In the context of domestic innovative drug targets and intense competition, going overseas is expected to break through the profit ceiling in the domestic market and conform to the trend of innovative global industry.
The Zhitong Finance App learned that Guosheng Securities released a research report saying that in the context of domestic innovative drug targets and intense competition, going overseas is expected to break through the profit ceiling in the domestic market and conform to the trend of innovative global industries. According to Rubik's Cube statistics, local innovative drugs have gradually switched from a “buyer” to an “exporter.” In terms of license-in, the number of projects introduced by domestic pharmaceutical companies and transaction amounts declined year by year after reaching a peak in 2021; until 2024Q3, the introduction activity of projects was further reduced, focusing on varieties in the middle and late clinical stages or approved for marketing; in terms of license-out, the number of projects and transaction amounts that domestic pharmaceutical companies have reached external licensing cooperation increased steadily.
Guosheng Securities's main views are as follows:
Looking at innovative drugs from the perspective of the upgrading of the NEV industry
The domestic middle and high-end manufacturing industry excels at everything from learning and imitation to transcending output. Domestic electric vehicles started with subsidies, and initially flooded the market for low-quality oil to electricity products. With Tesla Model 3 entering China, it led to the overall upgrading of the industrial chain. After 2021, leading new forces expanded the market size. Domestic innovative drugs are similar to the high-end manufacturing industry of electric vehicles. At the beginning, excellent overseas products were also introduced into the country using the license-in model. After learning and imitation, the overall level of research and development improved significantly, the number of license-in projects began to decline, and the number of external license-outs began to increase dramatically, achieving a shift from “import” to “export.”
Bailey Tianheng (688506.SH): Comprehensive layout of EGFR-HER3 ADC and Bristol-Myers Squibb pan-cancer
Bailey Tianheng: BL-B01D1 is the world's first and only dual antibody ADC targeting EGFR×HER3 to enter the clinical stage. BL-B01D1 has carried out more than 20 clinical studies, including 7 phase III clinical trials for single-agent post-cancer treatment — 2 non-small cell lung cancer indications, 1 small cell lung cancer indication, 2 breast cancer indications, 1 esophageal squamous cell carcinoma indication, 1 nasopharyngeal cancer indication, and 8 phase II trials using PD- (L) class 1 drugs for first-line treatment of lung cancer, including 9 indications, 1 phase II trial for first-line lung cancer treatment in combination with TKI drugs, etc. As of November 6, 2024, after signing a cooperation agreement with BMS, Baili Tianheng's stock price has risen 73.98%.
Columbotai (06990): Potential BIC Trop2-ADC, and MSD take the lead in deploying first-line NSCLC
SKB BIO-B: potential best-in-class TROP2 ADC, 2024ASCO read impressive data in monotherapy after line treatment of TNBC and first-line treatment with PD-L1 monoclonal antibody for NSCLC. Since MSD first launched Global Phase 3 until the close of trading on 2024/11/4, Collumbotai Biotech's increase reached 142%.
Yasheng Pharmaceutical (06855): The world's second third-generation BCR-ABL inhibitor, authorized Takeda overseas
Yasheng Pharmaceuticals: Launched in China in 2021, Orebatinib is the world's second third-generation BCR-ABL inhibitor, specifically targeting resistance to first-generation and second-generation drugs such as glivir. On the evening of June 14, Yasheng announced that it had reached an agreement with Takeda. Takeda paid 0.1 billion US dollars to obtain priority options for Orebatinib from Ascend Pharmaceuticals in overseas markets. From 2024/6/18 to the close of 2024/11/6, Yasheng Pharmaceutical's increase reached 66%.
Hanson Pharmaceuticals (03692): B7H3/B7H4-ADC both authorized GlaxoSmithKline
Hanson Pharmaceuticals: HS-20089 is a novel B7-H4 targeted antibody drug conjugate (ADC), which is currently undergoing phase I clinical research for the treatment of gynecological cancer in China. On October 20, 2023, after reaching a global commercialization cooperation with GlaxoSmithKline, Hanson Pharmaceuticals increased 58% by the close of trading on 2024/11/6.
