CSPC Announces First-Ever 'Pre-Announced' BD Deal Worth Over $5.3 Billion with AstraZeneca

On June 13, CSPC announced that the Group had entered into a strategic R&D collaboration agreement with AstraZeneca to leverage CSPC's AI-engine dual-driven efficient drug discovery platform for the identification and development of novel oral small molecule candidate drugs. The platform utilizes AI technology to analyze the binding modes between target proteins and existing compound molecules and performs targeted optimization, aiming to screen out highly effective small molecules with excellent development potential.

According to the terms of the agreement, CSPC has agreed to discover preclinical candidate drugs (PCC) with potential for treating multi-indication diseases for multiple targets selected by AstraZeneca, including a preclinical small-molecule oral therapy for immune diseases. For each PCC project, AstraZeneca will have the right to exercise an option to obtain exclusive global rights for development, manufacturing, and commercialization.

CSPC will receive an upfront payment of $110 million and is eligible to receive up to $1.62 billion in potential development milestone payments, up to $3.6 billion in potential sales milestone payments, as well as tiered single-digit royalties based on the annual net sales of the relevant products (totaling $5.33 billion).

CSPC's重磅BD announced on June 13 had actually been rumored as early as last month.

On May 30, CSPC PHARMACEUTICAL GROUP LIMITED announced that the Group is currently in discussions with several independent third parties regarding three potential transactions. These transactions involve the licensing and cooperation in the development, manufacturing, and commercialization of certain products from the Group (including Epidermal Growth Factor Receptor Antibody-Drug Conjugates (EGFR-ADC) and other drugs developed through the Group’s technology platforms) ("Potential Transactions"). Under each potential transaction, the potential upfront payments, potential development milestone payments, and potential commercialization milestone payments that may be payable to CSPC could collectively reach approximately US$5 billion. One of the three potential transactions is currently in its later stages and is expected to be completed by June 2025.

Compared with the previous model of disclosing BD only after the cooperation had been finalized, this novel "preview-style" BD in new drug development seems to have significantly boosted the market value of pharmaceutical companies. On May 30, following the release of the "preview" announcement, CSPC's stock price surged to a high of 8.56 yuan per share, marking an increase of over 12% compared to the closing price of the previous day. Xinyu Pharma, CSPC’s controlling A-share listed company, saw its stock price rise by more than 14%. In the subsequent period, CSPC's stock price continued to rise with fluctuations, and its market value once broke through the 100 billion yuan mark.

This "high-profile" preview stands in stark contrast to the "rigorous" image previously associated with pharmaceutical companies, leaving industry professionals with a deeper impression of CSPC's business development (BD). Behind this striking contrast lies CSPC Group's proactive strategy to seek transformation and focus on innovative drug development amid its current situation of declining performance and revenue.

As a large pharmaceutical manufacturing enterprise in China, CSPC's comprehensive strength is comparable to many biopharmaceutical companies, with multiple marketed products in various disease areas such as neurological disorders, oncology, and cardiovascular diseases. Currently, CSPC has over 200 innovative drugs and novel formulations under research and development, including more than 90 large molecules, over 60 small molecules, and more than 50 novel formulations; over 160 clinical trials are ongoing, with nearly 60 in phase III clinical trials. Products such as EGFR ADC, Nectin 4 ADC, HER2 bispecific antibody, and Sirolimus Albumin Formulation have received Breakthrough Therapy Designation and Fast Track status from regulatory authorities in both China and the United States multiple times. It is expected that by the end of 2028, the group will file for market approval for over 50 new drugs/new indications, demonstrating strong R&D capabilities and market competitiveness.

However, under the influence of multiple factors such as centralized procurement and pharmaceutical cost control, CSPC has inevitably been impacted in recent years. In 2024, although CSPC's revenue reached 29 billion yuan, it declined by 7.8% year-on-year; net profit was 4.682 billion yuan, a year-on-year decrease of 25.4%. In the first quarter of 2025, CSPC’s revenue decreased by 21.9% year-on-year to 7 billion yuan, lower than the expected 8.8 billion yuan, and profit decreased by 8.4% year-on-year to 1.5 billion yuan, also below the expected 2.4 billion yuan.

In addition, the core product NBP is facing a patent cliff, and Jinyouli has long passed its patent protection period. While the finished drug business is encountering obstacles, CSPC's innovative drugs have yet to become profitable. For instance, despite having numerous outstanding R&D pipelines, most of Ju Shi Bio's projects are still in the clinical stage. Although China's first domestically produced mRNA COVID-19 vaccine was included for emergency use, it did not generate substantial revenue. Therefore, CSPC, which is in the transition phase from generic drugs to innovation-driven development, has reached a critical moment. This "preview-style" new drug BD indeed sent out positive signals in the capital market, bringing astonishing effects to CSPC's market value management.

In fact, since the beginning of this year, in addition to CSPC, companies such as Rongchang Bio and China Biologic Products have also "previewed" their new drug BD updates through official platforms. This "preview-style" new drug BD has seemingly become a new option for pharmaceutical companies to officially announce collaborations in the short term.

On the evening of June 11, Rongchang BioAn article published on the WeChat Official Account stated that at the 62nd ERA-EDTA Congress, several business development managers from multinational pharmaceutical companies proactively approached RemeGen to engage in in-depth discussions regarding international cooperation and technology licensing for Telitacicept. This showcased the significant potential of China-originated drugs in the global pharmaceutical market. Following this news, on June 12, RemeGen's Hong Kong-listed stock surged by 20.1%.

On June 12th morning, China Biologic ProductsAn article published on the official WeChat account of its subsidiary, Chia Tai Tianqing, stated that since the beginning of this year, out-licensing has become one of the company's most important strategic goals. Currently, the company is in deep negotiations with several multinational pharmaceutical companies and leading biotech firms regarding multiple innovative assets with global commercialization potential. A landmark significant out-licensing deal is expected to be finalized soon. Starting this year, business development (BD) transactions will become a recurring source of income and profit for the company, which will not only further increase the proportion of international revenue but also open up a second growth curve for performance. This development is also expected to act as a catalyst for re-evaluating the company’s valuation. Following this news, on June 12, the share price of China Biologic Products Holdings surged by 19.29%.

Overall, in recent years, the development of innovative drugs in China has been rapid, and the fruits of this development have been of high quality. Whether it is Chinese Biotechs like Gracell Bio, Sinovent Pharma, and Beacon Bioscience gaining the favor of top multinational corporations (MNCs) for acquisition, or previously various MNCs coming to China to acquire pipelines or technology platforms, these activities have provided a new path for domestic pharmaceutical companies currently facing an unfavorable financing market and high research and development costs to accelerate through the winter.

Among them, the advantage of the "advance-announcement" new drug BD model is that this new model serves as a "powerful and fast-acting remedy" to boost capital market confidence for pharmaceutical companies under short-term performance pressure. However, the announcement can only ignite temporary enthusiasm. During the pharmaceutical BD cooperation process, every step comes with uncertainties. Apart from the upfront payment or advance payment obtained through BD that can quickly improve cash flow, the longer-term development of pharmaceutical companies still depends on their comprehensive strategies, including the promotion of commercialized products, the enhancement of R&D technology, and the achievement of pipeline milestones, among others.