Pharmaceutical giant Pfizer Inc. PFE has signed a significant licensing agreement with China's 3SBio Inc. for an experimental cancer drug, SSGJ-707. According to the deal, Pfizer will pay $1.25 billion upfront and could pay up to an additional $4.8 billion contingent upon achieving certain development milestones. Also, Pfizer plans to invest $100 million in 3SBio through an equity stake once the transaction is finalized, which is expected in third-quarter 2025.

For some time now, SSGJ-707 has been undergoing clinical trials in China for several types of cancers that include non-small cell lung cancer, metastatic colorectal cancer and gynecological tumors. A Phase III trial in China is scheduled for later this year. Pfizer now has the global rights to develop, manufacture and commercialize the drug, excluding China, with an option to commercialize it within China. 3SBio has also received approval from the Food and Drug Administration (“FDA”) for its Investigational New Drug application. Pfizer plans to produce the drug substance in North Carolina and the final product in Kansas.

Late last month, PFE reported first-quarter 2025 adjusted earnings of 92 cents/share, which comprehensively beat the Zacks Consensus Estimate of 64 cents/share. Earnings rose 12% year over year. Revenues came in at $13.72 billion, down 8% from the year-ago quarter on a reported basis. Revenues reflected an operational decrease of 6% and a negative currency impact of 2%. Total revenues missed the Zacks Consensus Estimate of $13.89 billion.

In the United States, Pfizer has been embroiled in controversy and scrutiny following allegations that senior executives may have deliberately delayed the release of COVID-19 vaccine clinical trial results until after the 2020 U.S. presidential election. This licensing announcement comes as an excellent boost. Following the announcement, 3SBio's shares surged 35% in Hong Kong, raising the company's market valuation to nearly $6 billion.

PFE currently has a Zacks Rank #2 (Buy) and has a VGM Score of A. Novartis AG NVS and AbbVie Inc. ABBV are notable competitors from the same space. NVS currently also carries a Zacks Rank #2, while ABBV is ranked #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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