CSPC Pharma expects H1 profit to surge to RMB6.2B on licensing deal

CSPC Pharmaceutical Group expects H1 profit of RMB5.9B to RMB6.2B, more than doubling from a year earlier on licensing income.

"The significant increase in profit is primarily attributable to a substantial rise in licensing fee income compared with the same period last year, alongside steady growth in revenue from our finished drugs business," the company said in a filing to the Hong Kong stock exchange.

The surge is driven by recognizing US$840 million from a US$1.2 billion upfront payment under its licensing agreement with AstraZeneca for long-acting peptide therapies. Excluding the one-off fee, the finished drugs business still delivered about 10% sales growth year-on-year, signaling robust underlying demand.

Shares of the Hong Kong-listed drugmaker fell 2.9% to close at HK$8.30 on Monday, paring earlier gains. Short selling accounted for 34% of total turnover at HK$222.8 million. The company is scheduled to release its full interim results on Aug. 20.

The profit alert marks a significant milestone for CSPC as it transitions from a generic drugmaker to an innovative biopharma company through global partnerships. The AstraZeneca deal, announced earlier this year, gives the Anglo-Swedish pharma giant rights to develop and commercialize CSPC's long-acting peptide therapies outside China.

Analysts have a Buy rating on the stock with a HK$13.05 price target, implying about 57% upside from current levels. The stock has gained 3.7% year to date, giving it a market capitalization of about HK$98.4 billion.

The guidance raise shows CSPC's strategy of monetizing its pipeline through licensing deals is gaining traction. Investors will watch the Aug. 20 interim report for details on recurring revenue trends and pipeline progress.

This article is for informational purposes only and does not constitute investment advice.