Landmark US$18.5bn+ out-licensing deal with AstraZeneca. CSPC has entered into a strategic collaboration with AstraZeneca (AZ) to advance eight weight management and type 2 diabetes programs. This partnership complements AZ’s existing pipeline which includes oral GLP1RA, injectable amylin RA and GLP-1/GCGR assets, while significantly validating CSPC’s proprietary AI-driven discovery and sustained-release monthly dosing peptide platforms. The agreement grants AstraZeneca exclusive global rights (excluding Greater China) to a portfolio of innovative long-acting peptide medicines, anchored by SYH2082 (a clinical-ready long-acting GLP1R/GIPR agonist) and comprising three obesity-related preclinical assets plus four future new programs. Under the terms, CSPC will lead development through PhI completion for the initial assets. The transaction features a substantial US$1.2bn upfront payment, potential milestones totaling up to US$17.3bn, and double-digit royalties.
Sustainable out-licensing income stream. Beyond the recent landmark partnership with AZ, CSPC has established a strong track record of business development (BD). Since late 2024, the Company has signed six out-licensing agreements covering a diverse array of assets—including an Lp(a) inhibitor, MAT2A inhibitor, ROR1 ADC, oral GLP-1, irinotecan liposome, and an AI-driven small molecule discovery platform. These transactions continuously validate CSPC’s drug discovery capabilities. Furthermore, CSPC has cultivated a deep pipeline containing several latestage or differentiated candidates which we believe hold high out-licensing potential, such as B7-H3 ADC, PD-1/IL-15 bsAb, GFRAL mAb, and ActRII mAb. In our view, CSPC is on track to generate a sustainable and recurring stream of BD income over the medium to long term.
Sales mildly recovered in 3Q25. CSPC reported total revenue of RMB19.9bn for 9M25, including RMB1.54bn in out-licensing (BD) income. Excluding BD contributions, core revenue reached RMB18.4bn, down 19% YoY. However, signs of recovery emerged in 3Q25, with core revenue (ex- BD) returning to growth, increasing 4.2% QoQ. Modest sequential improvement was observed across key therapeutic areas, including neurology, oncology, anti-infectives, and cardiovascular products. Looking ahead, we expect drug sales to stabilize in 2026E. On the cost side, the selling expense ratio shrank significantly from 29.2% in 9M24 to 24.1% in 9M25. Meanwhile, R&D investment remained the Company’s priority, with R&D expenses rising 7.9% YoY to RMB4.2bn in 9M25 (21.0% R&D expense ratio). We also anticipate a sustainable dividend payout, supported by upfront payments from recent BD deals.
Maintain BUY. CSPC’s BD deals will be a key sustainable driver of earnings growth. Considering the landmark deal with AZ, we revise up our earnings forecasts in model and adjust our DCF-based TP from HK$11.05 to HK$13.93 (WACC 9.34%, terminal growth 3.0%).
Risks: Pipeline advancement delays; negative impact from VBP on commercial products.