Recently, there has been exciting news in the field of domestic innovative drugs.
Baili Tianheng, an A-share listed pharmaceutical company, announced on the same day that the company's wholly-owned subsidiary, Systimmune, and Bristol-Myers Squibb (hereinafter referred to as BMS) reached an exclusive license and cooperation agreement on the BL-B01D1 project.
BL-B01D1 is a bispecific antibody ADC (antibody drug conjugate) drug that targets both EGFR and HER3, and has demonstrated efficacy signals in multiple epithelial tumor indications.
Under the terms of the agreement, BMS will make an upfront payment of US$800 million to Baili Tianheng, with a potential total transaction value of up to US$8.4 billion. It is worth mentioning that BL-B01D1 is also the first new domestic bispecific antibody ADC drug to successfully go overseas, and this down payment has set a record for the highest amount of domestic innovative drug license out.
In recent years, the innovation strength of China's pharmaceutical companies has attracted more and more attention from foreign pharmaceutical companies, and innovative drugs have become more and more frequent, and ADC is a popular variety of domestic drugs going overseas.
With the popularity and success of ADC R&D, China's ADC R&D strength has gradually been revealed, and more than 10 ADCs will be successfully launched in 2023.
According to Debang** statistics, from 2021 to the first half of this year, the overseas transaction amount of domestic ADCs has exceeded 20 billion US dollars, of which Columbotai has won a potential transaction amount of more than 11.8 billion US dollars (calculated at the time of contract signing) by authorizing 9 products of Merck.
From the perspective of the number of overseas transactions, the top companies include Kelun Pharmaceutical, CSPC Pharmaceutical Group, Yingen Biotech, Kangnuoya, etc., and the overseas ADC drug targets mainly cover HER2, TROP2, and CLAUDIN182 etc.
In the long winter of biopharmaceutical capital, ADC is becoming one of the hottest areas for global new drug research and development due to its high specificity and efficient lethality.
Baili Tianheng is expected to win the first place in the total amount of overseas transactions this year. Stimulated by the sky-high potential total trading volume, Baili Tianheng's stock price has accumulated more than 30% in the next 10 trading days.
According to Baili Tianheng's 2023 interim report, BL-B01D1, which has reached the transaction this time, is the world's only bispecific antibody ADC drug in the clinical stage that can target both EGFR and HER3.
BL-B01D1 monotherapy has demonstrated strong efficacy signals in multiple epithelial tumor indications, especially in patients with non-small cell lung cancer and nasopharyngeal carcinoma in the final line of cancer, and has demonstrated breakthrough efficacy that can advance to pivotal clinical registration.
At present, BL-B01D1 monotherapy is in the phase II clinical study stage, and has completed the submission of communication applications for 3 single-agent double-arm Phase III registration clinical trials and 2 single-agent single-arm pivotal registration clinical studies.
The combination of BL-B01D1 with SI-B003, the combination with chemotherapy drugs, and the combination with osimertinib have all been approved for Phase II clinical trials, and are progressing to Phase II clinical studies of related combinations.
Since its listing in early January this year, Baili Tianheng's share price has soared, and by the end of November this year, it has been higher than the issue price of 247 yuan share C more than 3 times, the market value has also risen from less than 10 billion yuan to 4396.2 billion yuan, becoming the most concerned biomedical enterprise on the Science and Technology Innovation Board. As the stock price of Baili Tianheng soared, the founder of the company, Zhu Yi, also became the richest man on the Science and Technology Innovation Board.
Founded in 2006, Baili Tianheng is a modern biomedical enterprise integrating drug R&D, production and marketing. In 2011, Baili Tianheng entered the field of innovative drug research and development.
After years of development, the company now has a full range of drug research and development production capacity such as small molecule chemical drugs, large molecule biological drugs and antibody drug conjugates (ADC drugs), and has the upstream and downstream integration capabilities from intermediates, APIs to preparations, and the complete life cycle commercial operation capacity of "R&D-production-marketing".
At present, the research and development progress of some of its bispecific antibodies and ADC drugs is in the forefront of the world.
Baili Tianheng's business segment includes two parts: chemical drug preparations, Chinese patent medicine preparations, and innovative biological drugs, and supports its steady growth with generic drugs, and lays out its breakthrough development with innovative drugs.
It is worth noting that Baili Tianheng's innovative biological drug sector still has no products on the market and has not generated product sales revenue, and its performance is still supported by traditional businesses such as chemical drugs and Chinese patent medicines.
The financial data in the prospectus shows that the total revenue supported by chemical drug preparations and Chinese patent medicine preparations has shown a downward trend year by year: in 2019 and 2022, Baili Tianheng's revenue will be 120.7 billion yuan, 101.3 billion yuan, 79.7 billion yuan, 70.3 billion yuan, in the first three quarters of 2023, Baili Tianheng only achieved 37.8 billion revenue, continued to decline by 21% year-on-year.
