When Biotech led the rally in pharmaceutical stocks

China's innovative drug field has been quiet for a long time this year, but on October 12, BeiGene, which is listed in three places and seized the golden window of the capital market, issued an announcement that its global phase 3 head-to-head APINE trial of zebrutinib, an anti-tumor blockbuster, has achieved effective results - that is, better
results than the original research.

If the review concept on the other side of the ocean does not change, it means that BeiGene will challenge the giant with annual sales of nearly 10 billion US dollars - ibrutinib
in the major indication of relapsed/refractory chronic lymphoblastic leukemia.

And then there will be a series of chain reactions: Passing the FDA means opening the door to the world, and Baekje's move to build a global sales network at no cost, even in some small countries in the Middle East and Europe, becomes explainable
.

Head-to-head trials with star drugs require a large number of original drugs to be purchased at the original price, which is extremely expensive
.
And if you fail, it is "making a wedding dress for others"
.
Without this result, Baekje was at best charged with
"burning money.
"

As soon as the news came out, not only did the NASDAQ give Baekje a gain of more than 20%, but its gains in A shares and H shares also soared
.
The next day, the innovative drug and CRO sectors followed suit, and the entire pharmaceutical and biological sector was almost all red
.

In the golden age of a few years ago, this news was at best the icing on the cake in the process of China's innovative drug boom
.

But the times are different, and when the current innovative drugs enter the cold winter, it is undoubtedly a new shot in the arm to inject into the industry
.

-01- Two small orgasms

China's innovative drugs are in the midst of a valuation bubble bursting
.
In the first half of this year, more than 90% of the Hong Kong stock 18A listed biotech's stock prices broke, and only 5 companies had higher stock prices than the issue price, with an average decline of 42.
91%.

Among the 915 pharmaceutical stocks listed on the NASDAQ/NYSE, excluding those listed in 2021, the average decline in the past year is about
60%.

The chill of the secondary market is also transmitted to the primary market
.
In the first half of 2022, the number of investment and financing events in the primary market decreased by 46.
7% year-on-year and 45.
9%
month-on-month.

Many investors have money in their pockets but are no longer investing in innovative drugs
.

At this time, China's innovative drugs need a different story
outside a bunch of me-toos and pipelines.

In the final analysis, when China's innovative drugs need a little confidence, some industry leaders need to stand up
.

At the 2022 American Congress of Clinical Oncology (ASCO), Remegen shared the progress of the company's ADC drug vedicitumab (RC48), which is also the first domestic ADC drug approved in China for the treatment of gastric cancer and urothelial carcinoma
.

In the following five trading days, Remegen's A shares have risen by nearly 35%, and Hong Kong stocks have risen by more than 17%.

In the first half of 2022, Remegen's Hong Kong stock market value fell by 70% from last year's average price until June
.
After ASCO, Remegen's share price increased by nearly 50%
compared to four months ago.

During the same period, Hong Kong stock 18A companies such as Cinda and Akeso, which released data on ASCO, also spent honeymoon periods
ranging from one month to several months with capital.

And the head-to-head data of Baekje zebrutinib led the rise in innovative drugs, which also confirmed that in the industry of innovative drugs, which is a life of nine deaths, if you want to be favored by the capital market and send some heating to the cold industry, you must come up with good drugs
with real guns.

-02- The ebb and flow of innovative drugs

Good news and bad news are two sides
of the same coin.
This is also a note on the nine deaths of innovative drugs
.

Just in May of this year, BeiGene plunged near a record low
.
The reason is that the clinical performance of Roche TIGIT did not meet expectations, and the Baekje monoclonal antibody pipeline of the same target was affected
.

On the other hand, the indentation of this year's investment environment, coupled with the reflection of Roche, Sanofi and AstraZeneca's collapse in a number of key new drug clinical projects, the market environment for domestic innovative drugs is more turbulent than last year
.

