Fu Hong Han Lin (02696) 2025 semi-annual report releases global growth signals. Overseas profits soared by more than 200%, driving innovation to open up room for growth

On August 21, Fuhong Hanlin (02696)'s intraday stock price hit HK$85.95, setting a new high since the company went public. At this point, the company's stock price has increased dramatically since the beginning of the year, with an increase of more than 250%, outperforming the index by a large margin.

The reason for this is that in recent years, Fuhong Hanlin has frequently experienced multiple advantages that have exceeded expectations in terms of products going overseas, innovative research and development, etc., and the company's “investment certainty” has been further verified. The stock price trend, which continues to rise, is also the most tangible reflection of this round of the Hong Kong stock innovative drug bull market.

Through the newly released 2025 mid-term results, investors can clearly see that, relying on the advantages of global systematization formed in various aspects such as innovative research and development, registration, clinical operation, global supply, and market commercialization, Fu Hong Hanlin is continuously improving its positive development cycle of “hard core innovation - global monetization - performance verification”. The above stock price increase data reflects the market's high recognition of the company's long-term value.

“High certainty” brought about by tapping the potential of core varieties

After 2 consecutive years of profit for the whole year, Fuhong Hanlin once again achieved high-quality and steady growth in the first half of this year, and progress in the internationalization of core products led to the achievement of results.

The company achieved total revenue of about 2,819.5 billion yuan in the current period, an increase of 2.7% over the previous year; among them, the company's six products achieved total global revenue of about 2,556.8 billion yuan, and operating cash flow exceeded 770.9 million yuan, an increase of 206.8% over the previous year, and continued positive inflows.

Financial reports show that at present, Fuhong Hanlin has launched 6 products in China, and 4 products have been approved for sale globally, reaching nearly 60 countries and regions, benefiting more than 850,000 patients around the world. The expansion of the global commercial landscape continues to accelerate.

During the reporting period, Fuhong Hanlin's overseas product profits surged by more than 200% year on year, and BD contract cash inflows exceeded 1 billion yuan, up 280% year on year, fully verifying the high growth of its international commercial layout. With the volume of sales of various core commercial products, overseas revenue and profits are expected to continue to grow rapidly throughout 2025, and are expected to accelerate further in 2026.

In the first half of this year, while the company's overall profit continued to advance steadily, its core products continued to accumulate long-term growth potential through adaptations and internationalization strategies. As the world's first anti-PD-1 monoclonal antibody approved for first-line treatment of small cell lung cancer, H Drug Hansform® achieved global product sales revenue of 597.7 million yuan during the performance period.

In the first half of 2025, the overseas market expansion of H drugs accelerated. They were successively approved in the European Union, Singapore, Malaysia, the United Kingdom and India for first-line treatment of extensive small cell lung cancer (ES-SCLC), and approved in Indonesia and Thailand to treat squamous non-small cell lung cancer (SqnsCLC). The global marketing scope has been expanded to nearly 40 countries and regions. In February of this year, Hansform® was approved for marketing in the European Union, becoming the first anti-PD-1 monoclonal antibody for ES-SCLC treatment in the region. In August, Fu Hong Hanlin announced that it had issued its first prescriptions in Europe, Germany and India respectively, marking a key breakthrough in the company's internationalization strategy.

The potential of Hans Shape® has yet to reach its peak. Currently, Fu Hong Hanlin is simultaneously carrying out more than 10 clinical studies of immunological combination therapy with H drugs as the core around the world, focusing on high-incidence cancer types such as lung cancer and gastrointestinal tumors. It is promoting market bridging tests in the US. It is expected to complete the recruitment of test subjects in 2025, and submit BLA applications in the US in the first half of 2026.

In addition, the phase III clinical study of the H drug LS-SCLC, the phase III clinical study of the new adjuvant/adjuvant treatment of gastric cancer, and the international multi-center clinical study (ASTRUM-015) phase III study of H drug combined with bevacizumab in first-line treatment of patients with metastatic colorectal cancer (mCRC) have all completed patient enrollment, laying the foundation for subsequent global registration.

It is believed that with the successive launch of more differentiated indications and the perfect international R&D and market layout of Fuhong Hanlin, it is expected to support the release of its global terminal market potential of more than 5 billion US dollars.

On the other hand, as another “cash cow” product of Fuhong Hanlin, Hanquyou® also achieved several milestones in the first half of the year. During the reporting period, Hanquyou®'s global sales revenue reached 1,444.2 billion yuan. Currently, it has been approved in Mexico and other countries, and has been approved in more than 50 countries and regions around the world, covering Asia, Europe, Latin America, North America and Oceania.

