Pharmaceutical Industry Weekly Report: Focus on Mid-Year Earnings Season and Stocks with Low Base and Potential for Earnings Upside

Key Investment Points

Market Review: This week, the pharmaceuticals and biotechnology index fell by 0.84%, underperforming the CSI 300 Index by 2.07 percentage points, ranking 32nd in industry gains and losses. Since the beginning of 2025, the pharmaceuticals industry has risen by 21.28%, outperforming the CSI 300 Index by 16.96 percentage points, ranking 5th in industry gains and losses. The best-performing sub-sector this week was medical consumables, which rose by 3.9%. The top three best-performing sectors since the beginning of the year are pharmaceutical R&D outsourcing, active pharmaceutical ingredients (API), and chemical formulations, with changes of +48.1%, +40.7%, and +38.1%, respectively.

XtalPi Partners with Dovetree for AI-Driven Drug Discovery. XtalPi Holdings announced on August 5 that its indirectly wholly-owned subsidiary had entered into a definitive agreement with DoveTree Medicines LLC and its affiliates. Under the agreement, XtalPi will leverage its end-to-end artificial intelligence drug discovery platform, powered by "AI + robotics," to discover and develop small molecule and antibody-based drug candidates targeting key areas selected by DoveTree, including oncology, immunology and inflammation, neurology, and metabolic disorders. XtalPi has received an upfront payment of $51 million under the terms of the agreement. According to the agreement, XtalPi is entitled to receive an additional $49 million in payments and is eligible for potential regulatory and commercial milestone payments totaling up to $5.89 billion, as well as potential single-digit royalties based on the annual net sales of products. XtalPi’s “AI + robotics” technology platform demonstrates high efficiency in drug target discovery, molecular design, and screening, significantly shortening the R&D cycle and improving success rates. Continued attention should be paid to the progress of subsequent milestone achievements.

SINOMED's Self-expanding Intracranial Stent and Balloon Microcatheter Receive FDA Breakthrough Device Designation. In the company’s announcement after the market closed on August 6, the COMETIU@ Self-expanding Intracranial Drug-coated Stent System and COMEX™ Balloon Microcatheter received the Breakthrough Device Designation from the U.S. FDA. This marks the first-ever global intracranial atherosclerotic stenosis treatment product in the history of the U.S. FDA, as well as the first China-produced neurointerventional device to receive the U.S. FDA Breakthrough Device Designation. The technological advantages of the self-expanding drug-eluting stent mainly include: 1) Precise controlled drug release; 2) Significant risk reduction; 3) Excellent mechanical performance; 4) Efficient and safe operation; 5) Synergistic efficacy enhancement and safety upgrade. Clinical data (from 22/7~23/2, including 140 cases) shows that the restenosis rate at 6 months post-operation was as low as 1.71%; the restenosis rate at 1 year post-operation was only 1.87%, remaining stable compared to the 6-month mark; the stroke or mortality rate within 30 days post-operation was just 3.13%.

Angelalign's Performance Exceeds Expectations, Overseas Markets Enter the Harvest Period. On August 5, the company released a performance forecast, with H1 2025 net profit estimated at approximately $13.4 million to $14.8 million, representing a year-on-year increase of 538.1%-604.8%. The better-than-expected performance is mainly due to: 1) A low net profit base in H1 2024; 2) Delays in factory setup outside of China, resulting in lower investment and operating expenses in H1 2025; 3) Continuous growth in overseas market revenue. The company’s overseas revenue for 2023/2024 was $20.6 million/$80.5 million, with case numbers at 33,000/140,700. Early-stage cost frontloading led to increased overseas losses in 2023-2024. Currently, overseas markets are gradually entering the performance realization phase, as the initial market-building efforts near completion.

Stable Portfolio: Hengrui Medicine (600276), BeiGene (688235), Meinian Health (002044), Tonghua Dongbao (600867), Yahong Medicine (688176), Gan&Lee Pharmaceuticals (603087), Yifan Medicine (002019), SINOMED (688108), Pharmaron (300759).

Risk Warning: Risks from unexpected uncertainty in pharmaceutical industry policies; risks of R&D progress falling short of expectations; risks of performance not meeting expectations.