"Big Banks" Citigroup: 3SBIO has reached a cooperation with Pfizer on SSGJ-707, target price raised significantly to 21 yuan

Citi stated that 3SBIO (01530.HK) and its subsidiary Shenyang 3SBIO announced a global (excluding China) licensing transfer collaboration with Pfizer (PFE.US) for its breakthrough PD-1/VEGF bispecific antibody (SSGJ-707); 3SBIO will receive: 1) a $1.25 billion upfront payment; 2) up to $4.8 billion in potential milestone payments; 3) a tiered double-digit percentage royalty on net product sales.

Citi believes that the progress of this transaction and the transaction price exceed market expectations. Global expansion is a core investment theme for innovative pharmaceutical/biotechnology companies. The bank believes that the licensing transfer trend is minimally affected by geopolitical risks, and this transaction should alleviate investor concerns. Innovative pharmaceuticals/biotechnology remain the bank's industry preference, with 3SBIO still being one of the top choices in the biotechnology sub-industry.

Citi has included the $1.25 billion upfront payment in 3SBIO's fiscal year 2025 revenue and incorporated SSGJ-707's overseas sales into the bank's model, raising the 2025 expected earnings per share forecast from RMB 0.96 to RMB 3.41, resulting in a new discounted cash flow (DCF) target price of RMB 21 (previously RMB 13); maintaining a "Buy" rating