Rongchang Biotechnology is favored by American ADC giants!

Text: Linan/rainbow

On August 8, 2021, Rongchang Bio-B (09995) announced that it has reached an exclusive global license agreement with Seattle Gene (Seagen Inc.

Affected by this good news, on August 10, Rongchang Bio opened 40% higher in early trading, and then declined

Source: Futu Niuniu

The first domestic ADC new drug to be listed in the "Nuggets" tens of billions of dollars market

Data show that disitamab vedotin (research code "RC48", trade name "Aidixi") is a new antibody-drug conjugate ("ADC") independently developed by the company

According to statistics from China Securities, currently only Roche/ImmunoGen’s Kadcyla (T-DM1, enmetrastuzumab) and Daiichi Sankyo/AstraZeneca’s Enhertu (DS-8201A) Her2-ADC have been approved in the United States.

On June 8, 2021, vedicitumumab was approved to be marketed in China for the treatment of locally advanced metastatic gastric cancer, becoming China's first domestically approved new ADC drug

The molecular structure of vedicitumumab

It is worth noting that Vidicuzumab for the treatment of gastric cancer has also obtained orphan drug qualification and fast-track qualification granted by the US FDA.

According to the Frost & Sullivan report, the global gastric cancer drug market is expected to increase from US$14.

In 2020, China’s gastric cancer drug market will reach US$4.

Currently, non-biological drugs used in patients with gastric cancer indications are mainly chemotherapy drugs

A number of innovative biologic drugs for the treatment of gastric cancer have been approved in the United States, and many innovative biologic drugs that have been proven to be effective in the treatment of gastric cancer and have fewer side effects have been approved for marketing in the United States

Among them, only trastuzumab was included in the national medical insurance drug list

The competitive landscape of HER2 targeted innovative biologics that are on the market and clinically under research in the United States and China for the treatment of gastric cancer

Source: Rongchang Bioscience Innovation Board Prospectus

According to the analysis of CITIC Construction Investment Securities, the design of ADC drugs requires careful selection and reasonable combination of antibody structure and its target, linking chain, cytotoxic drug, coupling method, etc.

"Favoured" by the American ADC giant, Rongchang Bio quickly returns blood

Seattle Genetics, formerly known as Seattle Genetics, will be renamed Seagen in October 2020

Among them, the company has commercialized two ADC drugs, including Adcetris (brentuximab vedotin), which was launched in 2011, and Padcev (enfortumab vedotin-ejfv), which was approved for marketing in December 2019; ADC drugs under development include Ladiratuzumab Vedotin, Tisotumab vedotin and so on

Regarding Seagen's huge investment in acquiring the overseas rights and interests of Rongchang Bio-Vidicuzumab, some industry investors speculated that there may be no better HER2-ADC in the Seagen product pipeline.

Rongchang Bio-Vidicuzumab Research and Development Progress

In the sci-tech innovation board prospectus, Rongchang Biological expects to complete the phase III confirmatory clinical trial of vedicitumumab for the treatment of gastric cancer in 2026, ensuring that it is fully approved for marketing

In view of the competitive advantage of Vidicuzumab in the treatment of HER2 low-expressing tumors and its breakthrough efficacy in the treatment of urothelial cancer with PD-1 monoclonal antibody, Rongchang Biotech stated that it will continue to develop this product for the treatment of HER2 low-expressing urine.
Clinical trials of epithelial cancer and breast cancer will also be explored in the future in the treatment of solid tumors with vedicitumumab
.

In November 2020, Rongchang Biopharmaceuticals, which is holding a heavyweight biopharmaceutical under research, went public in Hong Kong, with a total fundraising of 3.
987 billion Hong Kong dollars, creating the highest global biotechnology IPO fundraising record in 2020
.
In May 2021, Rongchang Biotech announced its listing on the Science and Technology Innovation Board.
It plans to raise a total of about 4 billion yuan.
The funds raised are mainly focused on the R&D, development and commercialization of drugs such as testacept and ADC
.
If the listing is successful, Rongchang Biological is expected to become another A+H share
.

According to the prospectus of Rongchang Bioscience and Technology Innovation Board, during the reporting period, the company’s main R&D investment projects were tytaxacept for injection (RC18) and vedicitumumab for injection (RC48), and the total amount of investment accounted for the proportion of total R&D investment It is 66.
04%
.
Among them, RC48 has invested more than 300 million yuan in research and development from 2018 to 2020
.

Source: Rongchang Bioscience Innovation Board Prospectus

Although Rongchang Bio has already begun to form a sales team, the company's commercialization capabilities are relatively lacking due to the lack of product launches before
.
On the other hand, Seattle Gene has rich experience in ADC commercialization
.
This cooperation will help RC48's global commercialization advancement, and it will also promote its further technical cooperation with Seagean
.

From 2018 to 2020, Rongchang Biotech's net losses were 270 million yuan, 430 million yuan, and 700 million yuan, respectively; R&D expenses were 216 million yuan, 352 million yuan, and 470 million yuan, respectively
.
Most of its operating losses are attributable to research and development expenses, administrative expenses and financial costs
.
R&D projects are "burning money" seriously
.

After the license out transaction, the research and development expenses are divided according to the regions where they own the rights.
Seagen needs to bear all the ongoing and future clinical trials, development, and registration costs in the regions where the rights are held; Rongchang Bio will bear the global share of the countries outside the Seagen region.
Part of the cost of the cooperative experiment
.
This move can also greatly reduce the burden of Rongchang Bio's global clinical trial research and development expenditures, and can be beneficial to the promotion and sales of vedicitumumab on a global scale
.

In 2021, there have been 15 license out projects with a total value of more than 9.
55 billion U.
S.
dollars

According to incomplete statistics from Sina Pharmaceuticals, from the beginning of this year to August 10, there were 15 license out transactions involving 13 innovative drugs in China
.
Compared with "bringing in", it is much more difficult for domestically-made innovative drugs to "go global", because license out requires that China's R&D targets be recognized by international giants
.

Drawing: rainbow

However, as the R&D and innovation capabilities of Chinese pharmaceutical companies continue to increase, the amount of license out transactions is also increasing
.
The total amount of all transactions disclosed in the above table has reached 9.
55 billion US dollars, of which the license out project just announced by Rongchang Biotechnology has generated the largest transaction amount, reaching 2.
6 billion US dollars
.

After sorting out, there are two PD-1s in the license out transaction project this year, namely BeiGene’s tislelizumab and Junshi Biologics’ teriplizumab.
The value of the two transactions is 22.
Billion U.
S.
dollars and 1.
11 billion U.
S.
dollars
.
The domestic sales of tislelizumab (entered the market in March 2020) in 2020 will be 1.
055 billion yuan, and Junshi Bio's total operating income for 2020 will be 1.
595 billion yuan (mainly from Tripril Anti)
.

At present, there is a clear trend of domestic innovative drugs going overseas, and this is also one of the layouts of many innovative pharmaceutical companies' globalization strategies
.
Moreover, if the license out is successfully achieved, on the one hand, it will not only prove the strength of domestically-made innovative drugs, but on the other hand, it will have a broader global market, which will enable domestically-made innovative drugs to go further and obtain more returns
.
We look forward to more domestically-made innovative drugs, moving from "Chinese New" to "International New"
.

Reference materials:

1.
Rongchang Biological Announcement, Science and Technology Innovation Board Prospectus

2.
"A new record for overseas authorized transactions! Why is Rongchang Biological this star ADC drug"