.4 billion, up 51.8% year on year, is a strong beat to our estimate of CNY 7.8 billion. The positive surprise is largely attributable to a faster ramp-up from its new-product launches and high license income, CNY 0.6 billion more than what we had forecast. After adjustments, we bring forward profitability by two years to 2025. We raised our fair value estimate to HKD 58.10 per share from HKD 54.0. While it is positive that management decided to expand its global pipeline and conduct more overseas clinical trials, that will not have a material impact on our valuation yet, as these pipelines are still in the very early stages. Despite a strong rally of 16% after earnings, we still view shares as modestly cheap.

Innovent is a leading biotech company in China with strong roots in oncology, anchored by its core PD-1 drug Tyvyt. The price cut for PD-1 drugs has stabilized gradually. Hence, we expect stable revenue growth from Tyvyt in the next three years as Tyvyt has more indications approved.

China healthcare stocks under our coverage, with the exception of medical distributors, have surged 10% to 50% since the end of January, following excitement over DeepSeek. While artificial intelligence may help improve efficiency in the sector, we don’t know if and when the benefits will materialize, so we believe the recent share price rally reflects a shift in investor sentiment on previously oversold stocks. Namely, Sino Biopharm (up 19%), WuXi Biologics (up 34%), and KingMed (up 56%), are reaching or surpassing our fair value estimates. However, we think CSPC (up 10%), Innovent (up 16%), and Adicon (up 21%) are still attractive.

China’s National Medical Products Administration issued another supportive pilot policy earlier this week. Similar to other updates since the beginning of 2024, the policy aims to support innovative biological drugs, from regulatory approvals to manufacturing processes. While the policy could affect CSPC Pharmaceutical (narrow moat), China Resources Pharmaceutical (narrow moat), Shanghai Pharmaceuticals (narrow moat), Innovent Biologics (no moat), and Sino Biopharmaceutical (no moat), which derive most of their revenue from China and whose businesses develop or manufacture innovative biologic drugs, we don’t believe it's enough to change our fair value estimates for biotech companies or big pharmaceutical names. In our view, the fundamental shifts depend on (1) fewer price cuts on innovative drugs, (2) more customized public healthcare reimbursement policies, and (3) less uncertainty about whether an innovative drug will be adopted by hospitals once it is included in the public reimbursement.

Following Innovent’s decent interim results, we lift our fair value estimate to HKD 54.00 per share from HKD 50.80. Innovent is fairly valued, and we prefer to wait for a cheaper entry. We raise our 2024-25 revenue forecasts by 8%-9% and see narrower net losses in 2024-25 on the back of strong Tyvyt sales. While we account for the positive performance, we still only expect Innovent to become bottom-line profitable in 2026, driven by portfolio expansion. This is in line with management guidance that the company will achieve positive EBITDA (earnings before interest, tax, depreciation, and amortization) in 2025.

Innovent is a leading biotech company in China with strong roots in oncology, anchored by its core PD-1 drug Tyvyt. The price cut for PD-1 drugs has stabilized gradually. Hence, we expect stable revenue growth from Tyvyt in the next three years as Tyvyt has more indications approved.

We take a fresh look at Innovent’s pipelines after several updates in the past few days. Notably, Innovent sold its commercialized BCMA CAR-T product Fucaso to Iaso BioTherapeutics, and in return, Innovent acquired 18% of Iaso Bio’s shares as a strategic investor. We think the move is sensible as it allows Innovent to prioritize its potential new core assets such as Mazdutide and novel therapeutic targets such as CLDN 18.2. We keep our fair value estimate at HKD 50.80 per share as our long-term view on Innovent is unchanged. Our forecast risk-adjusted peak revenue for Mazdutide remains at CNY 7.6 billion, around 40% of Innovent’s total revenue.

We raise Innovent Biologics’ fair value estimate to HKD 50.80 per share from HKD 43.50, after strong 2023 results that led us to lift key growth assumptions. Revenue of CNY 6.2 billion, up 36.2% year over, surpassed our estimated CNY 5.4 billion. Growth was driven by its core asset Tyvyt, a PD-1 drug being included in the Chinese national drug reimbursement list. Tyvyt contributed revenue of USD 393.4 million in 2023 compared with USD 293.3 million in 2022, according to Eli Lilly's recent disclosures. It validates the view of a more dovish price cut on innovative drugs during China's national volume-based procurement. As such, we think the pricing of PD-1 drugs is likely to remain relatively stable in 2024 and 2025.