Eyes on pivotal ivonescimab readouts

Akeso (9926 HK) Eyes onpivotalivonescimabreadouts In FY25, Akeso delivered strong product sales of RMB3.0bn (+52% YoY),trackingclosely with our previous estimates of RMB3.1bn.This top-linemomentumwas primarily driven by the Jan 2025 NRDL inclusions ofcadonilimabfor 2L+ CC and ivonescimab for 2L+ EGFR-mutated NSCLC.Looking ahead to FY26, we anticipate a further acceleration in revenue growth,catalyzed by the Jan 2026 NRDLinclusion for major front-line indications,includingcadonilimabin 1L GC and 1L CC, as well asivonescimabin 1L PD-L1+NSCLC.Operationally,Akeso demonstrated meaningful operatingleverage.Selling and R&D expenses as a percentage of product salescontracted to 47% and 51%, respectively (down from 49% and 56% in FY24).Gross profit margin normalized to 79%in FY25(from 86% in FY24), reflectingpricecutsassociated with NRDL inclusions. Despite a reported attributable netloss of RMB1.14bn (vs. RMB501mn in FY24), Akeso maintains a strong balancesheet with RMB9.2bn in cash and equivalents as of end-FY25, providing amplerunway for its extensive late-stage clinical programs.We look forward toivonescimab’s pivotal data readouts, and maintain our BUYrating for Akeso witha target price ofHK$185.80. Target PriceHK$185.80(Previous TPHK$182.12)Up/Downside47.0%Current PriceHK$126.40 China Healthcare Jill WU, CFA(852) 3900 0842jillwu@cmbi.com.hk Andy WANG(852) 3657 6288andywang@cmbi.com.hk Stock Data Expect criticalpivotal Ph3 readoutsforivonescimab.Ivonescimabhasalready met its primary PFS endpoint in the head-to-headChinaPh3 trial(Harmoni-6)versus tislelizumab plus chemotherapy in 1L sq-NSCLC,demonstrating a compelling mPFS of 11.1 vs 6.9 months (HR=0.60). Weawait theinterim OS data readouts this year.On the global front, weanticipateAkeso’spartnerSummit to report interim mPFS data from theglobal Ph3 Harmoni-3 trial (1L sq-NSCLC cohort) in 2Q26, followed by finalPFS and interim OS readouts in 2H26. For the nsq-NSCLC cohort ofHarmoni-3 trial, enrollment completion is targeted for 2H26, with a final PFSreadout expected in 1H27. Furthermore,the FDA has set a target actiondate of Nov 2026 for the EGFR-TKI resistant NSCLC indication. While theoutcome of the review remainsuncertain, this represents the potential firstFDA approval for ivonescimab. Cadonilimab accelerates global expansion.Akeso is aggressivelyadvancing the global footprint ofcadonilimabthrough two pivotal trials. Theinitiation of a global Ph2 registrational trial evaluatingcadonilimabpluslenvatinib in IO-resistant 2L HCC represents a critical milestoneas the firstglobal pivotal trial forcadonilimab. Additionally, bolstered by compellingefficacy signals—particularly in PD-L1 low-expressing populations—Akesoislaunching a head-to-head global Ph3 MRCT of cadonilimab pluschemotherapy versus chemotherapy +/-nivolumab in 1L GC. Source: FactSet IO2.0 plus ADC strategy.Akeso’s proprietary HER3 ADC andTROP2/Nectin-4 ADC are currently advancing into Ph2 trials. UnderpinningAkeso's "IO 2.0 + ADC" paradigm, we expect the Company to aggressivelyevaluate combinatorial regimens pairing these ADCs withcadonilimabandivonescimab. Maintain BUY.We look forward to the data readouts of ivonescimab(Harmoni-6 interim OS and Harmoni-3 PFS).Factoring into the strongproduct sales,wereviseour TP from HK$182.12to HK$185.80(WACC:8.37%,terminal growth:4.5%). Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities andFutures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGM RatingsBUY :Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broa