Akeso (09926) Report Interpretation

Overview

This event update assesses new HARMONi-2 overall-survival data for Akeso's ivonescimab. J.P. Morgan considers the result strong, views it as favorable for two global Phase 3 trials, and retains its Overweight rating and HK$125 target price.

Core views

J.P. Morgan highlights that the updated HARMONi-2 overall-survival results show a statistically significant advantage for ivonescimab over pembrolizumab. The OS hazard ratio was 0.73, with a 95% confidence interval of 0.57-0.95 and p=0.009. Median OS reached 30.8 months in the ivonescimab arm, more than eight months above the 22.6 months reported for pembrolizumab. Safety was broadly comparable: serious treatment-related adverse events occurred in 29.9% of the ivonescimab arm and 21.6% of the pembrolizumab arm, while treatment-related adverse events leading to permanent discontinuation were 4.1% and 5.0%, respectively. The institution sees favorable read-through from the result to HARMONi-3's squamous cohort and HARMONi-7, both global Phase 3 trials. In HARMONi-2, the OS hazard ratio was 0.65 among squamous patients, better than the 0.79 reported for non-squamous patients. In patients with PD-L1 tumor-proportion score of at least 50%—the intended HARMONi-7 population—the OS hazard ratio was 0.58. J.P. Morgan argues that these subgroup outcomes raise its confidence in the forthcoming OS readouts for HARMONi-3's squamous cohort and HARMONi-7. The report also explains why it places more weight on the updated analysis than on the earlier OS result. The prior OS hazard ratio of 0.777 came from the first interim analysis, which used very little alpha spending and was considered immature because assumed median follow-up was only about 17 months, below the median OS of both arms. The WCLC update was the second planned interim analysis, with a prespecified 232 events and one-sided alpha of 0.0139. At the August 20, 2026 cutoff, median follow-up was about 36 months, 234 OS events had occurred, and one-sided alpha spending was 0.0141. J.P. Morgan expects the longer follow-up to provide a more meaningful assessment of ivonescimab's survival benefit and awaits further details, including results in older patients. Beyond the immediate trial update, J.P. Morgan's investment thesis identifies AK104 and AK112 as the main growth drivers. It expects AK104 indication expansion in China to generate about Rmb7 billion in China peak sales. For AK112, it expects NRDL inclusion to support sales momentum above Rmb7 billion in China peak sales, while its PD-(L)1/VEGF positioning and efficacy profile versus Keytruda could support ex-China peak sales of more than US$5 billion. The HK$125 December 2027 target price is based on a DCF valuation that estimates Akeso free cash flow through 2034, using a 3.0% terminal growth rate and a 9.6% WACC. The valuation table shows enterprise value of Rmb85,961 million, including Rmb61,780 million of terminal present value and Rmb24,180 million of present-value cash flow; after cash, debt, minority interest, early-pipeline assets and SMMT equity value, total equity value is Rmb104,075 million, or HK$125 per share.

Analysis framework

J.P. Morgan evaluates the updated HARMONi-2 survival result against its statistical plan, follow-up maturity, subgroup outcomes and safety profile. It then connects the subgroup evidence to the target populations of HARMONi-3 and HARMONi-7, while valuing Akeso through projected free cash flow to 2034 and a terminal-value DCF.

Methodology notes

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted cash flow valuation

  The target price is derived by forecasting Akeso's free cash flow through 2034 and discounting it using a 9.6% WACC, with a 3.0% terminal growth assumption.

• Event-Driven and Behavioral FinanceEvent-driven analysis

  Clinical-trial event analysis

  The report assesses the updated HARMONi-2 survival release, its statistical maturity and subgroup results to judge implications for later Phase 3 readouts.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Akeso (09926.HK)

  Primary covered company; the report links favorable HARMONi-2 survival data to confidence in its ivonescimab development program.

  Strengths

  Strong updated OS data, favorable subgroup results, AK104 expansion potential and AK112 sales potential in China and outside China.

  Comparison

  Ivonescimab median OS was 30.8 months versus 22.6 months for pembrolizumab; J.P. Morgan also cites a competitive efficacy profile for AK112 versus Keytruda.

  Risks

  Pipeline development setbacks and AK104 or AK112 sales below expectations.

Key data

• HARMONi-2 overall-survival hazard ratio0.7395% confidence interval of 0.57-0.95; p=0.009
• Median overall survival30.8 months vs 22.6 monthsIvonescimab arm versus pembrolizumab arm
• Squamous-patient OS hazard ratio0.65Compared with 0.79 for non-squamous patients
• PD-L1 TPS at least 50% OS hazard ratio0.58This population is the target population for HARMONi-7
• Second interim-analysis follow-up~36 months and 234 OS eventsAt the August 20, 2026 data cutoff
• DCF assumptions9.6% WACC; 3.0% terminal growthFree cash flow estimated through 2034
• Target priceHK$125.00December 2027 target price

Impact & implications

J.P. Morgan believes the mature HARMONi-2 OS evidence supports a positive interpretation of ivonescimab's efficacy and increases confidence in HARMONi-3's squamous cohort and HARMONi-7. Its valuation continues to reflect projected growth from AK104 and AK112.

Risks

• Pipeline development setbacks could weaken the investment case.
• AK104 or AK112 sales could fall below J.P. Morgan's expectations.

What to watch

• Detailed HARMONi-2 OS data expected from Tuesday's presentation, including outcomes in older patients.