In the first half of 2026, InnoCare Pharma Limited (ASX: 09969) recorded operating revenue of 1.137 billion yuan, up 55.46% year on year, while net profit attributable to shareholders reached 246 million yuan, swinging to a profit from a loss a year earlier, and non-GAAP net profit also hit 187 million yuan, up 327.38% year on year, marking the first time since listing that the company has been profitable on a half-year basis.

Yet on the other side of these stellar results, the two founding families have been taking turns cashing out. From April to September 2026, the Shi Yigong family and the Cui Jisong family collectively realized more than 100 million yuan through A-share centralized bidding and on-market sales in Hong Kong, among other channels. On September 24, just six days after the company announced a major R&D collaboration with Eli Lilly with a total potential value of 3.35 billion US dollars, the Cui Jisong family sold 5 million shares via the Hong Kong market.

Profits Turn Positive and a Major Deal Lands, So Why Are Both Founding Families Cashing Out?

InnoCare Pharma Limited (ASX: 688428) was co-founded by Cui Jisong and Shi Yigong in 2015, and from the outset it established a clear dual-family shareholding structure. The Cui Jisong family holds shares through Sunland BioMed Ltd and its parties acting in concert, while the Shi Yigong family holds shares through Sunny View Holdings Limited and its parties acting in concert. The two entities operate independently, and their combined stakes have long ranked among the top shareholders of the company.

Entering 2026, the two founding families began reducing their holdings in unison, with the timing closely overlapping with the release of positive news. The Shi Yigong family started selling earliest, in the second quarter of 2026. On April 30, InnoCare issued a disclosure notice stating that the combined shareholding of Sunny View Holdings Limited and its parties acting in concert had fallen from 8.21% to 7.98%, with the change resulting from the sale of 4 million shares in the Hong Kong market, crossing the 1% equity change disclosure threshold. In July, the Shi Yigong family reduced holdings further in the A-share market. On July 17, Shi Yigong's wife, Zhao Renbin, an executive director and senior vice president of hematology medical research and clinical development at the company, sold 50,000 A-shares, cashing out 1.415 million yuan.

Compared with the Shi Yigong family, the Cui Jisong family's reductions have been more frequent and more closely tied to the timing of positive company news. The first round occurred in July 2026. Under a reduction plan disclosed on June 25, Cui Jisong sold 206,200 shares, cashing out about 5.835 million yuan. The second round came after the major partnership was announced. On September 24, InnoCare announced the signing of an R&D collaboration and licensing agreement with Eli Lilly, with a total potential value of up to 3.25 billion US dollars, which the market viewed as a major breakthrough in the company's global R&D push. But judging by the deal terms, the 3.25 billion US dollar headline figure is more of a "paper value." Under the agreement, the payment structure is divided into three parts, of which upfront and near-term milestone payments total up to 100 million US dollars, payable after the agreement starts and early milestones are met, accounting for only about 3% of the total potential amount. The vast majority of payments are tied to clinical and commercialization milestones, leaving considerable uncertainty over future realization.

Just six days later, on September 30, Sunland BioMed Ltd, effectively controlled by Cui Jisong, sold 5 million shares in the Hong Kong market, causing the combined shareholding of its parties acting in concert to fall from 7.23% to 6.94%, once again crossing the 1% disclosure line. Based on the average transaction price that day, the sale amounted to about 73.95 million Hong Kong dollars, or roughly 68.03 million yuan. In terms of timing, the April sale came during a valuation recovery period before the first-quarter report, the July sale during a rally after the interim earnings preview, and the September sale right after the positive Eli Lilly collaboration was released. As a result, both families sold at relatively high points in their respective phases.

In fact, aside from major shareholders selling into strength this year, previous disclosures of positive information by the company have often been accompanied by share reductions by shareholders or executives. For example, two months after the approval of orelabrutinib for first-line indications, from June 10 to 18, 2025, King Bridge Investments Limited, a shareholder holding more than 5%, and its party acting in concert Success Growth Limited, reduced their holdings in the Hong Kong market, with their combined stake falling from 8.08% to 7.54%, crossing the 1% disclosure threshold. The insiders who know the company best choosing to repeatedly cash out into positive news may weaken investors' confidence in the company's long-term development.

