Sales mildly recovered in 3Q25. CSPC reported total revenue of RMB19.9bn for 9M25, including RMB1.54bn in business development (BD) income. Excluding BD contributions, core revenue reached RMB18.4bn, down 19% YoY, representing 73.4% of our prior FY25 forecast and broadly in line with expectations. Notably, core revenue (excl. BD income) returned to sequential growth in 3Q25, increasing 4.2% QoQ. Modest sequential growth was observed across key therapeutic areas, including neurology, oncology, anti-infectives, and cardiovascular products. We expect CSPC’s drug sales to remain stable in 4Q25E. On the cost side, the selling expense ratio shrank significantly from 29.2% in 9M24 to 24.1% in 9M25. R&D investment remained a priority, with R&D expenses rising 7.9% YoY to RMB4.2bn in 9M25 (21.0% R&D expense ratio). Attributable net profit was RMB3.5bn in 9M25, representing a 7.1% YoY decline.
Sustainable out-licensing income stream. Since late 2024, CSPC has signed six out-licensing agreements across a diverse portfolio of assets, including lipoprotein(a) inhibitor, MAT2A inhibitor, ROR1 ADC, oral GLP-1, irinotecan liposome, and an AI-driven small molecule discovery platform. Management also anticipates out-licensing its EGFR ADC and a technology platform, although the pace of these potential deals remains uncertain. CSPC has built a variety of pipelines. We see high out-licensing potential in several late-stage or differentiated candidates, including EGFR ADC, PD- 1/IL-15 bsAb, GFRAL mAb, ActRII mAb, and B7-H3 ADC. In our view, CSPC is on track to generate a sustainable and recurring stream of BD income over the medium to long term.
EGFR ADC (SYS6010): data readouts expected in 1H26. CSPC is expected to present data for SYS6010 across multiple tumor types at AACR/ASCO in 1H26, with NSCLC data to follow after journal publication. The asset has already entered global Ph3 development. In China, two pivotal trials are underway: a Ph3 monotherapy study in second-line EGFR TKI–resistant NSCLC, and a Ph1b/3 study evaluating SYS6010 in combination with osimertinib in first-line EGFR-mutant NSCLC, with the Ph3 portion set to commence shortly. CSPC is also in discussions with the CDE to initiate trials in 2L+ EGFR wild-type NSCLC, with additional Ph3 trials planned. In the US, CSPC is preparing to launch two global Ph3 trials targeting 3L+ EGFR-m NSCLC, and 2L+ EGFR wild-type NSCLC. Early data for SYS6010 monotherapy have shown promising activity in heavily pretreated EGFR-m nsq-NSCLC patients and in IO-resistant EGFR wildtype NSCLC patients with moderate to high EGFR expression. We will continue to monitor SYS6010 as a high-potential asset and see meaningful out-licensing potential as data mature.
Maintain BUY. CSPC’s BD deals will be a key sustainable driver of earnings growth. Considering the uncertain drug sales in 2026, we revise our TP from HK$12.11 to HK$11.05 (WACC 9.34%, terminal growth 3.0%).
Risks: Pipeline advancement delays; BD timeline setbacks; negative impact from VBP on commercial products.