In addition, Fuhong Hanlin also introduced the intensive adjuvant drug Hannaijia® (nelatinib) to form a sequential treatment plan with Hanquyou® to reduce the risk of recurrence in early patients; at the same time, Fuhong Hanlin's self-developed pertuzumab biosimilar drug HLX11 has been accepted for marketing by Chinese, American and European regulators, and is expected to be approved by the US in the second half of the year. It is expected that it will be approved by the US in combination with Han Quyou® to form a “proper double target” plan.

As the construction of sequential treatment or combination treatment plans with Hannaijia® and HLX11 and Hanquyou® gradually matures, Fuhong Hanlin's strong commercialization capabilities and channel advantages in the field of breast cancer through Han Quyou® are expected to rapidly advance the layout and penetration of these products in the Chinese and global markets, further consolidating and strengthening their leading effect in the field of breast cancer treatment.

This also means that Fuhong Hanlin's accumulation in the development and commercialization of core products such as Han Quyou® and Hans Shape® is being efficiently transformed into momentum for its international commercial development. As the company's subsequent breast cancer treatment team and lung cancer+gastrointestinal tumor treatment team enter the international market one after another, its long-term value is expected to continue to be released in future financial reports, continuously improving the company's investment certainty and growth expectations in the secondary market.

The closed loop of integrated innovation continues to improve, further opening up room for growth

As far as Fuhong Hanlin is concerned, even though the stock price has risen by more than 250% from the beginning of the year to date, it is still far from reaching the upper limit. The reason is that unlike the previous round of innovative drug bulls in 2015-2021, which was policy-driven (accelerated drug review and 18A new policy for Hong Kong stocks), the core drivers of this round of the Hong Kong stock innovative drug market place more value on the hard core innovation ability of enterprises themselves, and this is the root cause of Fuhong Hanlin's rapid internal value growth at this stage.

On the R&D side, Fuhong Hanlin's overall R&D expenditure reached 995.4 million yuan during the reporting period. With strong R&D investment, the company adheres to a differentiated innovation strategy, built an international biopharmaceutical innovation platform integrating drug research and development, pharmacology, clinical, production quality, and commercialization, and continues to enrich and expand the innovation pipeline based on this.

At present, the company has deployed more than 50 molecules and more than 10 R&D platforms. The drug forms cover monoclonal antibodies, polyantibodies, antibody-conjugated drugs, fusion proteins, small molecule drugs, etc.

The Zhitong Finance App learned that in order to accumulate multi-drug usage data and accelerate the global approval and marketing process of products, Fuhong Hanlin is also actively promoting international multi-center clinical trials on a global scale, enrolling about 9,200 people in China, Australia, the United States, the European Union and other countries and regions. At present, the company has completed 800+ pharmaceutical administration registration applications and received more than 600 drug administration registration approvals, covering countries and regions such as China, the United States, the European Union, Canada, Australia, Indonesia and Japan, to comprehensively promote the product globalization process.

In addition to the above mentioned, Fuhong Hanlin is comprehensively promoting combined tumor immunotherapy based on the H drug Hansform®, and the company has also made breakthrough progress in clinical development of innovative products such as HLX43 (PD-L1 ADC) and HLX22 (new epitope HER2 monoclonal antibody).

Take HLX43, the core product of Fuhong Hanlin Innovation's research pipeline, as an example. In 2023, HLX43, a potential FIC/BIC variety, was approved for the first time by the Chinese NMPA for clinical trials of a new ADC drug, marking that the company's ADC pipeline has entered the clinical stage one after another. This is a novel ADC drug candidate targeting PD-L1, which has the dual mechanism of action of immune checkpoint blocking and payload cytotoxicity.

Previous preclinical studies have shown that HLX43 has shown remarkable efficacy in various tumors such as PD-1/PD-L1 monoclonal resistant non-small cell lung cancer, cervical cancer, and esophageal squamous cell carcinoma, and is well tolerated. At this year's ASCO annual conference, HLX43's phase I clinical data was released for the first time, showing that it showed “efficient and low toxicity” treatment potential in solid tumors such as NSCLC and TSCC, and the value of broad-spectrum anti-tumor drugs was highlighted.