As the first brother of China's biotech, Baekje has been listed in three places and raised tens of billions of yuan, which has always been considered because of good luck, which makes people red but cannot win real respect
.

As the capital market's requirements for Biotech change, the market is directly cold-faced
.
In January this year, even though Baekje's blockbuster PD-1 product Bazean and Novartis reached a license-out agreement, setting a record for the highest amount of single-variety drug licensing transactions in China, it was called "winning face and losing Lizi"; In April, Bazean's new indication was approved by the NMPA, and there was no splash - Baekje's share price has been following the pessimism in the global innovative drug market
.

Pessimism is not without reason
.
In 2021, BeiGene's 8 drugs and 6 varieties accounted for only 0.
5-0.
8% of the global market – which is the current net worth of a company with a market value of 130 billion yuan – and obviously cannot satisfy the picky appetite of the secondary market
.

What happened to BeiGene seems to be saying that, especially in a stock market crash year, outdated and slow-paced stories like Me-too and Fast-Follow are no longer able to whet the appetite of capital, and that more Me-Better is needed to break through the bottleneck
of China's innovative drug imagination.

If you go back five years, no one would have thought that what brought hope to Baekje, a pharmaceutical company, and made people regain confidence in innovative drugs, was not PD-1, which has a market of 100 billion, but BTK
, which is only 1/20 of the former.

-03- China's innovative drugs need new stories

Just as Remegen's ADC drug has brought stimulus to shareholders, Baekje's head-to-head trial is also novel
enough.

After a period of seedling-boosting, China's innovative drug market increasingly needs differentiated stories to boost itself
.
In the past, after any license out drug could support sky-high valuations, the capital market after seeing PPT companies also needed more sexy investment topics to make more and more rigid capital flow
.

From the beginning of the year to the present, investors are facing multiple pressures: the general environment of what to invest and what to lose; the value-added anxiety caused by the popularity of innovative drugs in the past two years; The attractiveness of the sector becomes weaker after the market capitalization correction – not to mention, a mature, reliable innovative drug company often presents a thick and thin growth curve, which does not meet the market environment
that urgently needs short-term visible returns.

To do this, participants in the innovative drug capital market need to listen, tell, and even build stories – the fastest way to create positive results
.
Behind the news, in fact, it is the restlessness of the capital side
.

This year's second quarter report shows that the proportion of pharmaceutical public offering positions has reached a new low since 2018, and everyone has been looking forward to an opportunity
to make up positions.
At the same time, the valuation of the secondary market of innovative drugs continues to be cleared, and the biotechnology sector of US and Hong Kong stocks has seen a sharp correction, and people's understanding of the characteristics of the innovative drug industry is more rational market perception: the so-called overnight wealth is just a success
.

But the pandemic has undoubtedly made the prospects of a drug even more unpredictable
.
This bit of confidence heat eventually needs to land to keep warm
.

In July this year, Baekje's PD-1 new drug, Bazean, will extend the target review time
for its marketing authorization application due to factors such as pandemic-related travel restrictions.
This adds another frost to the PD-1 track, which was originally compressed due to involution, - it was much
more difficult to go to sea than expected.

As another product of BeiGene, as 1/5 of the 5 BTK inhibitors approved worldwide, the road seems to be much
easier in comparison.
In the latest financial report, Bazeyue's sales in the United States increased by 500% year-on-year to 1.
015 billion, which probably explains why this time can become a lifesaver in the trough period of Baekje
.

After the bubble of innovative drugs has been squeezed, the capital market is looking forward to the formation of a new "bubble" as never before - not only to solve the liquidity dilemma of the current environment and restart a new cycle in all walks of life; At the same time, this kind of "bubble" of telling new stories can also motivate innovative drug companies to avoid homogenized competition and explore new models
to mobilize market sentiment to a certain extent.

After all, innovative drugs carry the whole human exploration for better treatment methods and higher-quality lifestyles, which requires continuous irrigation
from all walks of life.