3SBio reported 1H25 revenue of RMB4.4bn, down 0.8% YoY, primarily due to a slowdown of TPIAO but partially offset by strong growth in the alopecia franchise. During the period, attributable net profit rose 24.6% YoY to RMB1.1bn, thanks to a 49% YoY reduction in finance costs. While legacy products remain under pressure, a number of new drugs are expected to launch in 2025-2026E, including 608 (IL-17A) and 613 (IL-1β) etc., which should help drive product sales. In addition, we believe 707 (PD-1/VEGF) has the potential to become a global blockbuster. Pfizer is expected to aggressively advance 707’s global clinical development, potentially initiating Phase 3 trials for 707 both as monotherapy and in combination with chemotherapy, in our view. Pfizer is also likely to explore combination regimens involving 707 and PDL1V (PD-L1 ADC), Padcev (Nectin-4 ADC), and SV (IB6 ADC). We believe the initiation of global trials for 707 could serve as a key catalyst for 3SBio’s earnings upside.
Expected Pfizer to accelerate global development of 707. The drug has already entered a Ph3 trial in first-line NSCLC in China, and Phase 2 data in mCRC is scheduled to be presented at ESMO in October. During its 2Q25 earnings call, Pfizer’s mgmt indicated that they plan to announce global Ph3 development strategies for 707 later in 2025E, following the initiation of execution. Additionally, Pfizer is preparing to launch Phase 1 or 2 combination studies of 707 with its ADCs. Given Pfizer’s strong clinical execution capabilities, we believe 707 has the potential to outpace competing assets in clinical development-particularly in colorectal cancer and in combination studies with ADCs.
　　More innovative pipelines entering global development stage. 1) 705 (PD-1/HER2) entered Ph2 in HER2+ solid tumor in China. 2) 706 (PD-1/PD- L1) has obtained IND clearance in China and the US, and initiated Ph2 trials in GI cancers and NSCLC in China. 3) First-in-class pipelines SPGL008 (B7- H3 Ab/ IL-15 fusion protein) and SSS59 (MUC17/CD3/CD28) entered Ph1 in solid tumors in China, both featuring proprietary engineering to enhance efficacy and safety. For example, SPGL008 employs an attenuated IL-15 to reduce toxicity. SSS59 lowers CD3 affinity to mitigate cytokine release, while boosting CD28 signaling to preserve T-cell activation. We expect further clinical readouts across these pipelines. With differentiated MOA and leading global development timelines, these pipelines may offer meaningful out-licensing potential and reinforce 3SBio’s global innovation strategy.
　　Alopecia franchise sustains growth while TPIAO under pressure. Sales of alopecia feanchise reached RMB690mn (+24% YoY) in 1H25. The minoxidil foam formulation launched last year successfully drove sales growth of Mandi. However, TPIAO revenue declined 4.2% YoY to RMB2.4bn, amid rising competition from TPO-RAs and NRDL regulation pressure. Given its large revenue base, TPIAO may remain under pressure.
　　Maintain BUY. We remain positive on 707’s global potential given the strong clinical trial execution of Pfizer and the promising combination potential with Pfizer’s ADCs. We maintain our target price largely unchanged at HK$37.58 based on an 11-year DCF model.