Unlocking 3SBio’s Hidden Value: A Biotech Bargain in a Strategic Deal

The biotech sector has long been a battlefield of high-risk, high-reward opportunities, but few companies today offer the combination of transformative dealmaking, clinical promise, and undervalued stock that 3SBio (HKG:1530) currently presents. With its landmark collaboration with Pfizer—anchored by the PD-1/VEGF bispecific antibody SSGJ-707—the company has secured a financial and strategic foundation that far outpaces its current valuation. For investors seeking exposure to a breakthrough oncology asset with global scalability, 3SBio is a high-conviction buy at today’s prices.

The Deal: A Financial Masterstroke with $6.05 Billion in Immediate Upside

In May 2023, 3SBio struck a historic licensing agreement with Pfizer for SSGJ-707, a first-in-class bispecific antibody targeting PD-1 and VEGF. The terms are staggering:
- $1.25 billion upfront payment—the largest ever for a Chinese innovative drug.
- $4.8 billion in potential milestone payments tied to regulatory approvals, sales targets, and clinical success.
- Double-digit royalties on global sales (excluding China), providing a perpetual revenue stream.
- $100 million equity investment by Pfizer, signaling confidence in 3SBio’s future.

Combined, the upfront, milestones, and equity create a $6.05 billion floor of value—a sum that dwarfs 3SBio’s current market cap of $30.04 billion as of May 16, 2025. Even if only half of the milestones are met, the deal’s intrinsic worth exceeds the company’s valuation. This is a textbook case of undervaluation, where the stock price has yet to fully absorb the transformative nature of the collaboration.

SSGJ-707: A Clinical Breakthrough with Global Oncology Demand

SSGJ-707’s clinical profile is the linchpin of this opportunity. In Phase II trials for first-line PD-L1-positive non-small cell lung cancer (NSCLC), the drug delivered an objective response rate (ORR) of 70.8%—far exceeding the 30–50% range typical for checkpoint inhibitors alone. Even more compelling, its 100% disease control rate (DCR) suggests it could become a foundational therapy in oncology.

The PD-1/VEGF combination addresses a critical unmet need: tumors often evade immune attack by both downregulating PD-1 and activating pro-angiogenic VEGF pathways. SSGJ-707’s dual targeting could outperform single agents like Keytruda or Opdivo, which have seen sales pressure amid generic competition and pricing reforms. With U.S. FDA IND approval secured and Phase III trials underway in China, the drug is poised for global commercialization.

Why the Market Has Missed the Value

Despite these positives, 3SBio’s stock remains undervalued for three key reasons:
1. Short-term focus on execution risks: Investors may be overlooking the Phase III trial’s 2025 start date, which will validate SSGJ-707’s efficacy in a larger population.
2. Underappreciation of Pfizer’s infrastructure: With Pfizer handling global development and commercialization, 3SBio’s R&D and marketing risks are minimized—a critical factor in a sector where 90% of biotech drugs fail.
3. Discounting the royalty tailwind: Analysts often underweight royalty streams in valuation models, but SSGJ-707’s potential to generate double-digit percentages of global sales could add billions in recurring revenue.

The Catalysts Ahead: 2025’s Inflection Point

This year is a make-or-break period for 3SBio—and a clear opportunity for investors to act before the market catches up. Key catalysts include:
- Q3 2025 Phase III data readout for SSGJ-707 in NSCLC, which could trigger a regulatory filing in China and accelerate U.S. trials.
- Global pricing negotiations: With the U.S. Inflation Reduction Act prioritizing cost-effective therapies, SSGJ-707’s potential to reduce treatment cycles (and costs) could secure favorable formulary access.
- Milestone payments: As Pfizer progresses through development, 3SBio will collect chunks of the $4.8B milestone pool, driving near-term liquidity and confidence.

The Bottom Line: Buy Now, Benefit Later

At a P/E of 16.03 and a stock price of $14.50—despite a compound annual growth rate (CAGR) of 4.22% over the past decade—3SBio is a value trap turned into a value engine. The Pfizer deal alone justifies a valuation closer to $50 billion, with upside from SSGJ-707’s potential in other indications like colorectal and gynecological cancers.

For investors, the question is clear: Why pay a premium for overhyped biotechs when 3SBio offers a proven partnership, clinical clarity, and a valuation that ignores $6 billion in near-term upside? The answer lies in acting now—before the market recognizes what Pfizer already knows.

Recommendation: Buy 3SBio (HKG:1530) immediately. Set a target price of $22–$25 by end-2025, with significant upside if Phase III data exceeds expectations. This is a once-in-a-decade opportunity to back a Chinese biotech with global-scale innovation at a bargain price.

The views expressed here are for informational purposes only and should not be taken as investment advice.