Goldman Sachs: Raises target price of SBP GROUP (01177) to 8.05 Hong Kong dollars, rating it as "buy" and introducing GSK Hepatitis B medicine.

Goldman Sachs released a research report stating that SBP GROUP (01177) has signed an agreement with GlaxoSmithKline (GSK) to obtain exclusive commercialization rights for the potential groundbreaking antisense oligonucleotide (ASO) therapy bepirovirsen for the functional cure of chronic hepatitis B in China. GSK submitted a New Drug Application (NDA) in China in March of this year, with approval expected in 2027. Under the agreement, Zhongsheng Pharmaceutical will utilize its leading hepatitis infrastructure to be fully responsible for importing, distributing, hospital access, and promotion, and will fully include the sales of bepirovirsen in China, raising the 12-month target price from HK$7.43 to HK$8.05, maintaining a "buy" rating. The bank expects the group to have resilient profit growth in the next two years, with a strong cash balance, and potential for more business development transactions. Goldman Sachs pointed out that bepirovirsen, as a first-of-its-kind therapy for functional cure of chronic hepatitis B, strategically aligns with the treatment focus of the 75 million chronic hepatitis B patients in China, and is expected to enhance Zhongsheng Pharmaceutical's hepatitis product portfolio. Goldman Sachs believes that Zhongsheng Pharmaceutical, with nearly 40 years of experience and insight in the Chinese hepatitis market, about 2,000 sales personnel, and a vast network of over 5,000 medical centers, is an ideal commercial partner for bepirovirsen, given its past successes with key hepatitis drugs like Runzong/Tianqi Gengmei. The bank estimates that the peak potential sales of bepirovirsen are around 5 billion RMB. Goldman Sachs raised the group's profit forecast for 2027 and 2028 by 1.1% and 1.7%, respectively, to reflect the potential sales contribution of bepirovirsen, and included the long-term sales of the drug in the discounted cash flow (DCF) valuation of innovative drugs.