Fundamental Signals

Editor's Notes:

• Akeso recently saw a big price jump due to a significant label update in China for one of its flagship products. Its robust R&D track record (impressive breakthrough with efficacy outperforming Merck's $30B blockbuster + inclusion of all 5 self-developed drugs in NRDL in 2025) positions it as a rising global leader. The team is strong, and it's well-positioned.

• However, just like other early-stage R&D companies, the unprofitable and volatile financial profile makes it difficult to assign a value (multiples irrelevant). It's likely to be expensive at the moment - 28x fwd P/S vs. 3-5x P/S for Merck historically. With consensus around 50-60% YoY growth for the next few years, it would need get to 2029 to have 7.5x P/E, i.e. the market is likely giving full credit to Akeso now for the next 3 years. Upside can only come from another breakthrough (e.g. US FDA approval) or new clinical trial success. This is likely why sell-side brokers tend to give a Hold rating on the company now. Another issue may be the lack of near-term predictable catalyst, and the high-beta nature (given Akeso's lack of earnings-driven valuation metrics).

• With above said, Akeso seems to be a great company in the making. I would love to buy if the price pulls back a bit.

Akeso, Inc. (9926.HK) is a biopharmaceutical leader specializing in oncology and autoimmune therapies, driven by its proprietary bispecific antibody platform. Key takeaways include robust commercial growth, particularly from Cadonilimab and Ivonescimab following NRDL inclusion, and significant R&D investment. Despite strong sales momentum, the company faces challenges with sustained profitability due to high operating costs and volatile licensing income, making its path to long-term financial sustainability a central investor focus.

1. Company Snapshot

Akeso, Inc. (9926.HK) is a global biopharmaceutical company primarily focused on developing, manufacturing, and commercializing innovative therapies for oncology and autoimmune diseases. Its competitive advantage lies in its proprietary bispecific antibody platform, with products like Cadonilimab (first global PD-1/CTLA-4 bispecific antibody) and Ivonescimab (demonstrated superior efficacy against Keytruda in NSCLC) leading its pipeline and commercial efforts.

Revenue Mix (H1 2025)

2. Strategic Priorities & Key Drivers

Market Access and Reimbursement

Akeso has achieved significant commercial traction in China. The inclusion of Ivonescimab for NSCLC in the National Reimbursement Drug List (NRDL) (effective Jan 2025) is a major milestone.

More broadly, the inclusion of all five of its self-developed innovative drugs (Ivonescimab, Cadonilimab, Penpulimab, Ebdarokimab, Ebronucimab) in the 2025 NRDL (effective Jan 1, 2026) further solidifies its market position.

These inclusions are expected to drastically improve patient access, accelerate clinical adoption, and boost sales volumes in the vast Chinese market by reducing financial burden and expanding treatment options for prevalent cancers and other conditions.

Key Product: Ivonescimab (PD-1/VEGF Bispecific Antibody)

• Clinical Efficacy (China): Ivonescimab has shown remarkable clinical success. It received NMPA approval in May 2024 for locally advanced or metastatic non-squamous NSCLC. This approval was based on the HARMONi-A study, demonstrating superior efficacy to chemotherapy alone with a 26% reduction in death risk and 54% reduction in progression/death risk. Updated Phase III HARMONi-6 study results (Dec 2025) presented at ESMO Asia Congress further confirmed its superior efficacy over tislelizumab plus chemotherapy for advanced squamous NSCLC, significantly prolonging PFS by 4.24 months (11.14 months vs. 6.90 months). Critically, it has also outperformed Merck's blockbuster Keytruda in certain Chinese Phase III lung cancer trials.

• Pipeline Expansion: Ivonescimab's combination therapy for first-line triple-negative breast cancer (TNBC) received Breakthrough Therapy Designation (BTD) from China's NMPA (Nov 2025).This designation is supported by strong Phase II data (ORR 83.3%, DCR 100% in CPS10 subgroup, mPFS 15.9 months). A Phase III trial is underway.

• Global Ambitions & Challenges: Akeso licensed ivonescimab to Summit Therapeutics for ex-China development, with a U.S. patent extending until 2039. Analysts project significant global sales, reaching $4.4 billion by 2030 and potentially $53 billion at peak.However, the U.S. FDA rejected the use of China clinical trial data for U.S. approval, mandating new U.S. Phase III studies. Moreover, the FDA stipulated a statistically significant overall survival (OS) benefit for NSCLC approval, which Summit's HARMONi study did not meet. Despite this, Summit plans to submit a BLA in Q4 2025, creating regulatory uncertainty for its U.S. market entry.

