Three Major BD Deals in One Day Ignite Innovation Drug Rally: Hansoh Pharma Surges Nearly 4% with $1.53B Deal; HKEX Innovation Drug ETF (159570) Sees Over RMB 2.9B Net Inflows in 20 Days

Today (10.17), after two consecutive days of rebound, the Hang Seng Stock Connect Innovative Drug ETF (159570) once fell back by more than 1%, and the current decline has narrowed to 0.38%. The intraday turnover quickly exceeded 860 million yuan! In terms of capital flow, the net inflow in the past 20 days has exceeded 2.9 billion yuan! As of October 16,The latest scale of HK Connect Innovative Drug ETF (159570) exceeds 21.5 billion yuan, continuing to lead its peers in terms of scale and liquidity!

In terms of news,ESMO (European Society for Medical Oncology) 2025 Annual Meeting will be held in Berlin from October 17 to 21., multiple Chinese innovative pharmaceutical companies will announce breakthrough clinical research results, involving significant advancements in the treatment of kidney cancer, lung cancer, and other fields.

Recently, heavyweights in innovative drug BD have frequently emerged!

1. On October 17, Hansoh Pharma announced that it has licensed the global rights (excluding Greater China) for the CDH17 ADC new drug HS-20110 to Roche.The latter pays an upfront payment of 80 million US dollars, up to 1.45 billion US dollars in milestones, and a certain percentage of sales royalties.Total transaction amount up to 1.53 billion US dollarsHS-20110 is currently in global Phase I clinical trials.

2. On October 16, Purigin Biologics announced that it had reached a collaborative development agreement with Kite Pharma, a subsidiary of Gilead Sciences, for in vivo CAR-T therapy.According to the agreement, PreGenuity Bio received a $120 million upfront payment and up to $1.52 billion in milestone payments.Total transaction amount up to 1.64 billion US dollars, as well as a certain percentage of sales revenue sharing.

3. On October 16, Nanjing LeadGen Biologics announced an exclusive global partnership with Dianthus Therapeutics., will jointly advance the development of the novel anti-BDCA2/TACI bispecific fusion protein LBL-047 (DNTH212). VibeBio will grant Dianthus exclusive rights to research, manufacture, and commercialize LBL-047 outside of Greater China, receiving up to $38 million in upfront and near-term milestone payments.The total amount of this transaction can reach up to 1 billion US dollars.

As of 10:50, most component stocks of the Hang Seng Stock Connect Innovative Drug ETF (159570) were in the red: China Biologic Products fell more than 2%, while Akeso and CSPC Pharmaceutical Group dropped over 1%.BeiGene3SBio slightly fell.

Note: The constituent stocks are for display only and do not serve as individual stock recommendations.

[Q4 Awaits BD, Focus on ESMO Conference and Q3 Earnings]

Sinopharm SecuritiesPointed out that, due toBlockbuster drugs from overseas MNCs are successively facing patent cliffsThe strategy of introducing pipeline through BD to fill the revenue gap is expected to continue in the future. Analyzing global BD events over the years,Major BD Deals Land at Year-End。As a series of authoritative academic conferences such as the ESMO conference kick off in October, BD events are highly anticipated.Continue to be optimistic about the global competitiveness enhancement of China's innovative drugs, the improvement in their own operations, and the intensive implementation of BD collaboration industry trends.

In response to previous concerns about tariffs on medicines, Guojin Securities emphasized that the overseas expansion of China's innovative drugs is mainly through BD (Business Development) methods, which are essentially IP transactions and service trade, different from goods trade.Moreover, the gross profit margin of innovative drugs is relatively high. Even if they are self-produced and self-distributed, the actual impact of additional tariffs is limited. (Source: Goldsun Securities 20250927 "Innovative Drug Trend Upward Without Fear of Tariffs")

ESMO Congress Held from October 17-21, Multiple Chinese innovative pharmaceutical companies are about to disclose important oral reports (LBA). In the short term, attention can be paid to the key pipeline clinical data at major conferences. In addition,As the third-quarter reports approach, benefiting from the marginal improvement in domestic innovative drug investment and financing data, continued active BD transactions, and downstream innovation in drug technology iteration alongside high prosperity in niche sectors (ADC, bispecific antibodies, GLP-1, etc.), the main innovation-driven drug sector continues to be favored.(Source: Guojin Securities 20251011 "Focus on ESMO Congress and Q3 Earnings Report")

【Institution: Innovative drugs have significantly opened up a new growth curve for pharmaceutical enterprises in China】

Huayuan Securities stated,China MedicineThe industry has basically completed the conversion of new and old growth drivers (innovation replacing imitation, enhanced overseas expansion capabilities), especially innovative drugs significantly opening up a new growth curve for China's pharmaceutical enterprises. Specifically,

1. China InnovationNew IndustryAlready at scale,Hengrui MedicineHansoh Pharma, China Biologic Products and other traditional Pharma have completed an innovative transformation,Baili Tianheng, Kolon Biotech and other innovative drug companies are rapidly emerging as global First-in-class entities;

2. The ability to expand overseas is rapidly increasing, and Chinese pharmaceutical companies have become a highly valued source of innovative transformation for MNCs.Medical devices, supply chains, etc., have already gained a relatively high status globally, continuously making a name in both developed markets like Europe and America and emerging markets.

The demand side and the payment side are also continuously driving new growth:

1. Aging continues to accelerate,The demand for chronic diseases such as cardiovascular, endocrine, and orthopedic conditions continues to rise, indicating a long and prosperous road ahead for the silver economy.

2. From the payment perspective, the income and expenditure of medical insurance are still growing steadily.At the same time, the National Healthcare Security Administration is actively promoting the development of commercial insurance to build a multi-level payment system. (Source: Huayuan Securities 20251013 "25Q3 Earnings Preview")

[Focus on China's Hardcore Innovative Drug Power, Representative of New Quality Productivity, Recognize the Hong Kong Stock Connect Innovative Drug ETF (159570)]

HK Connect Innovative Drug ETF (159570) Index 100% Focuses on Innovative Drugs! As of September 30, the top ten constituent stocks account for a weight of up to 71.83%, highly concentrated essence of HK Connect innovative drugs!