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According to the Huacheng Import and Export Data Observation Report, a few days ago, Shijiazhuang Pharmaceutical Group and Kelun Pharmaceutical have reached a License out (overseas authorization) cooperation agreement on antibody conjugated drugs (ADC) with US pharmaceutical enterprises and major pharmaceutical company MSD. Since 2022, many domestic innovative drugs have "gone to sea" in the form of overseas authorization, including billions of dollars in blockbuster transactions. The insiders believe that the R&D strength of Chinese pharmaceutical enterprises and the global competitiveness of domestic innovative drugs have gradually been recognized by overseas markets, and the local innovative enterprises have already taken the lead in the subdivided technology field.

Going to sea one after another

On July 28, Shiyao Group announced that its subsidiary, Shiyao Jushi Biology, had entered into an exclusive licensing agreement with Elevation Oncology on the development and commercialization of the Group's innovative (first of its kind) anti Claudin18.2 antibody coupling drug SYSA1801 outside the Greater China region.

According to the terms of the agreement, Shi Yao Jushi Bio will receive a down payment of $27 million, and is entitled to receive a potential development and regulatory milestone payment of up to $148 million and a potential sales milestone payment of up to $1.02 billion. Shiyao Jushi Bio also has the right to charge a sales commission up to a double-digit percentage based on the annual net sales of the product in the region. Shiyao Jushi Bio will reserve all rights of the product in Greater China.

On July 26, Kelun Pharmaceutical announced that it had reached a cooperation and exclusive license agreement with MSD to develop an antibody conjugated drug for the treatment of solid tumors. According to the agreement, Kelenbotai, the holding subsidiary of the company, will exclusively license MSD to research, develop, produce and commercialize this antibody conjugated drug globally for a fee. The two sides will also cooperate on the early clinical development of this antibody coupled drug. MSD will pay the down payment of USD 35 million, milestone payment of no more than USD 901 million and corresponding net sales commission to Kelun Botai according to the agreement content and the commercial development stage.

Prior to this cooperation, Kelenbothy announced in May this year that it would grant MSD exclusive permission to develop, produce and commercialize antibody coupling drug SKB-264 targeting TROP2 outside China. SKB-264 is currently conducting phase III clinical trials for triple negative breast cancer and phase II clinical trials for non-small cell lung cancer and advanced solid tumors.

Also in May, Lixin Pharmaceutical announced that it had reached an exclusive licensing agreement with Turning Point Company of the United States. Turning Point, as an exclusive partner, would obtain the development and commercialization rights and interests of the innovative antibody coupling drug LM-302 independently developed by Lixin Pharmaceutical in countries and regions other than Greater China and South Korea. In addition, this cooperation also grants the two sides the right to expand potential cooperation in the future.

According to the agreement, Turning Point will pay a down payment of $25 million to Lixin Pharmaceutical, a R&D milestone of $195 million and subsequent commercialization milestones, with a total amount of more than $1 billion. Lixin Pharmaceutical is also entitled to receive a gradient royalty of up to double-digit percentage from the annual net sales of the Turning Point region. In addition, the two sides can jointly develop three subsequent antibody coupled drug products to further expand the scope of cooperation.

The increase in the number of trade cooperation and the way of trade cooperation reflect that the antibody coupling drug technology and products of domestic enterprises are gradually approaching the global advanced level. Huacheng Import and Export Data Observation Report.

Great market potential

Antibody conjugated drug consists of three parts, namely monoclonal antibody, small molecule drug (generally cytotoxin) and linker. This drug is a kind of drug that couples tumor targeted antibodies and small molecule cytotoxic drugs through connectors. It is compared to an ingenious "biological missile" in the industry. The antibody part is a warhead for targeting, and the cytotoxic drugs are ammunition to achieve accurate attack on tumors.

As a targeted chemotherapy drug, antibody conjugated drugs have significant tumor killing advantages for malignant solid tumors that are not sensitive to immunotherapy or other targeted therapies. Not only do single drug end line drugs have good therapeutic effects, but also have the potential to partner immunotherapy forward. 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. Large overseas pharmaceutical enterprises compete to layout this field.

Huacheng's import and export data observation reports that the global market size of antibody conjugated drugs is expected to reach 6.2 billion dollars in 2022, and the annual compound growth rate is expected to be 30.6% from 2019 to 2024. In 2030, the global market size of antibody conjugated drugs is expected to reach US $20.7 billion, and China's market size is expected to reach US $4.2 billion.

Huacheng Import and Export Data Observation reported that as of June 2022, there were 14 antibody coupling drugs on the market worldwide, 7 for blood tumors and 7 for solid tumors. Among them, 4 antibody conjugated drugs are listed in China. The earliest antibody coupling drug approved in China is Emmettozumab of Roche, which was approved in January 2020. Among the four drugs, one was produced by a domestic enterprise and independently developed by Hualuo Rongchang Biology. The drug was conditionally approved by the State Food and Drug Administration for gastric cancer and urothelial cancer in June and December last year. 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, and the overall sales volume is still small, with great growth potential.

According to the import and export data observation report of Huacheng, antibody coupling drugs have the potential of large single products. The sales of Roche related drug Kadcyla (Enmettrazumab) ranked first, with the sales volume reaching 1.982 billion Swiss francs in 2021; Adcetris, a partnership between Seattle Genetics and Takeda Pharmaceuticals, achieved sales of 1.27 billion US dollars, ranking second in sales.

In order to scientifically regulate the research and development of antibody conjugated drugs, on July 6, the Drug Examination Center of the State Food and Drug Administration issued the Technical Guidelines for Non clinical Research of Antibody conjugated Drugs (Draft for Comments), which provided systematic research guidance on pharmacology, safety pharmacology, pharmacokinetics and toxicology. Based on the particularity of antibody conjugated drugs, the Drug Examination Center of the State Food and Drug Administration pays special attention to the research of drug toxicology, and in addition to the general toxicology research, it provides detailed guidance in eight aspects, including genetic toxicity, 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 enterprises will have strong competitiveness in the field of antibody conjugated drugs, namely, those with leading progress in R&D pipeline and those with differentiated layout; Enterprises with technological platform advantages and innovative R&D; Huacheng Import and Export Data Observation Report, an enterprise providing CDMO (entrusted development and production outsourcing) services for the integration of antibody coupling drug research and development.