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Recently, CSPC and Kelun Pharmaceutical have successively reached a license-out (overseas authorization) cooperation agreement with US pharmaceutical companies and major pharmaceutical company Merck & Co. on antibody conjugated drugs (ADCs). Since 2022, a number of domestic innovative drugs have been "going overseas" in the form of overseas authorization, and many of them are blockbuster transactions of billions of dollars. Industry insiders believe that the R&D strength of Chinese pharmaceutical companies and the global competitiveness of domestic innovative drugs have gradually been recognized by overseas markets, and local innovative companies have come out on top in the field of subdivision technology.

"Going to sea" one after another

On July 28, CSPC announced that CSPC Jushi Bio, a subsidiary of CSPC, has cooperated with Elevation Oncology on the development and commercialization of the Group's innovative (first-of-its-kind) anti-Claudin18.2 antibody conjugated drug SYSA1801 outside of Greater China. entered into an exclusive licensing agreement.

Under the terms of the agreement, CSPC Jushi Bio will receive an upfront payment of $27 million and is entitled to receive potential development and regulatory milestone payments of up to $148 million and potential sales milestone payments of up to $1.02 billion. CSPC Jushi is also entitled to receive a sales commission of up to a double-digit percentage based on the annual net sales of the product in the region. CSPC Jushi Bio will retain all rights to this product in Greater China.

On July 26, Kelun Pharmaceutical announced that it had reached a cooperation and exclusive license agreement with Merck to develop an antibody-conjugated drug for the treatment of solid tumors. According to the content of the agreement, the company's holding subsidiary, Colombo, will exclusively license Merck to develop, manufacture and commercialize the antibody-conjugated drug globally. The two parties will also collaborate on the early clinical development of the antibody-conjugated drug. Merck will make an initial payment of US$35 million, various milestone payments of up to US$901 million and corresponding net sales commissions to Colombo based on the content of the agreement and the stage of commercial development.

Prior to this cooperation, Colombo announced in May this year that it had paid an exclusive license to Merck to develop, produce and commercialize SKB-264, an antibody-conjugated drug targeting TROP2, outside of China. SKB-264 is currently in Phase III clinical trials for the treatment of triple-negative breast cancer and Phase II clinical trials for the treatment of non-small cell lung cancer and advanced solid tumors.

Also in May, Lixin Pharma announced that it had reached an exclusive licensing agreement with Turning Point in the United States. Turning Point will be the exclusive partner to obtain LM-302, an innovative antibody conjugated drug independently developed by Lixin Pharma, in the world except Greater China and Development and commercialization interests in countries and regions other than Korea. In addition, the partnership grants both parties the right to expand potential future collaborations.

Under the agreement, Turning Point will pay Lixin Pharma an upfront payment of US$25 million, development milestones of US$195 million and subsequent commercialization milestones, totaling more than US$1 billion. Lixin Pharma is also entitled to a gradient of up to a double-digit percentage of annual net sales in the Turning Point area. In addition, the two parties can jointly develop 3 follow-up antibody-conjugated drug products to further expand the scope of cooperation.

Guosen Securities believes that the increase in the number of transaction cooperation and the mode of transaction cooperation reflect that the antibody-drug conjugated technology and products of domestic enterprises are gradually approaching the global advanced level.

Great market potential

Antibody-conjugated drugs include three parts, namely monoclonal antibody, small molecule drug (usually cytotoxin), and connecting part. The drug is a class of drugs that couples tumor-targeting antibodies and small-molecule cytotoxic drugs through a linker. It is likened to an ingenious "biological missile" in the industry. The antibody part is the warhead for targeting the target, and the cytotoxic drug is the ammunition. , to achieve precise attack on tumors.

Soochow Securities believes that as a targeted chemotherapeutic drug, antibody-conjugated drugs have significant tumor killing advantages for malignant solid tumors that are not sensitive to immunotherapy or other targeted therapies. The therapeutic effect also has the potential to advance to the front line with partner immunotherapy. It has shown excellent curative effect in large tumors such as gastric cancer, breast cancer, and lung cancer, and has the potential to become a blockbuster product. Overseas major pharmaceutical companies are scrambling to deploy in this field.

According to Frost & Sullivan, the global antibody conjugated drug market is expected to reach US$6.2 billion in 2022, and the compound annual growth rate from 2019 to 2024 is expected to be 30.6%. In 2030, the global antibody conjugated drug market is expected to reach US$20.7 billion, and the market size in my country is expected to reach US$4.2 billion.

According to the research report of securities companies, as of June 2022, there are 14 antibody-conjugated drugs on the market worldwide, 7 are used for hematological tumors, and 7 are used for the treatment of solid tumors. Among them, 4 antibody-conjugated drugs are listed in China. The earliest approved antibody-conjugated drug in my country is Roche's trastuzumab, which was approved in January 2020. Among the 4 drugs, 1 is produced by a domestic company, and Hualuo Rongchang Bio's self-developed Vidicitumab was approved by the State Food and Drug Administration in June and December last year with conditions for gastric cancer and urothelial cancer. Indications. In terms of sales, according to the data of PDB sample hospitals, the sales of domestic antibody-conjugated drug sample hospitals are about 30 million yuan, the overall sales volume is still small, and the growth potential is large.

Guolian Securities believes that antibody-conjugated drugs have the potential to be a big single product. Roche's related drug Kadcyla (trastuzumab) ranks first in sales, with sales reaching CHF 1.982 billion in 2021; Adcetris, a collaboration between Seattle Genetics and Takeda Pharmaceuticals, has sales of $1.27 billion, ranking second in sales.

In order to scientifically standardize the research and development of antibody conjugated drugs, on July 6, the Center for Drug Evaluation of the State Food and Drug Administration issued the "Technical Guidelines for Nonclinical Research on Antibody Conjugate Drugs (Draft for Comment)", which discussed pharmacology, safety pharmacology, Pharmacokinetics and toxicology provided systematic research guidance. Based on the particularity of antibody-conjugated drugs, the Center for Drug Evaluation of the State Food and Drug Administration pays special attention to drug toxicology research. In addition to general toxicology research, it provides detailed guidance on 8 perspectives such as genotoxicity, reproductive toxicity and carcinogenicity. East Asia Qianhai Securities believes that the industry will usher in high-quality development.

Antibody-conjugated drugs have led the second wave of innovative drugs in China and are currently the hottest track in the field of innovative drugs. CITIC Securities believes that in the future, three types of companies will have strong competitiveness in the field of antibody conjugated drugs, namely companies with leading progress in R&D pipelines and differentiated layouts; companies with technological platform advantages and innovative R&D; providing antibody conjugated drugs. An enterprise that develops integrated CDMO (commissioned development and production outsourcing) services.