A Profitability Milestone That Cannot Mask the Dilemma: Core Product Competition Intensifies and Successor Products Fail to Take the Baton

From a fundamental perspective, the return to profit in the first half of 2026 is an important milestone in InnoCare's development. At the same time, however, the company still faces hidden concerns such as non-recurring factors contributing to profit, a single revenue structure, and insufficient cash content in earnings, meaning the quality of its profitability still needs sustained verification. In the first half of 2026, total revenue was 1.137 billion yuan, up 55.46% year on year, a growth rate that further accelerated from full-year 2025. Of that, pharmaceutical sales revenue was 920 million yuan, up 43.2% year on year, serving as the core driver of revenue growth, while the remaining 217 million yuan came from other income and gains, mainly milestone payments from business development (BD) collaborations and technical service income, with a growth rate significantly higher than pharmaceutical revenue.

On the profit side, this half-year turnaround was driven not only by revenue growth but also by non-recurring gains. In the first half, the company recorded investment income of 21.2174 million yuan and financial expenses of -32.8239 million yuan (that is, net interest income), which together contributed about 54.04 million yuan to profit, accounting for 22% of net profit attributable to shareholders for the period. In terms of cash flow, net cash flow from operating activities in the first half of 2026 was 81.474 million yuan, turning positive year on year. But compared with the 246 million yuan in net profit attributable to shareholders, operating cash flow was only 33% of net profit, indicating that the cash content of earnings is not high.

On the business side, the company's core product orelabrutinib (brand name: Yinuokai) remains the absolute revenue pillar. As the company's first approved BTK inhibitor, orelabrutinib now has four indications included in the national medical insurance catalog, among which first-line chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) achieved rapid volume growth after being newly included in medical insurance, while the marginal zone lymphoma (MZL) indication continues to maintain its exclusive advantage. In the first half of 2026, orelabrutinib sales growth exceeded 30%, accounting for about 75%-80% of total pharmaceutical revenue, supporting the company's revenue base.

It should be noted that the BTK inhibitor space in which orelabrutinib competes is one of the most fiercely contested areas in hematology oncology. As of the second half of 2026, several BTK inhibitors have been approved in China, including first-generation ibrutinib, second-generation zanubrutinib, acalabrutinib, and orelabrutinib, as well as third-generation pirtobrutinib. In addition, since 2026 domestic drugs such as bexicasinib and lobrutinib have also been approved one after another, further crowding the space. In terms of the competitive landscape, orelabrutinib is facing a squeeze from both front and back. At the front are the first-mover advantages of mature competitors such as ibrutinib and zanubrutinib, while at the back are third-generation products and generic drugs. Eli Lilly's pirtobrutinib, the world's first non-covalent reversible BTK inhibitor, has differentiated advantages in resistance and safety, and began rapid volume growth in China after approval for relapsed/refractory CLL/SLL in February 2026, creating generational competition for second-generation products. In addition, the Chinese compound patent for ibrutinib will expire in December 2026, and companies such as Simcere Pharmaceutical have already secured first generic approval, with a large wave of generics expected to hit the market, making a price war inevitable.

Beyond orelabrutinib, InnoCare currently has two other marketed products, tafasitamab and zorifertinib, but neither is likely to become the next pillar product. Tafasitamab is mainly used to treat B-cell lymphoma, but that space is already extremely crowded, with Roche's rituximab biosimilar widely used and products such as BeiGene/Amgen's Blincyto (blinatumomab for injection) and Sinocelltech's ripertamab already on the market, making competition intense. Tafasitamab was launched late, its differentiated advantages are not obvious, and its sales ramp-up has fallen short of market expectations. Zorifertinib is used for NTRK fusion-positive solid tumors, but the mutation rate for this target is extremely low, making it a typical niche drug with a limited market size. At the same time, Bayer's larotrectinib and Roche's entrectinib were launched earlier, and as a second-generation product with limited efficacy improvement, zorifertinib faces considerable difficulty in market expansion.

In terms of the R&D pipeline, the company has laid out three major areas: hematology oncology, autoimmune diseases, and solid tumors, with the autoimmune space seen as particularly promising. Orelabrutinib is being developed for autoimmune indications such as primary immune thrombocytopenia (ITP) and systemic lupus erythematosus (SLE), and two TYK2 inhibitors have also made clinical progress in indications including atopic dermatitis and vitiligo. But the autoimmune space is likewise a red ocean. In the TYK2 field, Bristol Myers Squibb's deucravacitinib has already been approved, and domestic companies including Hengrui, BeiGene, and Innovent all have programs, leaving substantial uncertainty over clinical success rates and commercialization prospects. In the solid tumor pipeline, the company's SHP2 inhibitors and bispecific antibody-drug conjugates remain in early clinical stages, still far from launch, and face fierce global competition, with doubts remaining over whether they can ultimately succeed.