China's sino biopharm obtained a research report stating that the emergence of BTK inhibitors is a major breakthrough in the treatment of hematologic malignancies. With superior efficacy and safety, second-generation BTK inhibitors have gradually increased their market share. China has 0.1 million new lymphoma patients each year. Although the incidence rate is far lower than some solid tumors such as lung cancer, the emergence of targeted therapies in this area has made lymphoma in clinical treatment manageable as a chronic disease. With a large patient base and long management cycles, the hematologic field has successively introduced multiple blockbuster molecules exceeding one billion US dollars, such as ibrutinib, acalabrutinib, zanubrutinib, and venetoclax, highlighting the considerable commercial value.

The emergence of BTK inhibitors is a major breakthrough in the treatment of hematologic malignancies. With superior efficacy and safety, second-generation BTK inhibitors have been gradually increasing their market share. The research and development and listing of BTK inhibitors have epoch-making significance for the treatment of hematologic malignancies. First-line and relapsed/refractory CLL/SLL patients have gradually transitioned from immunotherapy to BTK targeted therapy. Similarly, for patients with MCL and MZL, BTK inhibitors are recommended as second-line treatment options, further improving patients' clinical prognosis. The first-generation BTK inhibitor ibrutinib was approved and launched in the US at the end of 2013, reaching a peak global sales of 9.8 billion USD in 2021. However, under competitive pressure from second-generation BTK inhibitors such as acalabrutinib and zanubrutinib, the sales of ibrutinib saw a decline for the first time in 2022 (a 14.6% year-on-year decrease). In the same year, acalabrutinib surpassed 2 billion USD in sales, zanubrutinib exceeded 1 billion USD in sales in 2023, and the sales in the first half of 2024 of ibrutinib, acalabrutinib, and zanubrutinib were 3.225, 1.508, and 1.126 billion USD respectively, with year-on-year changes of -6.6%, 27%, and 116.8%, respectively. As of the first half of 2024, ibrutinib's global market share has dropped to around 50%, while second-generation BTK inhibitors have been increasing their market share year by year.

The number of CLL/SLL patients in the USA is ten times that in China. Long-term use of BTK inhibitors in the global market contributes significantly to sales among CLL/SLL patients; domestic hematologic sales may need to rely on differentiated competition, with specific opinions as follows:

1. Epidemiology of NHL in China: In 2020, the number of existing NHL patients in China was approximately 0.51 million, with approximately 0.093 million new NHL patients each year. In terms of classification, DLBCL is a common subtype of NHL in China, accounting for about 35%-50% of NHL; other subtypes such as CLL/SLL, FL, MCL, MZL account for single-digit percentages of NHL, corresponding to new case numbers in the thousands each year.

2. There are significant differences in the epidemiology of CLL/SLL subtypes between the USA and China: CLL/SLL is the most common adult leukemia type in the USA, with approximately 0.2 million existing patients, while in China, there are approximately 0.02-0.03 million patients. From the perspective of annual incidence of new CLL/SLL cases, the USA has approximately 0.02 million new CLL/SLL patients, while China has around 7,000-8,000 new patients per year. The number of CLL/SLL patients in the USA is about ten times that of China, and the racial differences in patient base to some extent lay the foundation for the large-scale sales of BTK inhibitors. We have seen that ibrutinib reached a peak global sales of 9.8 billion USD, acalabrutinib exceeded 2 billion USD in sales six years after market launch, and zanubrutinib has seen continuous doubling of sales for multiple years. The rapid increase in the use of first- and second-generation BTK inhibitors indicates that there are still significant unmet clinical needs for treating diseases. In the global hematologic market, the indications for CLL/SLL may significantly contribute to the large-scale sales of BTK inhibitors.

3. In the domestic market, differentiated competition has a positive effect on the scale of product sales. In April 2023, innocare obtained domestic approval for MZL indications of obatinib, which was included in medical insurance by the end of 2023. As the first and only BTKi approved for this indication in China, obatinib's sales growth rate reached 48.8% in 2024 Q2, with an expected annual growth rate of 35%+.

The continuous exploration of post-relapse progression therapy after BTKi treatment may provide directions through BCL-2, BTK degraders, CD3 bispecific antibodies, and others. BTK inhibitor therapy brings longer survival benefits to lymphoma patients, but resistance mutations may occur under continuous treatment, leading to poorer prognosis in the population with relapse and progression after BTKi treatment. Novel treatments such as BCL-2, BTK degraders, CD3 bispecific antibodies, etc., may provide solutions in subsequent dosing regimens. (1) BCL-2 inhibitors: With anti-tumor effects by promoting cell apoptosis, venetoclax is the world's first approved BCL-2 inhibitor. Currently, domestically, enterprises such as Ascentage Pharma have the investigational new drug lisaftoclax (4 registrational Phase III clinical trials ongoing), expected to apply for R/R CLL indication in China in 2024; Beigene has Sonrotaclax (4 registrational clinical trials ongoing), expected to apply for R/R CLL indication in China in 2025; Innocare ICP-248 (in combination with ibrutinib in Phase 2/3 clinical trials for CLL/SLL). (2) BTK degraders: Resolve the challenge of relapse and progression after BTKi treatment by degrading proteins. Beigene's BGB-16673 for treating R/R MCL and R/R CLL/SLL has obtained FDA Fast Track designation. (3) CD3 bispecific antibodies: Activating T cells to exert their cytotoxic effect for therapeutic purposes. CD3 bispecific antibodies not only show potential in hematologic malignancies but also highlight preliminary prospects in treating autoimmune diseases, sparking a wave of CD3 bispecific antibody BD transactions. Domestic enterprises involved include but are not limited to Innocare/Kanoroya, Tianguangshi, Sino Biopharm, Junshi Bio, Cellular Biomedicine Group, and Lvzhu Bio.

Investment Advice: In China, there are 0.1 million new cases of lymphoma patients each year. Although the incidence rate is much lower than some solid tumors such as lung cancer, the emergence of targeted therapy in this field has transformed lymphoma into a chronic disease manageable in clinical practice. With a large patient base and long management cycles, we see a series of blockbuster molecules in the hematologic malignancies field that have surpassed one billion US dollars each, such as ibrutinib, zanubrutinib, acalabrutinib, and venetoclax, highlighting significant commercial value. From the technological iterations of BTK inhibitors to the continuous exploration of new drugs, the emergence of innovative therapies aims to bring safe, tolerable, deep remission, and longer survival benefits to patients. It is recommended to pay attention to related companies in this field such as Beigene, Ascentage Pharma, and Innocare. It is recommended to focus on related companies in this field like Beigene (688235.SH,06160), Ascentage Pharma-B (688558.SH,01961), Innocare-B (688456.SH,09969).

Risk Warning: 1) Unexpected drug approval: Company's innovative products may face delays in approval. 2) Lower-than-expected market launch of new drugs: The smooth progression of various milestones after the launch of the company's innovative products significantly affects the sales volume of the company's products. 3) Impact of national policies: Changes in medical insurance negotiation policies may affect the sales of the company's innovative pharmaceuticals.