This article only represents the author's own views.

After years of cash burning to support its drug development and Hong Kong listing, Lepu Biopharma Co. Ltd. (2157.HK) has entered a new phase as it graduates from the ranks of revenue-less drug makers to a more elite class of money-makers. It crossed that major milestone after one of its independently developed PD-1 monoclonal antibodies was approved last year. Last month, one of its joint ventures signed a lucrative licensing deal with multinational AstraZeneca (AZN.LN) for a different drug, and stands to get $63 million in prepayments. And as icing on the cake, Lepu Biopharma’s own 2022 annual report published last Friday showed it posted its first-ever recurring revenues last year.

Specifically, Lepu Biopharma brought in a relatively modest 15.57 million yuan ($2.26 million) in 2022, the report showed, all from its recently approved Pucotenlimb drug. That might be much lower than revenue for more established rivals like BeiGene (BGNE.US; 6160.HK; 688235.SH) and Innovent Biologics (1801.HK). But every journey begins with a single step, and Pucotenlimb has plenty of potential for the treatment of late-stage colorectal cancer and melanoma patients. The drug’s treatment for both indications was approved last year, and sales officially began in November. But the road won’t be all smooth sailing on that front, since the drug will face cutthroat competition from more than 10 drugs in the PD-1 antibody segment already launched in China alone. Instead, the company’s biggest potential could come from its strong pipeline of antibody-drug conjugates (ADC), an emerging class of highly targeted drugs for treatment cancer. More on that shortly.