Key Product: Cadonilimab (AK104, PD-1/CTLA-4 Bispecific Antibody)

• Regulatory Progress (China & Global): Cadonilimab was approved in China as a first-line treatment for advanced gastric cancer in combination with chemotherapy.The NMPA also granted priority review for its New Drug Application (NDA) for relapsed or metastatic cervical cancer (Sept 2020), citing promising safety and efficacy with lower toxicity. Globally, the U.S. FDA approved a global Phase III study (COMPASSION-37/AK104-311) for cadonilimab in gastric cancer, marking its second international registrational study, showing a 39% reduction in death risk in long-term data.

• Clinical Data: Positive Phase II COMPASSION-25 trial results for cadonilimab as a neoadjuvant therapy for resectable gastric/gastroesophageal junction adenocarcinoma were reported, demonstrating a 28.6% pCR rate overall.A pivotal Phase III (COMPASSION-33) study was initiated in August 2025 based on these results.

Pipeline Expansion and Diversification

• Neurodegenerative Diseases (AK152 for Alzheimer's Disease): A significant strategic move was the NMPA approval in November 2025 for clinical trials of AK152 for Alzheimer's Disease in China.AK152 is a novel bispecific antibody, notable as the first bispecific antibody developed in China for AD disease-modifying therapy and Akeso's first therapeutic candidate targeting the central nervous system (CNS). Preclinical data showed superior efficacy over conventional monoclonal antibodies, with improved brain penetration and accelerated Aβ plaque clearance.

• Novel Modalities (Bispecific ADC & mRNA Vaccine): Akeso is advancing into next-generation therapeutics. Its first bispecific antibody-drug conjugate (ADC), AK146D1, entered Phase Ia clinical trial (July 2025).Furthermore, its first mRNA-based therapeutic, the personalized mRNA vaccine AK154, entered Phase I clinical trials for adjuvant treatment of pancreatic cancer (Nov 2025).

• Other Oncology Assets:

  • Ligufalimab (AK117): Received FDA Orphan Drug Designation for AML (Sept 2025), offering incentives and 7 years market exclusivity. Phase III trials for AK117-302 in head and neck squamous cell carcinoma have also been initiated.

  • Akeso is developing gocatamig and I-DXd for ES-SCLC (Nov 2025 study initiation), and AK112 and AK104 are also noted in this segment.

  • Akeso is recognized in pipeline reports for Colorectal Cancer and Esophageal Cancer.

• Beyond Oncology: Akeso is also a prominent player in the Global Psoriasis Treatment Market, which is projected for significant growth (from $35.0 billion in 2024 to over $87.6 billion by 2035).

Financial Outlook and Industry Trends

The innovative drug industry, especially in new technologies like bispecific antibodies and ADCs, is experiencing an improving outlook. Chinese R&D is becoming a global leader, leading to a "rediscovery" and revaluation of innovative pipelines like Akeso's.

The global bispecific antibodies market is expected to grow dramatically at a 43.8% CAGR to over $100 billion by 2031, positioning Akeso for substantial opportunities.

In summary, Akeso, Inc. is implementing a multi-pronged strategy to develop and commercialize innovative biopharmaceuticals. Despite facing U.S. regulatory hurdles for Ivonescimab, the company maintains a robust domestic market position in China, supported by comprehensive NRDL inclusion. Its promising clinical data across a broad oncology pipeline and strategic expansion into neurodegenerative diseases and novel therapeutic modalities position Akeso as a dynamic and growth-oriented biopharmaceutical entity.

3. Financial Scorecard

Annual Trends (RMB Million)

Recent Momentum (H1 2025)

• Balance Sheet: Akeso maintains a strong liquidity position with RMB 7,343.85 million in Cash & Short-Term Investments as of FY2024. However, finance costs increased in H1 2025 due to a larger borrowing scale, while capital commitments for manufacturing and R&D facilities remain significant (RMB 653.2 million as of June 30, 2025).

• Valuation Context: Not Meaningful

  • NTM_PE: Current 156.2x (3Y Range: 20.6x - 27947.9x)

  • NTM_Ev_Ebitda: Current 95.7x (3Y Range: 13.8x - 2716.7x)

4. Recent News - Chronological Developments:

Early 2026

January 6, 2026:

Akeso announced that the National Medical Products Administration has approved a significant label update in China for Ivonescimab.

