Veteran Pharma East China Medicine Quietly Expands CAR-T Portfolio Amid IPO Filing

On August 4, Huadong Medicine announced that its wholly-owned subsidiary, Huadong Medicine (Hangzhou),Yimiao Shenzhou Signs Commercialization Cooperation Agreement, Obtains Exclusive Commercial Rights in China for Yimiao Shenzhou's CD19 Autologous CAR-T Candidate Product IM19.According to the agreement, Beijing Yimiaoshenzhou Medical Technology Co., Ltd. will receive an upfront payment of 125 million yuan and milestone payments for registration and sales of up to 950 million yuan.

Thus far,Huadong Medicine Has a Total of Two CAR-T Products in Hand, The other is the CAR-T product Zevor-cel obtained from CARsgen Therapeutics in January last year, but the two targets and indications are different. CARsgen Therapeutics' Zevor-cel targets BCMA and is mainly for relapsed or refractory multiple myeloma. Beijing Yimiaoshenzhou Medical Techology Co., Ltd.'s IM19 is for relapsed/refractory diffuse large B-cell lymphoma and other B-cell hematological malignancies.

The combination of the two can effectively expand Huadong Medicine's presence in the field of hematological oncology.

Targeting cell and gene therapy are not limited to Huadong Medicine. On August 5,Northeast Pharmaceutical Group Co.,Ltd. announced the acquisition of 70% equity in Beijing Dingcheng Peptide Source Biotechnology Co., Ltd., an enterprise specializing in cell therapy products for solid tumors.Beijing Dingcheng Peptide Source Biotechnology Co., Ltd. has more than 10 cell therapy products, including TCR-T and CAR-T, targeting KRAS mutations, Claudin18.2, and others.

Since the advent of CAR-T technology, cell and gene therapy has attracted many pharmaceutical companies to enter the field. Many traditional domestic pharmaceutical companies such as Huadong Medicine, Northeast Pharmaceutical Group, and Shijiazhuang Pharmaceutical Group have also successively invested in CAR-T.But in just two days, there were two deals made in cell and gene therapy cooperation. This is quite rare.Cell and gene therapy has been struggling to impress the market due to issues of accessibility and production capacity. The buzz around cell and gene therapy is also gradually fading.

Nowadays, traditional pharmaceutical companies frequently enter the CAR-T field, indicating that the industry still has some confidence in cell and gene therapy. But a key question is, how much return can the investment bring?

Huadong Medicine "Bottom Fishing" CAR-T

IM19 is the first CAR-T developed by Beijing Yimiaoshenzhou Medical Technology Co., Ltd., and also the company’s most advanced product. In a media interview, He Ting, founder of Yimiaoshenzhou, stated that the efficacy and safety of IM19 have demonstrated its potential to be a best-in-class treatment.

But this statement needs to be questioned.

Compared with the CD19 CAR-T products already on the market in China,The indications for IM19 are not particularly novel, including relapsed or refractory diffuse large B-cell lymphoma, acute B lymphoblastic leukemia, and mantle cell lymphoma., in clinical phase 2 and phase 1.

IM19's own efficacy is not particularly outstanding. According to the Ib/II phase pivotal clinical study, IM19 is used for the treatment of relapsed or refractory aggressive B-cell non-Hodgkin lymphoma.The Best Objective Response Rate is 76%The best objective response rate of JW Therapeutics' Relma-cel for patients with relapsed or refractory (r/r) large B-cell lymphoma is 75.9%.

IM19's current advantage is only reflected in its better safety profile.The incidence rates of cytokine release syndrome (CRS) and neurotoxicity (NT) were 42% and 7%, respectively, with no patients experiencing grade 3-4 CRS or NT. The incidence of CRS with Relma-cel was higher at 47.5%, with three patients experiencing grade 3 to 4 CRS.

So why did Huadong Medicine buy this product?

Huadong Medicine once disclosed,Since Zevorcleucel was approved in March, nearly 20 patients have been served in two months. Based on the initial price of 1.15 million yuan, the product has generated approximately 23 million yuan in revenue.Huadong Medicine may have seen the prospects of CAR-T and decided to invest in IM19.

In terms of price, Huadong Medicine did not pay a high price. In November last year, Legend Biotech granted Novartis the DLL3 CAR-T product (LB2102), with an upfront payment of US$100 million and total milestone payments reaching US$1.01 billion. Novartis also had to cover the development costs incurred during Legend Biotech's Phase 1 clinical trials.

