Phase III data for bepirovirsen support the path to a functional cure for hepatitis B; Buy maintained on Sino Biopharmaceutical

Overview

This report focuses on the Phase III B-Well 1 and B-Well 2 study results for bepirovirsen, partnered by Sino Biopharmaceutical and GSK, presented at EASL 2026. Goldman Sachs believes that bepirovirsen, as a potentially first-in-class antisense oligonucleotide therapy, demonstrates that a limited treatment course can deliver a clinically meaningful functional cure rate for chronic hepatitis B, supporting a shift in the treatment paradigm from long-term viral suppression to time-limited therapy with curative intent.

Core views

The core view is that the Phase III data validate the efficacy of bepirovirsen, but early commercialization is more likely to focus on biomarker-screened, previously treated patients with lower baseline HBsAg. Part of the efficacy improvement comes from a more favorable Phase III patient mix, including a higher proportion of Asian patients, lower average baseline HBsAg, and a lower share of patients with HBsAg >1000 IU/mL. Goldman Sachs also points out that durability of efficacy remains a limiting factor; therefore, subsequent combination therapies, especially with siRNA or therapeutic vaccines, are key to further improving efficacy and expanding the treatable population.

Analysis framework

The report compares Phase III B-Well 1/2 data with Phase II B-Clear results, focusing on functional cure rates, baseline HBsAg levels, Asian and Chinese patient subgroups, sustained HBV DNA below LLOQ, post-treatment waning efficacy, and ALT safety signals. On valuation, Goldman Sachs uses a SOTP framework, applying DCF to the innovative drug pipeline and exit P/E assumptions to generics, and adjusts the approval probability and target price based on the Phase III bepirovirsen data.

Methodology notes

• Clinical developmentPhase III efficacy and biomarker stratification analysis

  Functional cure rate segmented by baseline HBsAg and patient geography

  The report believes that bepirovirsen efficacy shows a clear antigen-burden gradient, with stronger efficacy in patients with low HBsAg and in Chinese patients; therefore, clinical use and early commercialization will depend on biomarker screening.

• Valuation methodsSOTP and DCF

  12-month SOTP target price

  Goldman Sachs' target price is composed of DCF valuation for the innovative drug pipeline, exit P/E valuation for generics, and DCF valuation for anlotinib and PD-(L)1, with the approval probability raised from 80% to 100% based on the positive Phase III bepirovirsen data.

• Factors and relative comparisonGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  The Goldman Sachs Factor Profile provides investment context for the stock by comparing the company's key attributes with the market and industry peers; growth, financial returns, and valuation multiples are standardized and ranked based on analyst forecast metrics.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sino Biopharmaceutical

  Covered company in the report and the issuer of 01177.HK

  Strengths

  A leading Chinese pharmaceutical company spanning innovative drugs and generics, with a strong foundation in liver disease and a cash balance that supports potential BD transactions.

  Weaknesses

  The company faces challenges in allocating R&D resources, and some earnings forecasts were lowered due to the exclusion of Sinovac dividends.

  Comparison

  Goldman Sachs assesses it relative to its China healthcare coverage universe and believes the valuation is at the low end of its 5-year historical range.

  Risks

  Broader price cuts for generics, delays in approval of key pipeline assets, low returns on R&D investment, and weaker-than-expected ramp-up of innovative drugs.

• bepirovirsen

  Pipeline asset partnered by Sino Biopharmaceutical, with clinical development led by GSK

  Strengths

  Phase III data showed a 19% functional cure rate, reaching 35% in Chinese patients with low HBsAg, with overall manageable safety.

  Weaknesses

  Efficacy is highly dependent on baseline HBsAg, and sustained viral control after treatment discontinuation remains incomplete.

  Comparison

  Compared with standard long-term nucleos(t)ide analogue therapy, bepirovirsen offers a limited treatment course and a potential path to functional cure.

  Risks

  Lower efficacy in patients with high HBsAg, HBV DNA rebound after treatment discontinuation, and uncertainties in combination-therapy development and regulatory approval.