The volume and price of domestic new drug license-out transactions have risen sharply, with obvious innovative attributes and diverse technologies
During the 2019-2024Q3 period, domestic new drug license-out transactions were quantitative and qualitative, and local innovation gradually gained recognition from the global industry. Drug Rubik's Cube statistics show that the volume and price of domestic innovative pharmaceutical companies' license-out transactions rose sharply; in 2024Q1-3, the number of externally authorized projects increased by 11 year-on-year, and the total amount of disclosed transactions increased 100% year over year; the total number of global pharmaceutical transactions in Q1-3 in 2024 was 502, down 17% year on year; despite the decline in global pharmaceutical investment enthusiasm, China's new drug pipeline, ranked second in the world, and the products and technology of local innovative pharmaceutical companies have received international recognition. China's pharmaceutical innovation strength continues to improve.
Pharmaceutical Rubik's Cube statistics show that during the 2019-2024Q3 period, domestic new drug license-out transactions were quantitative and qualitative, and local innovation gradually gained recognition from the global industry. The innovative nature of the projects that have achieved authorization is obvious. Potential first-in-class projects all account for more than 20% in 2022 and 2023; the technical types of externally authorized projects are more diverse, with double/multiple antibodies, ADC, cell gene therapy, radiopharmaceuticals and technology platforms accounting for more than 50% of the cooperation reached in 2024Q1-3.
Biotech is the main force for license-out going overseas, and MNC cooperation accounts for an increase
Pharmaceutical Rubik's Cube statistics show that BioTech companies were the main players on the overall license-out supply side in 2019-2023, and the share of cooperation with MNC increased. In the early stages, the share of first-tier companies in domestic overseas license-outs increased dramatically, reaching 54% by 2023. Currently, from the supply-side perspective, Biotech is still the main overseas supply force, accounting for more than 50% in 2019-2023 and 69% in 2023. From the perspective of overseas recipients, MNCs with high commercialization capabilities increased their share in overseas cooperation, reaching 36% in 2023.
Domestic new drug license-out deals focus on tumors, and flowers are in full bloom
Pharmaceutical Rubik's Cube statistics show that the distribution of license-out projects is relatively average in each clinical stage, and the proportion of indicated tumors is relatively high. Judging from the current license-out clinical stage, 2023 is relatively consistent in all clinical stages compared to 2022, and there is little overall change. Judging from license-out indications, tumors are still the main force in overseas travel, accounting for 54% of cancer license-out programs in 2023. As can be seen from the performance of domestic innovative pharmaceutical companies in the 2023 Top 10 cooperative projects after going overseas for half a year, Bailey Tianheng's stock price increased by 88%, while Connor's stock price fell 29%.
Comparing the initial payment and total amount of domestic license-out projects and overseas transaction projects, it can be found that the overall cost of domestic projects is still low, and the total amount threshold for the top ten top ten transactions is less than 50% of overseas. Among the top ten global pharmaceutical deals in 2023, there is only one authorized project by Bailey Tianheng and BMS, and the unit price of domestic project transactions is still low. Overall, domestic projects are still in the “good quality and low price” stage.
Risk warning
Negative pharmaceutical policies have exceeded expectations: In recent years, the pharmaceutical sector has successively introduced a series of policies, such as volume procurement of generic drugs, volume procurement of high-value consumables, and medical insurance negotiations for innovative drugs. The actual business conditions of related varieties or enterprises may be affected. If policies such as price reduction are introduced in the future, the operation of related enterprises may face phased pressure.
The growth rate of the industry fell short of expectations: the deterioration of competition in some sectors and products, and disturbances in negative policies caused the growth rate to fall short of expectations.
Industry competition increases risk: As products of the same type continue to be launched or next-generation products are launched, competition in the pharmaceutical industry may intensify, and there is a risk that product market share will fall short of expectations or decline, affecting the revenue and profits of related companies.