The approval was based on positive clinical data from the HARMONi-A study, showing statistically significant improvements in progression-free survival (PFS) and overall survival (OS). The study reduced the risk of death by 26% and disease progression or death by 54%. This news led to Akeso's stock increasing by 6.15% on the Hong Kong Stock Exchange.

Late 2025

December 31, 2025:

• Citi downgraded Akeso's rating from 'Buy' to 'Hold', though it increased the price target from HKD 100 to HKD 116. This was part of a broader review of China's biopharmaceutical sector, emphasizing a more selective stock-picking strategy.

• Akeso restructured its monoclonal antibody manufacturing deal with Chia Tai Tianqing, establishing a shared production arrangement where both Akeso Biopharma and Nanjing Tianqing will produce equal quantities of MAb products.

December 19, 2025: JPMorgan reiterated a positive outlook for the biotech and CXO sectors for 2026. This view considered recent market pullbacks as entry opportunities, citing strong fundamental trends in healthcare and sustainable licensing-out of innovative drugs.

December 17, 2025: Akeso Biopharma's Ivonescimab demonstrated superior efficacy compared to Merck's Keytruda in certain Chinese Phase III trials for lung cancer. This achievement, comparing favorably to a drug with projected 2024 sales of $30 billion, was lauded as a "DeepSeek moment" for the Chinese pharmaceutical industry.

December 12, 2025: The U.S. FDA granted approval for a global Phase III study (COMPASSION-37/AK104-311) for Akeso's Cadonilimab (AK104) in gastric cancer. This marks the second international registrational study for cadonilimab.

Long-term follow-up data showed a 39% reduction in the risk of death when cadonilimab was combined with chemotherapy.

December 11, 2025:

• Ivonescimab combination therapy for first-line triple-negative breast cancer (TNBC) received Breakthrough Therapy Designation (BTD) from China's NMPA (CDE). This was based on positive efficacy and safety data from a Phase II clinical study.

• Longer-term data presented at the 2025 ESMO IO Congress showed an Objective Response Rate (ORR) of 83.3% and Disease Control Rate (DCR) of 100% in the CPS10 subgroup, with a median Progression-Free Survival (mPFS) of 15.9 months. A Phase III clinical trial is currently ongoing.

December 9, 2025:

• Akeso presented updated results from the pivotal Phase III HARMONi-6 study (AK112-306) for Ivonescimab at the 2025 ESMO Asia Congress. The study showed that ivonescimab combined with chemotherapy demonstrated superior efficacy and quality of life benefits compared to tislelizumab plus chemotherapy for first-line advanced squamous non-small cell lung cancer (sq-NSCLC).

• This combination achieved a significant prolongation of PFS (HR 0.60, P < 0.0001) and an absolute PFS improvement of 4.24 months.

• A supplemental New Drug Application (sNDA) for Ivonescimab + chemotherapy for first-line advanced sq-NSCLC was accepted for review by China's NMPA (CDE) in July 2025, based on HARMONi-6 study results.

• Akeso's Cadonilimab was approved in China as a first-line treatment for advanced gastric cancer in combination with chemotherapy, based on demonstrated survival benefits.

• Positive Phase II COMPASSION-25 trial results for Cadonilimab were reported, showing encouraging data as a neoadjuvant therapy for resectable gastric or gastroesophageal junction adenocarcinoma (28.6% pCR overall). This led to the initiation of a pivotal Phase III study (COMPASSION-33) in August 2025.

• Akeso formalized a strategic licensing agreement with Summit Therapeutics for the ex-China development and commercialization of Ivonescimab. Summit is conducting Phase III studies in the U.S. for lung cancer and colorectal cancer, with U.S. patent exclusivity extending until 2039. Analysts project worldwide sales of ivonescimab to reach $4.4 billion by 2030 and peak at $53 billion.

• Significant Challenge for U.S. Market: The U.S. FDA stated it would not accept China clinical trial data for Ivonescimab approval, necessitating new U.S. Phase III studies. Furthermore, the FDA indicated a requirement for a statistically significant overall survival benefit for NSCLC marketing approval, which the HARMONi study (conducted by Summit) did not meet. Despite this, Summit plans to submit a Biologics License Application (BLA) in Q4 2025, leading to considerable stock volatility for Summit.

December 8, 2025: Akeso announced the successful inclusion of all five of its self-developed innovative drugs (Ivonescimab, Cadonilimab, Penpulimab, Ebdarokimab, and Ebronucimab), along with their approved indications, into China's National Reimbursement Drug List (NRDL) for 2025. This inclusion is effective January 1, 2026, and is expected to significantly enhance market access and commercialization.

