The era of re-evaluating the value of innovative drugs in China has arrived! 3SBIO has already increased more than four times this year, who is expected to become the next explosive stock?

This year, Hong Kong Stock Exchange innovative drug concept stocks have become one of the main investment lines in the market.

Among them, $3SBIO(01530.HK)$ has increased more than four times this year, $INNOCARE(09969.HK)$ has nearly doubled, $INNOVENT BIO(01801.HK)$ and many other companies have achieved a doubling.

Overall, the recovery and rise of the Hong Kong Stock Exchange innovative drug sector are catalyzed by frequent large-scale overseas licensing BD transactions for innovative drugs; the fundamental driving force is the influx of foreign capital and the abundant funds brought by southbound capital, which can realize the fundamental value of enterprises.

Goldman Sachs believes that the Chinese biotechnology industry is undergoing a structural re-evaluation, and this round of significant growth is not just a short-term rebound. As of now, the overall market cap of Chinese biotechnology companies is still only 14%-15% of their American counterparts, while their share in the global innovative contributions is close to 33%. This means that the Chinese innovative drug sector is still in the "value trap" stage, and global capital re-evaluation has just begun.

Which companies are worth paying attention to?

Goldman Sachs stated that for investors looking to participate in the trend of biotechnology/pharmaceutical "going overseas," the recent market fluctuations may present an attractive entry point.

Currently, it is the relatively sparse period for summer data disclosure (after ASCO/ADA and before ESMO/WCLC/SABCS/ASH), providing a window to evaluate the potential upside from future "going overseas" BD opportunities.

Based on this, Goldman Sachs compiled a list of "going overseas" Stocks for investors' reference. The firm stated that the focus should be on medium to large market cap companies with mature research and development technologies, robust financial conditions, and an in-depth pipeline.

Specifically:

Pharmaceutical Sector: Focused on small molecule drugs, covering areas such as oncology and autoimmunity. Involved companies include $HENGRUI PHARMA(01276.HK)$ 、 $HANSOH PHARMA(03692.HK)$ 、 $SINO BIOPHARM(01177.HK)$ 、 $CSPC PHARMA(01093.HK)$ 、 $3SBIO(01530.HK)$ 、 $LUYE PHARMA(02186.HK)$ Among them, Hengrui Pharmaceuticals has License out Trades with Merck & Co, HANSOH PHARMA with Regeneron, CSPC PHARMA with AstraZeneca, and 3SBIO with Pfizer.

Biopharmaceutical companies with their own sales teams refer to those with established sales networks, covering products in oncology, immune diseases, etc., some of which have been commercialized. The companies involved include $BEIGENE(06160.HK)$ 、 $INNOVENT BIO(01801.HK)$ 、 $AKESO(09926.HK)$ 、 $SKB BIO-B(06990.HK)$ 、 $JUNSHI BIO(01877.HK)$ 、 $REMEGEN(09995.HK)$ 、 $ZAI LAB(09688.HK)$ 、 $HENLIUS(02696.HK)$ 、 $ASCENTAGE-B(06855.HK)$ 、 $INNOCARE(09969.HK)$ 、 $EVEREST MED(01952.HK)$ 、 $HUTCHMED(00013.HK)$ 、 $KEYMED BIO-B(02162.HK)$ 、 $OCUMENSION-B(01477.HK)$ 、 $BOAN BIOTECH(06955.HK)$ 。

Among them, there are licensing agreements with major overseas companies — BEIGENE with Novartis AG, INNOVENT BIO with Roche, AKESO with Summit Therapeutics, ALPHAMAB-B with Merck & Co, JUNSHI BIO with Coherus Oncology, REMEGEN with Seagen/Pfizer, HENLIUS with Abbott Laboratories, ASCENTAGE-B and Hutchmed (China) with Takeda Pharmaceutical, INNOCARE with Biogen, and AKOYA-B with AstraZeneca.

Pre-revenue or clinical-stage biotech companies: Refers to those in the research and development stage that have yet to achieve profitability and rely on financing or collaboration to advance their pipelines. Companies involved include $DUALITYBIO-B(09606.HK)$ 、 $TRANSTHERA-B(02617.HK)$ 、 $CARSGEN-B(02171.HK)$ 、 $LEPU BIO-B(02157.HK)$ 、 $ASCLETIS-B(01672.HK)$ 、 $TYK MEDICINES-B(02410.HK)$ 、 $LAEKNA-B(02105.HK)$ 、 $HBM HOLDINGS-B(02142.HK)$ 、 $ABBISKO-B(02256.HK)$ 、 $CSTONE PHARMA-B(02616.HK)$ 、 $ALPHAMAB-B(09966.HK)$ 、 $IMMUNEONCO-B(01541.HK)$ 、 $PEGBIO CO-B(02565.HK)$ 、 $JACOBIO-B(01167.HK)$ 、 $QYUNS-B(02509.HK)$ 、 $SINOMAB BIO-B(03681.HK)$ 、 $ANTENGENE-B(06996.HK)$ 。

Among them, Yiming Biotechnology-B partnered with BioNTech, Lepu Biopharma-B partnered with ArriVent BioPharma, ASCLETIS-B partnered with Sagimet Biosciences, HBM HOLDINGS-B partnered with AstraZeneca, HeYu-B partnered with Merck & Co, CStone Pharmaceuticals partnered with Pfizer, ALPHAMAB-B partnered with Sanofi, Yiming Oncology-B partnered with Instil Bio, and JACOBIO-B partnered with AbbVie for License out cooperation.

What other events are worth paying attention to next?

Looking ahead to the next 6-12 months, Goldman Sachs believes that the innovative drug sector will experience a series of key catalysts, including important clinical data releases and potential licensing deals, which will provide new upward momentum for the sector. For example:

$INNOCARE(09969.HK)$ (The phase 2b data of BTK for SLE, management guidance indicates a licensing deal will be achieved in the second half of 2025.)

$ZAI LAB(09688.HK)$ (Efgartigimod is expected to accelerate in the second half of the year, updates on the durability of DLL-3 ADC relief, and the first disclosure of combination therapy data for 1L small cell lung cancer.)

$Legend Biotech(LEGN.US)$ (Sales growth of Carvykti in the second and third quarters, preliminary data for 1L multiple myeloma from the CAR2 cohort E/F will be announced by the end of the year.)

$CSTONE PHARMA-B(02616.HK)$ (Updates on the data of the PD-1/VEGF/CTLA-4 tri-specific antibody and ROR1 ADC).

According to reports, based on past years' situations, innovative drugs will welcome over 10 international industry conferences in the remaining 4 months of 2025 after experiencing relative calm in July and August, such as the European Society of Cardiology Annual Congress, World Lung Cancer Congress, European Association for the Study of Diabetes Annual Meeting, European Biotechnology Congress, CSCO, American Obesity Week, etc. The clinical data released at these conferences will further fuel the innovative drug sector.

BOCOM INTL also stated that the core driving force behind the current Hong Kong stock innovative drug market is value reassessment, and the current valuation remains attractive. In the first half of the year, domestic capital continuously increased positions through the Stock Connect, but foreign capital's positions in innovative drugs are at the bottom, and the latter may prefer targets with solid fundamentals and significant cost-effectiveness. Still optimistic about the overall continued recovery opportunities in the innovative drug sector.