Henlius Biotech accelerates globalization in 1H, with biosimilars underpinning the business and the innovative pipeline entering a catalyst-rich period

Overview

The report assesses Henlius Biotech's operating performance in 1H 2026, global biosimilar expansion, and progress across its innovative drug pipeline. Goldman Sachs believes the company is transitioning from a biosimilar pioneer into a global innovative biopharmaceutical company. Although uncertainty over the timing of business collaboration revenue has led to lower earnings forecasts and a reduced target price, cash flow from biosimilars, international capabilities, and pipelines such as HLX43 and HLX22 continue to support the Buy view.

Core views

Commercial performance was generally stable in 1H 2026. Product sales reached RMB2.9 billion, up 13% year-on-year and slightly below Goldman Sachs' expectations. Serplulimab sales declined 3% year-on-year, mainly because the newly approved perioperative gastric cancer indication still requires time to generate more meaningful incremental sales. Biosimilars continued to provide the earnings foundation: trastuzumab biosimilar sales grew 5% despite already high market penetration, while rituximab biosimilar sales increased 18%. Collaboration revenue, primarily from the Eisai serplulimab partnership, exceeded expectations and drove total revenue to RMB3.6 billion, up 27% year-on-year. The company also increased investment in future growth, with R&D, selling, and administrative expenses rising 41%, 21%, and 34% year-on-year, respectively, while still generating net profit of RMB430 million. Management maintained its guidance for positive domestic sales growth in 2026, with incremental contributions from the newly launched pertuzumab biosimilar, neratinib, and bevacizumab biosimilar. Overseas biosimilar revenue for the year is expected to be RMB300 million to RMB400 million. The global biosimilar business is becoming a new growth engine. Management expects overseas biosimilar revenue to double annually over the next several years, driven by an increasing number of globally approved products, an expanding partner network, and improvements in its self-built commercial infrastructure. The company's model is no longer limited to straightforward out-licensing; it has established an integrated platform covering global clinical development, manufacturing, regulatory filings, and commercialization in international markets such as the United States and Europe. The recently announced Sandoz collaboration is viewed as an important transaction validating the platform's capabilities. It covers up to 10 biosimilars and includes a profit-sharing mechanism that allows Henlius Biotech to retain at least 40% of the economic interest, with further upside under certain scenarios. Pertuzumab and denosumab will constitute the first wave of global product launches, while nearly 10 additional biosimilars are expected to launch globally between 2028 and 2031. Goldman Sachs believes these products could create a multiyear growth opportunity and cash flow to fund innovative drug R&D. The near-term focus of the innovative pipeline is HLX43 and HLX22, while the company is expanding its next-generation assets across ADCs, bispecific antibodies, T-cell engagers, metabolism, and immunology. HLX105 (PD-1×IL-2v), HLX49 (HER2 biparatopic ADC), HLX109 (IL-1R3), and HLX403 (CDH17 ADC) are expected to enter clinical development in 2H 2026. HLX3901 and HLX3902 represent a next-generation CD28-enabled TCE platform designed to improve T-cell persistence and treatment durability. Goldman Sachs views HLX43 as a potentially best-in-class pan-tumor PD-L1 ADC and a major near-term catalyst. Multiple data readouts, including in thymic cancer and gastric cancer, are expected in 2H 2026, and the company is actively pursuing opportunities for accelerated approval from the U.S. FDA across several tumor types. The global Phase III gastric cancer study of HLX22 is nearing completion of enrollment, with approximately 430 patients currently enrolled, and preliminary efficacy data may be available by the end of 2027. The company is also expanding it into HER2-positive and HER2-low breast cancer as well as colorectal cancer. Following the earnings release, Goldman Sachs lowered its 2026, 2027, and 2028 earnings forecasts by RMB2.1 billion, RMB231 million, and RMB46 million, respectively, primarily due to the removal of its previous assumption for a potential HLX43 business collaboration transaction. The prior model assumed an upfront payment of US$500 million in 2026. Given reduced visibility into the timing of a transaction, Goldman Sachs adopted a more conservative approach by removing the related upfront and milestone payments until there is greater clarity on collaboration progress and the execution timetable. The report emphasizes that this adjustment does not reflect a lower assessment of HLX43's asset potential, and discussions with potential global partners remain ongoing. The company also has greater financial and operational flexibility to unlock the pipeline's global value through different models. After updating forecasts and rolling forward the DCF valuation period, the 12-month target price was reduced from HK$112.01 to HK$107.12. The risk-adjusted DCF uses a 10% discount rate and a 3% terminal growth rate. Goldman Sachs believes Henlius Biotech is transitioning from an early biosimilar pioneer into a global innovative biopharmaceutical company. This transformation is supported by three factors: the continued expansion of the innovative pipeline led by HLX43; two waves of new biosimilar launches through the global partnership network, which will generate cash flow to support R&D; and the company's initial demonstration of global clinical operations, regulatory approvals in the United States and Europe, and biomanufacturing capabilities. The report assigns a Buy rating and sees a rich catalyst pipeline over the next 6 to 12 months, but describes the stock as offering relatively balanced risk and reward rather than a growth story without execution risk.

Analysis framework

The report first compares product sales, collaboration revenue, expenses, and profit in 1H 2026 with year-on-year performance and Goldman Sachs' expectations, and then evaluates the growth trajectory of new domestic products and overseas biosimilars based on management guidance. Goldman Sachs subsequently examines the company's international platform across global clinical development, manufacturing, regulatory affairs, commercialization, and partnership terms, while mapping key milestones for HLX43, HLX22, and early-stage pipeline assets by clinical stage. Finally, the report removes the low-visibility assumption for HLX43 business collaboration payments, adjusts earnings forecasts, and recalculates the 12-month target price using a risk-adjusted DCF.