November 27, 2025: Akeso initiated a three-part study to evaluate gocatamig and I-DXd for Extensive-Stage Small Cell Lung Cancer (ES-SCLC), including participants from Japan and China.

November 26, 2025: The broader outlook for the innovative drug industry is improving, driven by breakthroughs in new technologies like bispecific/multispecific antibodies and ADCs. Chinese R&D in these areas is emerging as a global leader, leading to a reshaping of valuations for companies like Akeso, whose early-stage innovative pipelines are being "rediscovered" and reasonably priced.

November 25, 2025: Akeso initiated clinical development for its first bispecific antibody-drug conjugate (ADC), AK146D1, by dosing the first patient in a Phase Ia trial. This ADC targets Trop2 and Nectin4.

November 21, 2025: Akeso initiated Phase III trials for AK117-302 targeting head and neck squamous cell carcinoma.

November 20, 2025: Akeso was identified as a key player in the rapidly expanding global bispecific antibodies market. This market is projected to grow from US$10.8 billion in 2024 to US$101.7 billion by 2031, at a Compound Annual Growth Rate (CAGR) of 43.8%. This growth is driven by advancements in immuno-oncology and increasing cancer prevalence.

November 17, 2025:

• China's NMPA approved clinical trials for AK152, a novel bispecific antibody, for Alzheimer's Disease (announced Nov 16, 2025). This is a significant breakthrough as AK152 is the first bispecific antibody developed in China for AD disease-modifying therapy and Akeso's first therapeutic candidate targeting the central nervous system (CNS). Preclinical data indicated strong bioactivity, improved brain penetration, accelerated Aβ plaque clearance, and superior efficacy over conventional monoclonal antibodies.

• Ligufalimab (AK117) was granted FDA Orphan Drug Designation for acute myeloid leukemia (AML) in September 2025. This designation provides development incentives and 7 years of market exclusivity upon approval.

• Akeso initiated a Phase I clinical trial for its personalized mRNA vaccine AK154 in pancreatic cancer (first mRNA-based therapeutic), for adjuvant treatment, as monotherapy or in combination with cadonilimab/ivonescimab.

November 12, 2025: Akeso Biopharma is noted as a prominent company in the global Psoriasis Treatment Market. This market is projected to grow from US$35.0 billion in 2024 to over US$87.6 billion by 2035, at a 9.5% CAGR.

5. Key Debates & Risks

Bullish Arguments for Akeso:

Bulls contend that Akeso is on the cusp of significant commercial success, driven by its highly innovative and clinically validated bispecific antibody pipeline. Ivonescimab, with its demonstrated superior efficacy (including OS benefit) against competitors like Keytruda and its Breakthrough Therapy Designation (BTD), is a potential blockbuster globally. This potential is reinforced by the Summit Therapeutics licensing deal and pending FDA Biologics License Application (BLA).

Cadonilimab's NMPA approval and priority review status further strengthen Akeso's domestic market position, aided by National Reimbursement Drug List (NRDL) inclusion of key drugs. Insider confidence, as seen in the Akeso-affiliated entity's investment in Summit, underscores the belief in the company's undervalued potential. The company's technology validation and strong regulatory momentum in China establish it as a formidable player in immuno-oncology.

Bearish Arguments for Akeso:

Bears argue that despite strong clinical data, Akeso faces substantial commercialization and financial hurdles. The FDA's potential skepticism regarding ivonescimab's BLA due to missing OS endpoints in prior HARMONi studies could impede global market access. Intense competition from established global pharmaceutical companies poses a constant threat.

Financially, the company's increased R&D expenses, rising cost of sales, significant equity investment losses on Summit Therapeutics, decreased license income, and growing finance costs signal potential profitability challenges and cash burn. The combined CEO/Chairwoman role and unhedged foreign exchange exposure present governance and financial stability risks. Furthermore, a high valuation (P/E ~50x forward) leaves the stock vulnerable to broader market volatility, macro headwinds in China, or any delays in the commercial ramp-up. The recent Daiwa downgrade to "Hold" suggests that near-term catalysts might be limited, tempering immediate upside expectations.

Disclaimer: This content is generated using AI, synthesizing public data (filings, reports, news) and social media (Reddit, X). It may contain errors, inaccuracies, or hallucinations. Nothing herein constitutes financial advice. This newsletter is for informational purposes only; please consult a qualified professional and conduct your own due diligence before making any investment decisions.