3SBIO raises HKD 3 billion through a placement, focusing on the layout of innovative drug pipelines

Sanofi announced the spin-off of its subsidiary Mandi International for independent listing on the Hong Kong Stock Exchange, completely separating the "cash cow" business through a physical distribution method. Key Points: Sanofi's cumulative increase has exceeded 400% from early 2025 to date, showing market recognition of its long-term value. The company must prepare for the potential huge capital demand that may arise after the spin-off of the "cash cow" business. Molly After completing a $1.4 billion major licensing collaboration with Pfizer and launching the Hong Kong listing of its consumer healthcare business Mandi International, the established pharmaceutical company Sanofi (1530.HK) is once again showcasing its "financial skills." After the market capitalization of Hong Kong stocks reached a peak of HKD 70 billion, Sanofi initiated a large-scale placement, raising a total of HKD 3.115 billion to supplement the ammunition for innovative drug research and development. On December 2, Sanofi announced a placement of 105 million shares at a price of HKD 29.62 per share, with a net fundraising amount of approximately HKD 3.087 billion. The placement price represents a discount of 6.50% compared to the closing price of the previous trading day, accounting for about 4.14% of the issued share capital after the placement. Although the company's stock price fell by 4.61% and 3.04% on the announcement day and the following day, respectively, Sanofi's cumulative increase from early 2025 to date still exceeds 400%, indicating market recognition of its long-term value. On the surface, Sanofi does not appear to have an urgent capital demand. In May 2025, Sanofi reached a significant licensing collaboration with Pfizer (PFE.US), granting global rights to its PD-1/VEGF dual antibody SSGJ-707 to Pfizer, receiving up to $1.25 billion (approximately 8.8 billion yuan) as an upfront payment, setting a record for Chinese innovative drugs going overseas. This substantial amount is expected to be recorded in the third quarter, and the interim financial report shows that the company recorded a net profit of 1.358 billion yuan in the first half of the year, indicating that current cash reserves should be quite ample. Why, in the context of Sanofi being "not short of money," choose to accelerate capital recovery through a placement? From the announcement, Sanofi may hope to reserve more "ammunition" for future research and development while the stock price is at a high level. The announcement indicates that 80% of the funds raised from this placement will be used for research and development-related expenses, including advancing clinical research of innovative drugs under development in China and the United States to accelerate pipeline progress; supporting the expansion of indications for commercialized drugs or clinical trials outside China to further enhance product value and expand market coverage; and building global infrastructure and supporting facilities, with the remaining 20% of funds allocated for working capital. This plan is consistent with Sanofi's transformation strategy, which has placed a high emphasis on research and development in recent years. From 2022 to 2024, its research and development expenses increased from 690 million yuan to 1.33 billion yuan, with a year-on-year growth of 15% to 548 million yuan in the first half of 2025. The company currently has 30 key products under development, of which 27 are innovative drugs covering areas such as oncology and autoimmune diseases, with 4 of the products undergoing simultaneous clinical trials in both China and the United States and preparing registration materials, requiring substantial funding to support simultaneous clinical trials in both countries Spin-off "Cash Cow" Mandi International In addition to financing through share placements at high stock prices, 3SBIO also announced on November 20th the spin-off of its subsidiary Mandi International for independent listing on the Hong Kong Stock Exchange. As a leader in China's hair loss medication market, Mandi International has ranked first in the Chinese hair loss medication market for ten consecutive years starting in 2024. In 2024, its flagship product, the Mandi series minoxidil hair loss products, held a 71% market share in the domestic minoxidil sub-market. In the first half of 2025, Mandi International's revenue reached 743 million yuan, with a gross margin of 81.1% and a net profit of 174 million yuan. Although Mandi contributes stable cash flow to 3SBIO, its consumer medical attributes significantly mismatch the valuation logic of its parent company's innovative drugs. By spinning off Mandi for independent listing, 3SBIO can fully focus on its innovative drug mainline. It is noteworthy that this spin-off model is fundamentally different from the spin-off of WuXi Biologics (2269.HK) and WuXi AppTec (2268.HK) and other biopharmaceutical companies: 3SBIO completely separates its 87.16% stake in Mandi through a physical distribution method, allowing shareholders to directly receive Mandi International shares in proportion, with the parent company no longer holding any shares; whereas WuXi Biologics retained control when spinning off WuXi AppTec, aiming to establish an independent financing platform. Generally speaking, innovative drug research and development requires substantial funding support, and the parent company usually needs to retain businesses that generate stable cash flow to support R&D. 3SBIO's near "burning the boats" business spin-off highlights the management's determination to completely transform into a pure innovative drug company, and reflects that the company has strong cash flow reserves and a rich late-stage R&D pipeline, no longer relying on the continuous blood transfusion from its "cash cow" business