UBS has revised its forecasts for Innocare Pharma (09969), lowering sales projections for 2026 and 2027 while increasing expense estimates. This adjustment reduces the earnings per share forecast for 2026 and 2027 from RMB 0.06 and RMB 0.22 to RMB 0.04 and RMB 0.20, respectively. The target price has been cut from HK$21.1 to HK$19.8, although the Buy rating is maintained.

In the second half of last year, Innocare reported revenue of RMB 1.6 billion and net profit of RMB 673 million, broadly aligning with preliminary figures. Full-year 2025 revenue surged 135.3% year-over-year to RMB 2.37 billion, with a net profit of RMB 643 million, reversing a loss of RMB 441 million in 2024. The gross margin on product sales improved by 0.5 percentage points to 86.8%, and with upfront payments included, the overall gross margin rose 5.7 percentage points to 92%.

R&D expenses increased 16.9% to RMB 952 million, but as a percentage of product sales, they declined from 81% to 66%. Sales expenses grew 38.1% to RMB 580 million, yet their proportion to product sales dropped 1.6 percentage points to 40.2%. The company maintained a strong cash position of RMB 7.8 billion as of the end of last year.

The firm's guidance for this year was noted as slightly below expectations. Management anticipates orelabrutinib sales to grow at least 30% in 2026, driven by increased penetration in marginal zone lymphoma and inclusion in national insurance for first-line chronic lymphocytic leukemia/small lymphocytic lymphoma. Combined with contributions from newly launched zurletrectinib and tafasitamab, total product sales are expected to rise over 35% in 2026, slightly below the previous target of 35% to 40%. R&D spending is projected to increase about 20% due to several key ongoing clinical trials.