CICC has reaffirmed Sino Biopharmaceutical's (01177) earnings forecast and maintained its "Outperform Industry" rating. The stock currently trades at 29.0x and 26.1x projected 2025/2026 price-to-earnings multiples. Citing upward sector valuation trends, the firm elevated the target price by 26.7% to HK$7.6, implying 34.6x and 31.1x forward P/E ratios with 19.3% upside potential.
On July 15, Sino Biopharmaceutical disclosed plans to acquire 95.09% of Lixin Pharmaceutical for US$950.92 million. Having previously held 4.91% equity, this transaction will render Lixin a wholly-owned subsidiary. Key transaction details reveal a net cash consideration of approximately US$500 million, translating to a US$550 million enterprise value for Lixin.
This valuation represents a 30% premium to Lixin's October 2024 Series C1 financing round, where Sino Biopharmaceutical invested RMB142 million for a 4.91% stake alongside strategic rights to CCR8-targeting antibody LM-108 in mainland China. The final consideration will adjust for pre-closing value leakage and milestone payment variances related to LM-299.
Lixin's innovation credentials gained validation through major licensing deals: AstraZeneca secured global rights to ADC candidate LM-305 in May 2023 for US$55 million upfront plus US$545 million milestones, while Merck obtained worldwide rights to bispecific antibody LM-299 in November 2024 for US$888 million upfront and up to US$2.4 billion in additional milestones. Notably, GenScript Biotech's subsidiary Nanjing Probio, entitled to 40% of LM-299's upfront payment, reported receiving US$213.8 million in milestone payments on June 30.
Post-acquisition, Lixin's pipeline promises transformative potential for Sino Biopharmaceutical's oncology portfolio. Key assets include: - Phase I BIC candidate LM-299 in China - Global Phase I FIC prospect LM-305 - Phase II CCR8 antibody LM-108 - Phase III Claudin 18.2 ADC LM-302 in China - Four additional clinical-stage oncology assets spanning SIRP-α, 4-1BB, and CTLA-4 targets
Risks include delayed product launches and heightened medical insurance cost containment measures.
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