• Generic drug business

  An important component of SOTP valuation

  Strengths

  Goldman Sachs expects more than 100 new generic launches over the next three years, which could contribute incremental sales.

  Weaknesses

  Affected by VBP and pricing pressure, growth elasticity is weaker than that of innovative drugs.

  Comparison

  Valued using a 10.0x exit P/E and a 5-year 5% CAGR assumption.

  Risks

  If the scope of price cuts expands, revenue and margins could come under pressure.

• Innovative drug pipeline

  Company's near- to medium-term growth driver

  Strengths

  Includes PD-1/L1, G-CSF, ROS1, ALK, bepirovirsen, and multiple biosimilars.

  Weaknesses

  The sales ramp-up of innovative drugs and returns on R&D investment still need to be delivered.

  Comparison

  Goldman Sachs values the innovative drug pipeline using DCF and rolls the valuation period forward by one month.

  Risks

  Delays in approval of key products or commercialization ramp-up below expectations.

Key data

• Phase III functional cure rate19%B-Well 1 and B-Well 2 showed that the functional cure rate after a limited treatment course improved versus 9%-11% in Phase II.
• Functional cure rate in low-HBsAg patients26%Efficacy was stronger in patients with baseline HBsAg ≤1000 IU/mL; it fell to 5%-10% in patients with HBsAg 1000-3000 IU/mL.
• Functional cure rate in Chinese low-HBsAg patients35%The subgroup of Chinese patients with HBsAg ≤1000 IU/mL showed higher efficacy.
• Sustained HBV DNA <LLOQ23%Versus 0% for placebo, indicating strong suppression of viral replication even in non-cured patients.
• qHBsAg ≤100 IU/mLabout 30%This level was reached around one year after treatment discontinuation and is viewed as a clinically meaningful partial cure or disease-modifying effect.
• Permanent discontinuation rate<1%Overall safety was tolerable, and ALT elevations were transient and reversible after treatment discontinuation.
• 2026E/2027E/2028E earnings forecast revision-5.0%/-4.7%/-4.2%The revision was due to the exclusion of Sinovac dividends, as the company guided that no further dividends are expected in the future.
• Approval probability for bepirovirsenraised from 80% to 100%Goldman Sachs increased its approval assumption based on the positive Phase III data.
• 12-month target priceHK$8.18Slightly raised from HK$8.05.
• Main SOTP componentsInnovative drugs HK$100.3bn; generics HK$47.1bn; anlotinib and PD-(L)1 HK$6.0bnInnovative drugs and anlotinib/PD-(L)1 are valued using DCF, while generics are based on a 10.0x exit P/E and 5-year 5% CAGR.

Impact & implications

If bepirovirsen is approved as expected as early as end-2026 in the United States and in 2027 in China, Sino Biopharmaceutical could leverage its liver disease franchise to reach a large base of already treated patients and use biomarkers such as HBsAg for precise screening. The short-term investment implication is positive: the Phase III data improve pipeline certainty and support the target price; however, long-term value will still depend on durability of efficacy, combination-therapy data, regulatory progress, and the ramp-up speed of innovative drug sales.

Risks

• Broader price cuts across the generic drug portfolio.
• Delays in regulatory approval of key pipeline products.
• Improper allocation of R&D resources leading to low investment returns.
• Post-launch sales ramp-up of innovative drugs below expectations.
• Weaker efficacy of bepirovirsen in patients with high HBsAg, which may limit the treatable population.
• Insufficient durability of viral control after treatment discontinuation, which may require support from combination therapies.
• Although ALT elevations are considered manageable, clinical monitoring is still required.

What to watch

• Regulatory approval progress for bepirovirsen, potentially as early as end-2026 in the United States and in 2027 in China.
• Data from the Phase IIb B-United study in a broader patient population and from siRNA combination therapy.
• Real-world screening, penetration, and early sales ramp-up among Chinese patients with low HBsAg.
• Durability changes in HBsAg and HBV DNA markers after treatment discontinuation.
• Overall launch cadence and commercialization ramp-up of the innovative drug pipeline.
• VBP pricing pressure on generics and the contribution from more than 100 new generic launches over the next three years.