Currently, Fu Hong Hanlin is making every effort to advance the clinical development process of HLX43 and actively explore its therapeutic potential in various solid tumors. Among them, for non-small cell lung cancer and thymic cancer, it is efficiently promoting international multi-center clinical research on this product in China, the US, Japan, Australia, etc., to shorten the global marketing cycle of HLX43 and accelerate the benefits of patients around the world. In addition, the company is also actively exploring HLX43's combined treatment plan and forward-looking layout of ADC combination treatment in order to achieve synergetic anti-tumor efficacy.

In addition to HLX43, Fuhong Hanlin's new epitope HER2 monoclonal antibody HLX22 in the research pipeline also deserves investors' attention.

As an innovative monoclonal antibody targeting new epitopes of HER2, according to long-term follow-up (median follow-up period of more than 2 years), HLX22 still showed stable efficacy benefits in the treatment of HER2-positive gastric cancer, far exceeding historical data.

Furthermore, research shows that adding HLX22 to Hanquyou® combined chemotherapy can improve the survival and anti-tumor response of patients with HER2-positive G/GEJ cancer in first-line treatment, and the safety is controllable, and is expected to reshape the first-line standard treatment for advanced gastric cancer. It is also based on high recognition of HLX22's research and development potential. In the first half of this year, the US FDA and European Commission (EC) successively granted HLX22 orphan drug qualification for gastric cancer treatment.

In addition, according to financial reports, Fu Hong Hanlin is also accelerating the promotion of potential FIC human sialidase fusion protein HLX79, a novel SIRPα-FC fusion protein HLX701 with a safety advantage over existing CD47 targeted therapies, innovative anti-PD-L1/VEGF double antibody HLX37, potential BIC KAT6A/B oral small molecule inhibitor HLX97, and DLL3xCD28 tri-antibody TCE developed based on the TCE platform HLX3901 The development process of potential innovative molecules such as HLX3902, EGFRxcmet dual antibody ADC HLX48 developed based on Hanjugator™, and potential FIC B7H3-sialacidase fusion protein HLX316.

While accelerating differentiated innovation and research, Fu Hong Hanlin is also continuing to promote international production and marketing, and improve the closed loop of its own innovation integration.

In order to efficiently cooperate with the global commercialization of the company's innovative drug pipeline, Fuhong Hanlin has established a complete and efficient global innovation center, carried out production and quality control in accordance with international pharmaceutical production quality management standards (GMP) standards, and continuously consolidated an international biopharmaceutical platform integrating drug R&D, production and commercialization.

In addition, the company has also signed commercial cooperation agreements with more than 20 international pharmaceutical companies, including Accord, Abbott, Elea, Essex (Essex), Intas, KGBio, Organon, and Sandoz. The external licensing of the products fully covers the mainstream European and American biopharmaceutical markets and many emerging markets. In the first half of this year, Fuhong Hanlin also reached strategic cooperation with Abbott, Dr. Reddy's, Lotus and Sandoz on a variety of core products to accelerate the expansion of major global markets. The three collaborations contributed a net cash inflow of about 670 million yuan.

Since the global commercialization performance of the company's core products Han Quyou® and H Pharmaceutical Hans Type® is ahead, it is enough for investors to believe that as Fuhong Hanlin's innovative integration and continuous improvement of the closed loop, innovations under development such as PD-L1 HLX43 and the new epitope HER2 monoclonal antibody HLX22 are expected to replicate the successful path of Hanquyou® and H Pharmaceutical Hansform® after future marketing, and differentiated innovation will become a “blockbuster” that will further open up room for the company's valuation growth.

Summarize

From a macro perspective, according to the latest macroeconomic study released by Goldman Sachs in August, the market's expectations for the Fed's interest rate cut in September are heating up, which is expected to attract more capital into the field of pharmaceutical innovation. The recent update of the domestic innovative drug policy has sent a signal of optimizing the payment system, and is also expected to further unlock the potential for commercialization of innovative drugs. Under multiple favorable catalysts, this round of Hong Kong stock pharmaceutical valuation repair is bound to be a long-term process with strong certainty.

Returning to Fu Hong and Han Lin, the Zhitong Finance App observed that since this year, many institutions at home and abroad have updated their research reports on the company and reaffirmed the “buy” rating, yet the target price given by it has repeatedly been broken through new highs in the company's stock price. Recently, Citi pointed out in a newly released research report that Fuhong Hanlin HLX43's WCLC data update is expected to further verify its potential in NSCLC treatment. It is believed that progress in the company's innovation pipeline will continue to drive valuation revaluation and drastically raise the company's target price to HK$95.