Another innovative pharmaceutical company betting on the popular PD-1 sector has begun its path to a public offering in Hong Kong.

Public information shows that Hansi Aitai Biomedical Technology (Wuhan) Co., Ltd. (referred to as 'Hansi Aitai') has ICBC International as its exclusive sponsor, and before its IPO, the company completed three rounds of financing, with the estimated company valuation of about 1.615 billion yuan after the B+ round of financing in June 2024.

Among the many companies going public in Hong Kong, unprofitable innovative pharmaceutical companies are not uncommon, but as the popularity of the innovative drugs sector has waned in the past two years, the stock prices and valuations of pharmaceutical companies in the secondary market have become increasingly bleak. Given that Hansi Aitai is located in the highly homogenized PD-1 sector, will it gain the attention of the capital markets after its IPO?

Three main products are all in the early clinical stage.

According to public information, Hansi Aitai is an innovative biotechnology company with independent expertise in structural biology, translational medicine, and clinical development, dedicated to exploring the next generation of immunotherapies through the discovery, development, and commercialization of first-in-class and/or best-in-class products for precise treatment of cancers and autoimmune diseases.

Tumor immunotherapy is a promising and continuously developing cancer treatment that provides more targeted and potentially long-term beneficial treatment options compared to traditional therapies. However, the currently approved immune checkpoint inhibitor therapies also have many limitations, which is why the academic community generally adopts or seeks new targets or improves the currently approved inhibitors.

According to Zhito Finance APP, Hanseytai mainly innovates by improving existing target inhibitors, utilizing the company's proprietary VersatiBody platform (an antibody engineering platform) to create bifunctional or multifunctional molecules.

As of November 18, 2024, the company has multiple pipelines consisting of 10 innovative drugs under research. Among them, the core product HX009 has three indications undergoing clinical trials, with some indications entering clinical phase Ib/II, making it the product with the fastest research and development progress; two major products, HX301 and HX044, also have one indication each entering clinical trials; seven drugs are in the preclinical stage, including the first-in-class antibody-drug conjugate candidate HX111, and the novel OX40-targeted bispecific antibodies HX035 and HX038.

The core product HX009 is referred to as the "super PD-1" molecule, which is a specially designed bispecific molecule targeting two immune checkpoints (PD-1 and CD47), enhancing the efficacy of PD-1 antibodies and addressing the safety issues associated with CD47 targeting.

Among the two relatively advanced research products, HX301 is a multitarget kinase inhibitor that can target multiple targets including CSF1R, ARK5, FLT-3, and CDK4/6. In July 2024, HX301 completed phase I clinical trials for treating advanced malignant tumors in China and was approved in August to conduct clinical trials for combined therapy with temozolomide for treating glioblastoma, with plans to start combination therapy research before the end of 2024.

"Super CTLA-4 molecule" HX044 is a bifunctional anti-CTLA-4 antibody/SIRPα fusion protein, which can be used to treat various advanced malignant solid tumors, especially for treating various PD-1 resistant solid tumors, including non-small cell lung cancer and melanoma. In October, HX044 initiated phase I/IIa clinical research in australia, and in November, the IND application for treating advanced solid tumors was accepted by the National Medical Products Administration in china. Public data shows that HX044 is the only CTLA-4/SIRPα bispecific antibody/bifunctional fusion protein currently in the clinical trial phase globally.

Deeply trapped in losses, the company urgently needs an IPO to replenish funds.

As an innovative pharmaceutical company with multiple important products still in early clinical stages, Hanseytai's performance in terms of results is relatively weak. According to the prospectus, besides the HX008 product previously transferred to Lepu Biotech, the company has no commercialized products and no sales revenue from any product.

According to Zhitong Finance APP, HX008 (putilinib injection) is a PD-1 monoclonal antibody product. According to the transfer agreement, Hansaitai can receive a one-time cash payment of 0.35 billion yuan and an annual royalty fee of 4.375% of net sales, with the latter's annual fee in 2022 and 2023 being approximately 0.7 million yuan and 4.4 million yuan, respectively.

According to LePu Biotech's half-year report for 2024, in the first half of the year, the sales revenue of Puyuheng (putilinib injection) was approximately 94.8 million yuan, an increase of 115.4% compared to the same period in 2023. Based on this calculation, the total revenue that Hansaitai can obtain from putilinib for the entire year is expected to exceed 8 million yuan, significantly higher than the same period last year.

In 2022, 2023, and the first half of 2024, the company's R&D expenses were 58.684 million yuan, 46.663 million yuan, and 42.034 million yuan, respectively, with total losses of 25.117 million yuan, 84.623 million yuan, and 43.131 million yuan (amounts are in RMB).

As of September 30, 2024, Hansaitai has cash and cash equivalents on the books, as well as time deposits with original maturities exceeding three months, totaling 0.153 billion yuan, barely enough to meet the R&D investment for the coming year.

The competition within the PD-1 sector is intense, and there remain uncertainties in R&D progress.

As Hansaitai's core product, the R&D progress of HX009 is undoubtedly closely monitored. Public information shows that HX009 currently has three indications being developed simultaneously, including the HX009-I-01 China study (Phase Ib) for the treatment of advanced melanoma, the HX009-II-02 China study (Phase I/II) for the treatment of R/R EBV+ non-Hodgkin lymphoma, and a Phase II clinical trial for the combination therapy of cholangiocarcinoma, which was approved this September.

In terms of overseas commercialization, in April 2023, Hansaitai submitted an IND application to the FDA for conducting HX009 Phase Ib/II clinical trials in the USA, and received the FDA's clinical trial approval letter in May 2023.

According to Zhitong Finance APP, HX009 has successfully completed two Phase I single-agent dose escalation trials for solid tumors in australia and china.

However, from the perspective of new drug development processes, multiple major products of Hansai Aitai have not completed Phase II clinical trials, indicating a significant uncertainty about the company's ability to develop drugs in the future.

(Figure: Success of Chinese innovative drugs in clinical trials in the usa, a represents the success rate at each clinical stage; b represents the success rate for each stage by type of pharmaceutical.)

On the other hand, although HX009 is leading in the research and development of bispecific antibodies and bifunctional fusion proteins targeting PD-1/PD-L1 and CD47 in this niche field, the competitive landscape of the PD-1 hot oncology market has already turned red.

According to Zhitong Finance APP, as of now, the number of PD(L)-1 monoclonal antibodies approved for marketing domestically has reached as many as 15, with some approved for around 10 indications.

As the number of homogeneous products in the market increases, competition in the PD-1 sector has entered a heated stage; even bispecific antibodies with more advanced design concepts have been entered early by several companies such as merck and biontech.

Even if Hansai Aitai can capture a share of the already red ocean market for PD-1, the 'soul bargaining' of health insurance will also become another important factor affecting performance.

The market valuation of innovative pharmaceutical companies is closely tied to the potential market prospects of their research pipelines. In the current landscape, where many competitors surround the PD-1 space, primary products in early clinical trials for Han's Cytotherapy may struggle to achieve much valuation premium. Looking ahead, the progress of clinical trials will become a key focus for market investors.