SINO BIOPHARM (01177) maintains its earnings forecast and "Outperform" rating, with shares currently trading at 29.0x and 26.1x 2025/2026 P/E ratios. Reflecting sector-wide valuation expansion, the target price surges 26.7% to HKD 7.6, implying 34.6x and 31.1x forward P/E multiples and projecting 19.3% upside potential.

On July 15, the company announced a USD 950.92 million acquisition of 95.09% equity in Liaxin Pharmaceutical. Post-transaction completion, Liaxin will become SINO BIOPHARM's wholly-owned subsidiary, building upon its existing 4.91% stake.

The net cash consideration approximates USD 500 million, valuing Liaxin at USD 550 million enterprise value. Final transaction terms incorporate adjustments for pre-closing value gaps and LM-299 milestone payment differentials.

Liaxin demonstrates globally validated innovation through major licensing deals: - AstraZeneca secured worldwide rights to anti-GPRC5D ADC LM-305 for USD 550 million upfront plus USD 545 million in milestones (May 2023) - Merck obtained exclusive global rights to PD-1/VEGF bispecific LM-299 for USD 888 million upfront plus USD 2.4 billion potential milestones (November 2024). Nanjing Pobo, a GenScript Biotech subsidiary, retains 40% of upfront payments and 25% of future milestones/revenues from LM-299.

The acquisition significantly bolsters SINO BIOPHARM's oncology pipeline with multiple clinical-stage assets: - LM-299 (potential best-in-class bispecific): Phase I trials in China - LM-305 (potential first-in-class ADC): Global Phase I studies - LM-108 (CCR8 mAb): Phase II trials in China - LM-302 (Claudin18.2 ADC): Phase III development in China - Four additional novel oncology candidates targeting SIRP-α, 4-1BB/NaPi2b, 4-1BB/CEACAM5, and CTLA-4 tumor microenvironment.

Risks include delayed product launches and stricter-than-expected healthcare cost controls.