At the same time, Baili Tianheng's net profit is also difficult to hide the decline: in 2019 and 2020, it barely broke even, lost nearly 100 million yuan for the first time in 2021, and the loss continued to expand in the first three quarters of 2022 and 2023, respectively8.2 billion and 51.5 billion.
In addition, the company's main revenue products failed to participate in centralized procurement and failed to win the bid for centralized procurement, resulting in a significant decline in sales volume, which in turn affected sales revenue. The decline in sales of bid-winning products also brings the risk of declining gross profit margin.
The data shows that due to the decline in the gross profit margin of chemical drugs, in the first three quarters of 2019 and 2023, the comprehensive gross profit margin of Baili Tianheng was respectively. 56%, showing a downward trend. During the same period, the gross profit margin of Chinese patent medicine fell by 144%。
This means that the chemical and proprietary Chinese medicine businesses will no longer be able to provide stable cash flow support for the research and development of innovative biological drugs, and it also reflects the significance of the above-mentioned US$800 million down payment for Baili Tianheng.
Compared with the traditional chemotherapy drugs that "kill a thousand enemies and self-damage 800", ADC, as an emerging macromolecule targeted drug, has incomparable clinical advantages such as single-agent antibodies and chemotherapy, and will lead a new era of tumors and is expected to become a routine for tumors.
Against this backdrop, the global ADC market is growing year by year, from US$5.5 billion in 2021 to US$63.8 billion in 2030, with a compound annual growth rate of 313%。
The broad prospect of ADC hyphenated use has also driven the enthusiasm for R&D in this field: the target selection of ADC products is becoming more and more diverse, and bispecific antibody ADCs are gradually being exploredThe selection of cytotoxins is becoming more diverse, and linker technologies are constantly evolving.
Due to the characteristics of combining innovation, efficiency and chemical drug capabilities, Chinese pharmaceutical companies, which have always had little say in the field of innovative drugs, finally have the opportunity to show their strengths.
At present, 122 ADC drugs in China have entered the clinical trial stage, and the number of pipelines under development accounts for nearly 40% of the world.
Among them, 15 ADC drugs from Hengrui Pharmaceutical, Dongyao Pharmaceutical, Bio-Thera, Columbotai, Innovent Biologics, Huadong Pharmaceutical, Fosun Pharmaceutical, Meiyak Biotech, Xinma Biotech and other companies have entered phase clinical trials, another 7 have been approved for marketing, and 4 are applying for marketing. It is expected that in the next 2-3 years, China will usher in the outbreak period of ADC drugs.
With the approval of more and more ADC drugs and the expansion of indications, China's innovative drug R&D strength has been widely recognized internationally, and the sales of ADC drugs are expected to maintain a rapid growth trend.
According to incomplete statistics, so far, there have been more than 20 ADC grant transactions of domestic pharmaceutical companies, with a transaction value of more than 35 billion US dollars.
However, at the same time, ADC drug research and development is difficult, and it is necessary to link large molecules (NT targets) with very toxic small molecules, which need to have strong stability and safety, and the threshold for process development is extremely high. This also makes ADC not a newest track, but for more than ten years, there are fewer approved drugs in the ADC field, and the industry has not developed significantly.
However, there is also a chain of contempt within ADC drug development: the difficulty and value of the research and development of bispecific antibody and polyantibody ADC drugs are much higher than that of monoclonal antibody ADC. Baili Tianheng can be called the king of the volume in the ADC track, with 3 quadruple antibody pipelines (GNC-038, GNC-039 and GNC-035), and it is also the only quadruple antibody ADC pharmaceutical company in the world to enter the clinical trial.
Becoming a partner of an international leading pharmaceutical company like BMS is naturally a demonstration of Baili Tianheng's strength, and it also boosts the morale of domestic innovative drug research and development, but the risks cannot be ignored.
Some insiders said that multinational pharmaceutical companies will pay great attention to the capabilities of their partners in transactions, such as whether they have strong development capabilities, especially global market capabilities.
More importantly, it depends on the degree of understanding and cognition of the partners in the field of ADC. There are still a variety of challenges in the ADC field, and if you don't have a deep foundation and understanding in this field, it's easy to give up when you encounter difficulties.
Specifically, the potential milestone payment of $8.4 billion consists of three parts, in addition to the upfront payment of $800 million, including near-term contingent payments of up to $500 million and additional payments of $7.1 billion after the development, registration and sales milestones are met.
Whether the other two amounts can be recorded is closely related to the progress of BL-B01D1's pipeline, and the contract also indicates that there is still a great deal of uncertainty about the final milestone payment amount.