SINO BIOPHARM Target Price Hiked to HKD 7.6, "Outperform" Rating Reaffirmed

Market Watcher
16 Jul

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.

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