When a $645 million innovative drug licensing deal collides with subsidiary Hansoh Bio's 235% year-to-date surge, FOSUN PHARMA's (02196) valuation logic is undergoing a silent reconstruction.

On August 11, FOSUN PHARMA released an announcement that shook the market: its self-developed small molecule oral DPP-1 inhibitor XH-S004 reached a global licensing agreement (excluding China and Hong Kong/Macau regions) with US biotechnology company Expedition Therapeutics, with a potential total transaction value of $645 million (approximately RMB 4.6 billion). The following day, FOSUN PHARMA's H-shares surged 9.4% in early trading, while A-shares rose 5.6% simultaneously, with the market expressing its approval of this transaction through substantial capital flows.

XH-S004 is a small molecule oral DPP-1 inhibitor with proprietary intellectual property rights owned by FOSUN PHARMA. It reduces inflammatory responses by inhibiting DPP-1 and its activated neutrophil serine proteases, thereby blocking the vicious cycle of infection and resulting airway structural damage. Currently, XH-S004 is in Phase II clinical trials in China for treating non-cystic fibrosis bronchiectasis and in Phase Ib clinical trials for treating chronic obstructive pulmonary disease (COPD).

For XH-S004's research and development, FOSUN PHARMA's cumulative R&D investment totaled only approximately RMB 72 million (unaudited), creating a remarkable input-output ratio compared to the $645 million licensing amount.

Expedition is a biotechnology company focused on developing innovative therapies for autoimmune diseases, with its core management team composed of senior professionals from multinational pharmaceutical companies and biotechnology firms in drug development and business development. Expedition's current investors include several renowned US investment institutions with extensive industry investment experience.

This collaboration between FOSUN PHARMA and a partner specializing in autoimmune diseases aims to promote XH-S004's broader global benefit for patients with non-cystic fibrosis bronchiectasis and chronic obstructive pulmonary disease.

Notably, one day after this transaction was announced, US biotechnology company Insmed announced that its dipeptidyl peptidase 1 (DPP-1) inhibitor Brensocatib was officially approved for marketing in the United States for treating non-cystic fibrosis bronchiectasis (NCFBE) patients aged 12 and above, including children and adults.

Currently, only Insmed's DPP-1 inhibitor has received global market approval, with few domestic companies having layouts in this track, positioning FOSUN PHARMA ahead. In recent years, the global chronic lung disease patient population has continued to expand, with surging medication demand making the value of DPP-1 inhibitors increasingly apparent. MNC giants like Merck and GlaxoSmithKline (GSK) are increasing their investments in this subdivision.

This increasingly prominent track is gradually transforming into a blue ocean for giant competition due to breakthroughs in new mechanism small molecules and biotechnology. FOSUN PHARMA's DPP-1 inhibitor's overseas expansion not only proves its pipeline value has gained market recognition but also demonstrates significant innovation transformation results.

This strategic transformation is equally visible in capital operations. Three days before the licensing agreement announcement, FOSUN PHARMA announced completion of its second science and technology innovation bond issuance for 2025, with an actual total issuance of RMB 1 billion, a 2-year term, and an issuance rate of only 2.70%. This represents the first medium-to-long-term science and technology innovation bond in China's private pharmaceutical industry, reflecting the capital market's high recognition of FOSUN PHARMA's innovation transformation and innovative capabilities.

FOSUN PHARMA's innovation transformation results are more prominently displayed in subsidiary Hansoh Bio. In terms of stock price, as of August 14, Hansoh Bio's stock price has risen nearly 235% year-to-date, with a total market capitalization reaching HK$43.1 billion.

Hansoh Bio's stock price surge is closely related to its multiple innovative products. At the 2025 WCLC conference, Hansoh Bio's three core innovative products in the lung cancer field - PD-L1 ADC HLX43, anti-EGFR monoclonal antibody HLX07, and anti-PD-1 monoclonal antibody Serplulimab - had 10 lung cancer field studies selected for various conference sessions including oral presentations, poster tours, and poster displays, including 4 oral presentations and 2 poster tours.

HLX43 is the world's first PD-L1 broad-spectrum anti-tumor ADC to enter clinical Phase II stage, featuring dual mechanism of action combining immune checkpoint blockade and payload cytotoxicity. In advanced solid tumors, especially in later-line resistant NSCLC patients who have received checkpoint inhibitor (CPI) treatment and failed, HLX43 continues to demonstrate high response rates, showing superior efficacy in specific subgroups such as EGFR wild-type nsNSCLC populations with an ORR of 47.4%.

In the new era of tumor treatment with IO and ADC dual-track advancement, Hansoh Bio's PD-L1-targeted ADC HLX43 stands out with breakthrough clinical data, not only validating the synergistic value of the "immune activation + toxin killing" dual mechanisms but also directly addressing current treatment dilemmas for PD-1/L1 resistant patients with high efficacy and low toxicity characteristics, becoming one of the most watched innovative therapies in the global lung cancer field.

With progress in HLX43 and other innovative pipelines, its stock price is expected to continue soaring. Considering that Hansoh Bio is not yet included in the Stock Connect scheme, some mainland investors cannot directly benefit from its growth dividends.

A recommended strategy for this situation is that investors can indirectly benefit from Hansoh Bio's innovative value by holding FOSUN PHARMA, while enjoying stable support and risk mitigation from the parent company's diversified business ecosystem.

FOSUN PHARMA itself possesses deep pharmaceutical R&D and commercialization capabilities, with a business ecosystem covering multiple platforms including small molecule drugs, cell therapy, antibodies/ADCs, demonstrating stable performance with growth potential. Among these, Hansoh Bio, as a core innovative asset, has developed rapidly in recent years and has become an important value growth engine for the FOSUN PHARMA Group.

However, such a crucial "value gateway" remains in a significantly undervalued state. As of the latest closing (August 14), FOSUN PHARMA's H-shares closed at HK$19.96 per share, compared to its A-share price of RMB 27.97 per share, with H-shares trading at a 34% discount to A-shares. This valuation gap forms a stark contrast with the company's continuous release of overall innovative value.

As the innovative drug value reassessment wave sweeps through capital markets, FOSUN PHARMA, with its solid R&D pipeline, successful international collaborations, and explosive innovative achievements from subsidiaries, is well-positioned. When XH-S004 advances clinical trials in overseas markets and HLX43's Phase II data debuts at the World Conference on Lung Cancer, the market will ultimately recognize that the globalization era for Chinese innovative pharmaceutical companies has arrived, and FOSUN PHARMA's market value is expected to receive comprehensive revaluation.