CICC: Maintains 3SBIO's Outperform rating, raises target price to HKD 21.10

According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that it maintains the adjusted net profit forecast for 3SBIO (01530) at RMB 2.407 billion / RMB 2.602 billion for 2025/2026 (not including BD upfront payment income). The current stock price corresponds to an adjusted price-to-earnings ratio of 17.3 / 16.0 times for 2025/2026. It maintains an outperform rating for the industry, and considering the increase in sector valuation, the target price is raised by 56.3% to HKD 21.10, corresponding to an adjusted price-to-earnings ratio of 19.0 / 17.6 times for 2025/2026, implying a 10% upside potential. CICC's main points are as follows: Company Status On May 20, the company announced that it has authorized the global rights outside of mainland China for its PD-1/VEGF dual antibody (SSGJ-707) to Pfizer, which will also have the option for commercialization in the Chinese market. 3SBIO Guojian will also join as a signatory to this agreement. This overseas BD will bring significant flexibility to the company's performance According to the announcement, the company has authorized the global rights for the PD-1/VEGF dual antibody outside of mainland China to Pfizer, while retaining development, manufacturing, commercialization, and other development rights in mainland China. Pfizer has the option to commercialize the licensed product in China and will be responsible for all future development and regulatory costs in the licensed regions. Pfizer will pay a USD 1.25 billion upfront payment, up to USD 4.8 billion in milestone payments, and a tiered sales share of double-digit percentages of net sales in the licensed regions. Additionally, Pfizer will subscribe to USD 100 million of the company's common stock at the 30-day volume-weighted average price after the agreement takes effect. R&D progress is smooth, and clinical data is impressive SSGJ-707 is a core pipeline in 3SBIO's oncology sector, which has been approved to enter Phase III clinical research for first-line treatment of PD-L1 positive locally advanced or NSCLC (head-to-head with Keytruda) and has received breakthrough therapy designation in China. Meanwhile, SSGJ-707 is undergoing multiple Phase II clinical trials in China, including first-line treatment for advanced NSCLC, metastatic colorectal cancer, and advanced gynecological tumors. In January 2025, the company disclosed Phase II interim data at the JPM conference, showing that SSGJ-707 has significant anti-tumor activity and good safety, and the firm believes it may have best-in-class potential. The firm looks forward to more data being disclosed at the upcoming ASCO conference. Core products show steady growth, and innovative products are beginning to enter the harvest period The company's core product, TPIAO, is expected to achieve revenue of RMB 5.062 billion in 2024 (YoY +20.4%), with its revenue share increasing to 55.6%. According to IQVIA data, TPIAO maintains a 67% share, ranking first in the TPO market in 2024. At the same time, the company has a rich pipeline layout, covering over 30 products under research in nephrology, hematology, oncology, autoimmunity, and ophthalmology by the end of 2024, with 10 products already in Phase III clinical trials. The firm expects the company to achieve more impressive data releases and clinical collaborations in the future. Risk Warning: Price reductions from centralized procurement, intensified competition, R&D failures, and commercialization of new products falling short of expectations