Key takeaway

On July 31, the company released its 1H26 results. Overall results were strong and in line with consensus. The company recorded revenue of RMB1.205bn in 1H26, up 220.88% YoY. Revenue from its core business increased by 44.3% YoY, reflecting strong overall business performance. The company achieved a half-year profit for the first time in 1H26, mainly driven by the strong performance of its core business and revenue and profit contributions from international collaborations. Against this backdrop, clinical development of the company's core pipeline assets ZG005 and ZG006 continues to advance efficiently. Further clinical data and their future commercialization are worth anticipating.

Event

On July 31, Zelgen released its interim report for 2026.

Quick Take

Strong earnings growth in 1H26, with overall results in line with consensus

The company recorded revenue of RMB1.205bn in 1H26, up 220.88% YoY; net profit attributable to shareholders of the parent company was RMB640mn, up 979.09% YoY; and net profit attributable to shareholders of the parent company excluding non-recurring gains and losses was RMB617mn, up 700.66% YoY. The company's strong results in 1H26 were mainly driven by RMB660mn in revenue from product technology licensing, while its core business also performed strongly, with revenue increasing by 44.3% YoY. On the profit side, the company achieved a half-year profit for the first time since its establishment, mainly driven by the strong performance of its core business and revenue and profit contributions from international collaborations.

On the product front, clinical development of ZG005 and ZG006 continues to advance. ZG005 (PD-1/TIGIT) has initiated two pivotal Phase III clinical trials for first-line liver cancer and first-line neuroendocrine carcinoma. ZG006 is undergoing three pivotal Phase III clinical trials covering advanced small cell lung cancer, recurrent small cell lung cancer, and advanced neuroendocrine carcinoma. In addition, ZG006 has received two breakthrough therapy designations from the CDE and two orphan drug designations from the FDA. The product has significant potential, and future data are worth anticipating.

Breakthroughs in commercialization, clinical progress of pipeline drugs continues Jicaxitinib Hydrochloride Tablets: Approved for marketing by China's National Medical Products

Administration in May 2025, this product is indicated for intermediate- and high-risk myelofibrosis treatment. As the first domestically developed JAK inhibitor approved in China, it addresses the longstanding market gap in this therapeutic area that previously relied on imported drugs. In terms of commercialization, the product gained rapid traction after sales began in June and has been included as a Level I recommendation in the "CSCO Guidelines for the Diagnosis and Treatment of Hematologic Malignancies 2025." In December 2025, Jicaxitinib Hydrochloride Tablets were successfully included in the national reimbursement drug list, demonstrating significant potential for marketing. In terms of indication expansion, the indication for treating severe alopecia areata has been approved, and its subsequent commercialization is worth anticipating. The Phase III clinical trial for ankylosing spondylitis has met its primary efficacy endpoint, while the Phase III trial for moderate-to-severe atopic dermatitis and the Phase II/III trial for vitiligo are both progressing. This multiindication strategy will unlock greater market potential.

Recombinant Human Thrombin for Injection: As an innovative surgical hemostatic agent, it was launched in 2024 and included in the National Reimbursement Drug List in early 2025. Clinical data demonstrate that the product takes effect within 30 seconds, with a hemostasis rate significantly superior to the placebo group. With the support of promotional resources from our partner Grand Pharma, the number of participating hospitals has grown rapidly, and sales have increased significantly due to medical insurance coverage, making it one of the key revenue growth drivers.

Recombinant Human Thyroid-Stimulating Hormone for Injection: The product met the endpoint in the Phase III clinical trial for postoperative adjuvant diagnostic use and was approved for marketing in January 2026, with promising commercialization prospects. In 2022, China reported approximately 466,100 new cases of thyroid cancer. According to Frost & Sullivan data, the Chinese market for recombinant human thyroidstimulating hormone is projected to reach 571 million yuan by 2028. The company's product can address the domestic gap in postoperative precision diagnostic drugs, enhance patient survival rates and life expectancy, and is expected to offer greater support for thyroid cancer patients. In addition, the company has partnered with Germany's Merck, granting it exclusive promotion rights for a potential licensing fee of up to 250 million yuan. By leveraging Merck's established channels, the company is poised to rapidly capture the market.

ZG006: As the world's first CD3/DLL3 trispecific antibody, it has been granted Orphan Drug Designation by the FDA and Breakthrough Therapy Designation by the NMPA. Data presented at the 2026 ASCO Annual Meeting demonstrated excellent efficacy in patients with SCLC and advanced neuroendocrine carcinoma. The company is currently progressing registrational clinical trials for third-line and beyond SCLC, as well as secondline and beyond neuroendocrine carcinoma. Additionally, a global collaboration with AbbVie has been established to further advance the drug's international clinical development.

ZG005: A recombinant humanized anti-PD-1/TIGIT bispecific antibody. Phase II data presented at the 2026 ASCO Annual Meeting demonstrated excellent efficacy in first-line liver cancer. Additionally, clinical trials are underway for this product as a monotherapy in second-line cervical cancer and in combination with bevacizumab for first-line liver cancer. Recently, it was approved for advanced solid tumor trials in combination with ZGGS18 and Jicaxitinib, with promising potential for synergistic efficacy.

Clear key milestones for 2026 with strong growth potent ial

The company has a strong pipeline of catalysts in 2026: ① The medical insurance policies for recombinant human thrombin and Jicaxitinib Hydrochloride continue to be implemented, with further expansion in hospital access, driving additional sales growth; ② Clinical data for ZG005 and ZG006, both as monotherapy and in combination, are expected to be further released; ③ ZG006 has entered into a collaboration with AbbVie, with overseas clinical trials progressing steadily.

Earnings forecast and investment rating

The company has a diverse pipeline of products in various therapeutic areas that have entered or are about to enter commercialization. The continued advancement of its pipeline ensures stable development. We forecast the company’s revenue for 2026–2028 to be RMB1.824bn, RMB1.915bn, and RMB2.202bn, respectively, with net profit of RMB745mn, RMB70mn, and RMB292mn, respectively. We maintain “Buy” rating.

Risks:

Uncertainty in new drug R&D. As tech innovation, the R&D of new medicine has features such as a long cycle, large investment, high risk, and low success rate. From lab research to approval, new medicines will go through preclinical research, clinical trials, registration and listing, after-sales supervision and many other complex procedures, and each is faced with the risk of failure. Existing products or treatments also have the risk of being replaced by new therapies and technologies.

Commercialization risks. Medical insurance cost control exceeds expectations, resulting in innovative drug pricing not meeting expectations; the company has exclusive products in the volume expansion phase, but the autoimmune drug market is highly competitive. Meanwhile, thrombin sales are in the early ramp-up phase, which could pose risks of sales share falling short of expectations or sales expense ratio being higher than anticipated.