UBS has issued a research report maintaining a "Buy" rating on InnoCare Pharma (09969) with a target price of HK$21.8.

InnoCare Pharma has entered into a collaboration with Eli Lilly (LLY.US) to discover and develop up to five novel target programs, a development UBS views positively as recognition of the company's research and development capabilities.

The bank noted that upfront and near-term milestone payments total US$100 million, with potential development and commercial milestone payments reaching US$3.25 billion, along with tiered royalties on net sales at a single-digit percentage rate.

According to management, all programs will commence from the drug discovery stage. The related payments could provide upside potential to revenue and net profit in 2026.