KELUN-BIOTECH(6990.HK)ADVANCING NEXT-GENERATION ADC THERAPEUTICS：INNOVATIVE STRATEGY IN ONCOLOGY AND BEYOND-格隆汇

机构：招银国际
研究员：Jill WU/Andy WANG

　　Kelun-Biotech reported strong financial results for 2024, driven by milestone payments from global collaborations and the progression of its innovative pipeline. The Company recorded revenue of RMB 1.93bn, achieving 25.5% YoY growth. Licensing and collaboration agreements contributed RMB 1.86bn revenue, reflecting strong partnerships, particularly milestone payments from MSD. Product sales reached RMB 51.7mn, as the Company began generating revenue from its newly approved drugs. R&D expenses increased to RMB 1.21bn (+17.0% YoY), reflecting investments in clinical trials. The Company narrowed its net loss significantly to RMB 266.8mn, an improvement from RMB 574.1mn in 2023, as revenue growth outpaced cost expansion. Cash & financial assets totaled RMB 3.08bn at end-2024, ensuring sufficient capital for commercialization and pipeline development.
　　Significant strides in commercialization. To date, the Company already has three commercialized assets, including Sac-TMT (Trop2 ADC), A140 (cetuximab) and A167 (PD-L1). For Sac-TMT, the drug already received the NMPA’s approval for TNBC (Nov 2024) and 3L EGFRm NSCLC (Mar 2025), and its NDA for 2L EGFRm NSCLC is expected to be approved in 2H25. A166 (HER2 ADC)’s NDAs were accepted for 2L and 3L HER2+ BC, with approvals expected by 2H25. The Company grew its commercial team to 360 employees by end-2024, with plans to expand to 500+ by 2Q25. We believe this year will be a critical year for validating the Company’s commercialization capabilities. Given that the Company will fully leverage Kelun Pharma’s industry experience and resources, combined with the Company’s independently established commercialization network, we are confident in achieving the RMB 800mn to 1.0bn sales target for Sac-TMT this year.
　　Sac-TMT being the only TROP2 ADC proving OS benefit in TKI-resistant EGFRm NSCLC. We expect overwhelming China pivotal results of Sac-TMT in 3L EGFRm NSCLC to be released at this year’s ASCO meeting. We believe the significant PFS and OS benefits will further confirm Sac-TMT’s best-in-class position in this treatment setting. As of now, MSD has initiated 12 global Phase III clinical trials for Sac-TMT, primarily focusing on breast cancer, lung cancer, gastrointestinal tumors, and gynecologic tumors, demonstrating MSD's strong confidence in this drug.
　　Second wave of innovation. Kelun-Biotech is advancing a multi-pronged ADC strategy across oncology and non-oncology, leveraging novel payloads, bispecific ADCs, and next-generation conjugation technologies. In oncology, the Company develops differentiated ADCs targeting validated (e.g., SKB315, SKB410) and first-in-class (e.g., SKB571, SKB518, SKB535, SKB445) antigens. SKB571, its first bispecific ADC, mainly targets lung cancer, CRC and other solid tumors. Beyond cytotoxic ADCs, SKB107, a radiopharma drug conjugate (RDC), targets bone metastases by delivering targeted radiation, aiming to treat tumor- induced bone metastases and prevent skeletal-related events.
　　Maintain BUY. We remain confident about Sac-TMT’s global development and commercialization in China. We raise our DCF-based TP from HK$227.88 to HK$299.93 (WACC: 8.84%, terminal growth rate: 4.0%).