Even compared to its previous deals, the CAR-T therapy Huadong Medicine purchased from Beijing Yimiaoshenzhou Medical Technology Co., Ltd. is cheaper.In January 2023, when Huadong Medicine purchased CAR-T from Keji Pharma, it paid an upfront fee of 200 million yuan and negotiated up to 1.025 billion yuan in registration and sales milestone payments.

Beijing Yimiaoshenzhou Medical Techology Co., Ltd. was founded in 2015,Currently, at least 10 rounds of financing have been completed, with a total disclosed financing amount exceeding 300 million yuan.In terms of funding, Beijing Yimiaoshenzhou Medical Techology Co., Ltd. may not be as well-funded as Beijing Dingcheng Peptide Source Biotechnology Co., Ltd. From the disclosed financing amounts, Beijing Dingcheng Peptide Source Biotechnology Co., Ltd. has received at least 1.7 billion yuan in financing.

Beijing Yimiaoshenzhou Medical Technology Co., Ltd.'s IM19 for the treatment of relapsed/refractory diffuse large B-cell lymphoma is about to complete Phase II clinical trials, with plans to submit a drug marketing authorization application in the fourth quarter of 2024. The commercialization of the product requires sufficient human and financial support. Most Chinese CAR-T development companies either have strong financial backing like Fosun Kite and WuXi Jumo, or seek external cooperation, such as Icarus Bio and Innovent Biologics. It is clear that Beijing Yimiaoshenzhou Medical Technology Co., Ltd. cannot stand alone.

Market Dilemma Remains Unresolved

China's CAR-T product development is among the top globally. This year, domestically produced CAR-T products have been approved in a surge, with HyCyte's Naciorlucel and CARsgen Therapeutics' Zevorcabtagene Autoleucel joining the competition, bringing the total number of marketed products to five.

Globally, there are only 10 CAR-T products, half of which are in China.All CAR-T companies in China have to strive to expand into larger market spaces.

In June 2023, Fosun Kite's CAR-T received approval for an additional second-line indication, used to treat adult patients with large B-cell lymphoma who are ineffective with first-line immunochemotherapy or relapse within 12 months after first-line immunochemotherapy. Legend Biotech has also advanced its indications to front-line treatment. However, industry insiders told Jian Shi Ju,The difficulty in advancing CAR-T products to frontline treatment lies not in technological breakthroughs but in practical aspects.In other words, patient accessibility is the key bottleneck faced by all cell and gene therapies.

The earliest marketed Fosun Kite Axicabtagene Ciloleucel sees an increase of 100 to 200 patients every six months. Despite the approval of new frontline indications last year, there has been no significant increase in the number of patients. According to Fosun Pharma's financial report,As of June 2023, approximately 500 Chinese lymphoma patients had benefited cumulatively, and by the end of the year, this number increased to 600 patients.

In January 2024, Fosun Kite pioneered the innovative "Pay-for-Performance" scheme in China, with the hope of enabling more patients to receive CAR-T therapy. The number of customers it can acquire remains unknown.

JW Therapeutics is no exception. In 2022, JW Therapeutics reported total revenue of 146 million yuan, an increase of 373%, with a total of 165 CAR-T prescriptions issued. However, by 2023, sales had only slightly increased to 174 million yuan.A total of 184 prescriptions were issued nationwide.

Huadong Medicine is well aware of the difficulties involved. Huadong Medicine is a long-established pharmaceutical company with distinctive characteristics in commercial BD within the industry. The idea of cross-border CAR-T has been brewing for a long time. However, when facing investors, Huadong Medicine has repeatedly mentioned,Cell and gene therapies require high investment in production, R&D, and fixed assets. Therefore, we will not invest in R&D and production ourselves but instead decide to enter the CAR-T sector by leveraging commercialization capabilities.

In this regard, Huadong Medicine has been quite astute. While entering popular fields, it has also maximized the avoidance of development risks. With these collaborations, Huadong Medicine can also accumulate some experience in hematological tumor drugs. Why not?

Author: Yang Xixia

Editor | Jiang Yun, Jia Ting

Operation｜Han Jinrui

Illustration｜Visual China

Statement: Original content by Jian Shi Bureau, please do not reprint without permission.

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