Innovative drugs ＂going out to sea＂ speed-up cooperation mode is more diversified

　　Since the beginning of this year, innovative pharmaceutical companies have gone out to sea again. Pharmaceutical companies such as Yaoming Bio, Maiwei Bio and Anrui Bio have announced that they have reached overseas authorized transactions. The insiders believe that intensive overseas authorized transactions fully prove that the R&D strength of innovative pharmaceutical enterprises in China has been recognized by international pharmaceutical companies. The ecological pattern of domestic biomedical industry is being reshaped, and the mode of cooperation with foreign pharmaceutical companies will be more diversified in the future. With the adjustment of industry structure, it is expected that 2024 will be a year in which transactions and mergers and acquisitions among pharmaceutical enterprises will become more frequent.

　　R&D strength continues to increase.

　　With the rapid development of the industry, the research and development strength of biomedical enterprises in China has been continuously enhanced. According to incomplete statistics, there were at least 120 overseas authorized transactions of innovative drugs in China from 2021 to 2023, with a total transaction amount of nearly $85 billion. In 2024, innovative drugs went out to sea to speed up. As of January 14th, domestic enterprises have completed more than 10 foreign authorization transactions, including many transactions exceeding 1 billion US dollars.

　　Genxi Bio has announced that AstraZeneca has completed the acquisition of the company. After the merger, Genxi Bio became a wholly-owned subsidiary of AstraZeneca. AstraZeneca previously said that the acquisition of Genxi Bio will further consolidate AstraZeneca’s strength in the field of cell therapy.

　　Since the beginning of this year, several products of Anrui Bio have obtained overseas authorization, including an exclusive option and a global license agreement with AstraZeneca, and the development and commercialization of a new allosteric inhibitor targeting the mutation of epidermal growth factor receptor (EGFR)L858R as a potential new treatment for advanced EGFR mutation non-small cell lung cancer (NSCLC). With the transfer agreement with Avenzo Therapeutics,Inc.(Avenzo) of the United States, Avenzo will gain the global (except Greater China) development and commercialization rights of a cyclin-dependent kinase 2(CDK2) selective inhibitor ARTS-021 independently developed by Anrui Bio, and another pre-clinical project will be submitted to IND (new drug clinical trial) in early 2025.

　　Ding Qiang, co-founder and CEO of Anrui Bio, said that through cooperation, the company can obtain significant economic benefits and accelerate the development and listing of innovative drugs.

　　Chen Kan, a partner of Qiming Venture Capital, said that the cooperation between Anrui Bio and foreign pharmaceutical companies all involved small-molecule drugs, which on the one hand proved Anrui Bio’s research and development strength, and on the other hand reflected that small-molecule drugs could also be "put out to sea".

　　In addition to well-known biotech listed companies, there have been an increase in overseas authorized transactions of small biotech companies such as Yilian Bio, Anrui Bio and Bowang Pharmaceutical, as well as traditional pharmaceutical companies such as Hengrui Pharma and Haosen Pharmaceutical.

　　In Chen Kan’s view, China pharmaceutical companies and overseas pharmaceutical companies have reached a heavy cooperation, reflecting the recognition of domestic new drugs by international pharmaceutical companies. At the same time, domestic pharmaceutical companies can get cash support. In the process of cooperation with large international pharmaceutical companies, including joint promotion of clinical trials, China Biotechnology Company can also learn a lot of experience.

　　Share risks and obtain resources.

　　Ding Qiang said that cooperation with overseas pharmaceutical companies should be based on comprehensive consideration of the company’s strategic objectives, research and development capabilities and market demand. The cooperation between the company’s two pipelines and AstraZeneca and Avenzo Therapeutics is based on comprehensive considerations. Drug R&D costs a lot and risks are high. Cooperation with large pharmaceutical companies can share risks to a certain extent, especially in clinical trials and marketing stages. In addition, cooperation with overseas pharmaceutical companies can obtain many resources, including funds and market channels, which is very important for accelerating product development and commercialization. Of course, cooperation needs to consider whether the goals of both parties are the same, whether they can support their long-term development strategy, and how to protect their intellectual property rights and avoid the loss of core technologies.

　　Sinopharm plays an important role in two overseas authorized projects reached by Anrui Bio. It is reported that Sinopharm is an innovative company focusing on helping domestic biomedical enterprises to authorize projects overseas. Ding Qiang introduced that Sinopharm provided the whole process service for the company, from the preparation and modification of materials, strategic analysis and optimization, to assisting Anrui to connect and communicate with potential partners, and to negotiate and negotiate relevant terms, which greatly helped the company to reach overseas authorization.

　　For pharmaceutical companies planning to "go out to sea", Jung Lee, senior vice president of business development of Sinogold Pharmaceuticals, suggested that China Biotechnology Company must ensure that the product lines are differentiated and meet the unfinished medical needs. In addition, setting up branches overseas can better understand the current biotechnology trends and cutting-edge scientific progress.

　　Ding Qiang said that enterprises planning to go to sea need to have the world’s leading scientific research strength and unique product innovation. At the same time, it is necessary to deeply understand the situation of potential partners, especially the pipeline layout and the overall strategy of the enterprise. Multinational pharmaceutical companies have their own strategic direction and different layouts in different fields of disease treatment. A deep understanding of the business scope, market strategy and corporate culture of their partners can help the two sides establish closer and more efficient cooperative relations. In the cooperation agreement, many terms and details need special attention, including key factors such as intellectual property ownership, economic sharing, milestone payment, etc. It is necessary to make legal risk assessment and compliance preparation in advance to ensure that the cooperation activities meet the requirements of local laws and regulations.

　　Watch the three subdivided tracks

　　Looking forward to 2024, Chen Kan judged that the number of pharmaceutical companies "going out to sea" in China will remain high. From the past transactions, the clinical data of pharmaceutical companies in China have gained more and more global recognition. Overall, we are optimistic about the three sub-segments of tumor, metabolism and autoimmune.

　　Chen Kan believes that it is necessary for most new drug R&D companies to "go out to sea", especially to develop some small varieties of new drugs that are less suitable for people. Drug pricing in overseas markets is relatively high, and pharmaceutical companies "going out to sea" can expand the market and improve the input-output ratio. The domestic pharmaceutical industry will improve in 2024.

　　From the perspective of cooperation modes, Chen Kan said that there are more and more cooperation modes for domestic and foreign pharmaceutical companies, including obtaining down payment through overseas authorization, acquisition and joint development. Jung Lee believes that more and more innovative drugs from China will go global, and there will be more transactions between China biotechnology companies and multinational pharmaceutical companies than before.

　　Great Wall Securities believes that the "going out to sea" mode of Chinese pharmaceutical enterprises is mainly based on overseas authorization. From January 1 to February 4, 2024, the amount of overseas authorized transactions in China reached 9.146 billion US dollars. In 2024, China’s pharmaceutical "going out to sea" is expected to explode.