Methodology notes

• Valuation methodologyDCF discounted cash flow

  Risk-adjusted DCF valuation

  Goldman Sachs discounts the company's future cash flows to present value and makes risk adjustments for uncertainty in the innovative drug pipeline. The valuation uses a 10% discount rate and a 3% terminal growth rate. After updating forecasts and rolling forward the valuation period, it derives a 12-month target price of HK$107.12.

• Event-driven strategies and behavioral financeEvent-driven analysis

  Catalyst analysis of clinical data, enrollment, and regulatory progress

  The report tracks multiple HLX43 data readouts in 2H 2026, opportunities for accelerated FDA approval, Phase III enrollment for HLX22, and preliminary efficacy data expected at the end of 2027, using these events to identify potential value inflection points over the next 6 to 12 months.

• Company fundamentals and financial framework

  Adjustment of earnings assumptions based on business collaboration visibility

  Due to insufficient visibility into the timing of an HLX43 transaction, Goldman Sachs removes the previously assumed US$500 million upfront payment from its 2026 forecast and also eliminates the associated milestone payments until the execution timeline becomes clearer, avoiding the inclusion of unconfirmed transaction revenue in its base forecasts.

Asset mapping & comparison

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

• Henlius Biotech (2696.HK)

  Subject of the report; global biosimilar expansion, collaboration revenue, and the innovative drug pipeline collectively underpin the growth and valuation thesis.

  Strengths

  The core biosimilar business continues to grow, supported by a global platform spanning clinical development, manufacturing, regulatory affairs, and commercialization; HLX43, HLX22, and the next-generation pipeline provide multiple catalysts.

  Weaknesses

  Product sales were slightly below Goldman Sachs' expectations, serplulimab sales declined 3% year-on-year, and R&D, selling, and administrative expenses all increased significantly, while visibility into the timing of business collaboration revenue remains low.

  Risks

  Global partnerships may fail to fully realize the pipeline's value, early-stage assets face clinical development risks, competition in later-line solid tumors may intensify, and the company faces challenges from competition for talent.

Key data

• Product sales in 1H 2026RMB2.9 billionUp 13% year-on-year, slightly below Goldman Sachs' expectations
• Serplulimab sales growth-3%Down year-on-year, as the newly approved perioperative gastric cancer indication remains in the early stage of its sales ramp-up
• Trastuzumab biosimilar sales growth+5%Up year-on-year despite already high market penetration
• Rituximab biosimilar sales growth+18%Up year-on-year
• Total revenue in 1H 2026RMB3.6 billionUp 27% year-on-year, driven by better-than-expected collaboration revenue
• Growth in R&D, selling, and administrative expenses+41% / +21% / +34%All represent year-on-year changes in 1H 2026
• Net profit in 1H 2026RMB430 millionRemained profitable after significantly increasing investment in future growth
• 2026 overseas biosimilar revenue guidanceRMB300 million to RMB400 millionManagement expects overseas revenue to double annually over the next several years
• Scope and economic interest of the Sandoz collaborationUp to 10 products; at least 40%The collaboration covers up to 10 biosimilars, and the company can retain at least 40% of the economic interest, with potential additional upside
• Subsequent global biosimilar launch planNearly 10Expected to launch globally between 2028 and 2031
• Enrollment in the global Phase III gastric cancer trial of HLX22Approximately 430 patientsThe trial is nearing completion of enrollment, with preliminary efficacy data potentially available by the end of 2027
• Adjustments to 2026 to 2028 earnings forecastsLowered by RMB2.1 billion, RMB231 million, and RMB46 million, respectivelyPrimarily due to the removal of the assumption for potential HLX43 business collaboration revenue
• Original assumption for the HLX43 business collaboration upfront paymentUS$500 millionPreviously included in the 2026 forecast, now removed due to insufficient visibility into the transaction timing
• 12-month target priceHK$107.12Previously HK$112.01
• Key DCF parameters10% discount rate; 3% terminal growth rateUsed to calculate the risk-adjusted DCF target price

Impact & implications

Goldman Sachs believes the stable biosimilar business and global launches of new products can generate cash flow to support R&D, enabling the company to transition from a biosimilar company into a global innovative biopharmaceutical company. The Sandoz transaction validates the partnership value of its integrated international platform, while HLX43 and HLX22 provide the next phase of innovative drug value inflection points. However, the target price reduction indicates that the timing of business collaboration revenue recognition will continue to have a significant impact on near-term earnings forecasts, and subsequent valuation realization depends on the execution of global partnerships, clinical data, and regulatory progress.

Risks

• Partnerships or execution progress may prove insufficient, preventing the company from fully realizing the global value of its pipeline drugs.
• New indications and early-stage innovative pipeline assets face the risk of clinical development failure or slower-than-expected progress.
• Competition in later-line solid tumor treatment may intensify further.
• Competition for biopharmaceutical talent may challenge R&D and globalization execution.

What to watch

• Track whether domestic sales can maintain positive growth in 2026 and whether overseas biosimilar revenue can reach the RMB300 million to RMB400 million guidance.
• Monitor HLX43 data in thymic cancer, gastric cancer, and other indications in 2H 2026, as well as progress toward accelerated FDA approval across multiple tumor types.
• Monitor completion of enrollment in the global Phase III gastric cancer trial of HLX22 and potential preliminary efficacy data at the end of 2027.
• Track when discussions on a global HLX43 business collaboration, the transaction model, and the execution timetable achieve greater visibility.
• Monitor the first wave of global launches for pertuzumab and denosumab, as well as the launch progress of nearly 10 biosimilars between 2028 and 2031.