Huadong Medicine Acquires Second CAR-T Therapy IM19 for Up to $1.38 Billion, Files for Market Approval

Interface News Reporter |Chen Yang

Interface News Editor |Xie Xin

On August 4, Huadong Medicine Co., Ltd. announced that its wholly-owned subsidiary, Huadong Medicine (Hangzhou), had signed a commercialization cooperation agreement with Beijing Yimiaoshenzhou Medical Technology Co., Ltd. Huadong Medicine (Hangzhou) obtained the exclusive commercial rights in mainland China for the latter's CD19-targeted autologous CAR-T candidate product IM19. For this, Huadong Medicine (Hangzhou) will pay an upfront payment of 125 million yuan to Yimiao Shenzhou, along with registration and sales milestone payments of up to 950 million yuan.

Specifically, Yimiao Shenzhou is a company focused on CAR-T therapy. IM19 is the company’s most advanced product, with three indications—relapsed/refractory diffuse large B-cell lymphoma (r/r DLBCL), acute B lymphoblastic leukemia (B-ALL), and mantle cell lymphoma (MCL)—all having entered the registration clinical research stage. The scope of this authorization covers the treatment of all B-cell hematological malignancies by this product, including the aforementioned three indications.

Among these, the research of IM19 for r/rDLBCL end-line treatment is about to complete Phase II clinical trials (confirmatory clinical trial), with plans to submit a drug marketing authorization application in the fourth quarter of 2024. Additionally, the research for B-ALL and MCL has completed the infusion of all subjects in Phase I and is about to enter Phase II clinical trials. In the future, Beijing Yimiaoshenzhou Medical Techology Co., Ltd. also plans to initiate clinical trials for second-line treatment of DLBCL.

Compared with similar products, IM19 is not ahead in progress. In June and September 2021, Fosun Kite's Axicabtagene Ciloleucel Injection (trade name: Yikaida) and Wuxi Juno's Relmacabtagene Autoleucel Injection (trade name: Benuoda) were successively approved for marketing in China. These two products also target CD19, with the first indication being third-line treatment for large B-cell lymphoma. The second-line treatment for the former was also approved in June 2023.

However, from the perspective of Yimiao Shenzhou and Huadong Medicine, both parties have a need to collaborate. On one hand, due to reasons such as the million-level pricing of CAR-T, difficulty in entering medical insurance, and the small market for end-line treatment of hematological tumors, several CAR-T companies have chosen to partner with large pharmaceutical enterprises for commercialization.

For example, JW Therapeutics has partnered with Shanghai Pharma's SPD. The injectable Ixazomib (brand name: Fokusu) was previously co-developed and commercialized by IASO Biotherapeutics and Innovent Biologics until July 2024, when IASO Biotherapeutics bought back all rights to the product.

Moreover, Yimiao Shenzhou is not the first CAR-T company Huadong Medicine has partnered with. In January 2023, Hong Kong-listed company CARsgen Therapeutics granted Huadong Medicine the exclusive commercial rights in mainland China for its Zevor-cel injection (brand name: Cekazine). In March 2024, the product was approved in China, becoming the fifth CAR-T product in the country.

However, Sikaczumab targets BCMA and has been approved for fourth-line treatment of relapsed or refractory multiple myeloma (r/r MM) in adult patients. The official website of CARsgen Therapeutics shows that the indications for this product are also limited to MM. In other words, for Huadong Medicine, the licensed products from Yimiao Shenzhou and CARsgen Therapeutics do not have direct competition but instead enrich Huadong Medicine's portfolio in hematological tumors.

Regarding the reasons for entering the innovative therapy CAR-T field, Huadong Medicine mentioned in a May 2024 research activity that oncology is one of the company's three key areas for innovative R&D. Currently, cell and gene therapies (CGT) are popular directions. However, these therapies have high production requirements and require significant fixed asset investment. Therefore, the company decided not to invest in R&D and production initially but instead enter CAR-T through its expertise in commercialization.

This actually reflects the business transformation of Huadong Medicine, a veteran pharmaceutical company, following the end of the high-growth dividend period for generic drugs, as well as its characteristic strength in sales and business development (BD) rather than research and development.

In 2018, Huadong Medicine acquired Sinclair from the UK, marking its entry into the medical aesthetics field, often referred to as a "safe haven from medical insurance price cuts." By early and late 2020, the company's key product, Acarbose, failed to secure a bid in the second round of centralized procurement, while its product Bailiang Capsules entered the medical insurance system with a reduced price, causing the company’s revenue to decline for the first time. This also heightened the urgency for Huadong Medicine to transform. Consequently, the company adopted a strategy of aggressive acquisitions, completing 20 BD deals between 2019 and 2021, earning it the industry nickname of "BD Maniac."

In July this year, Huadong Medicine also obtained the rights to Edaravone Oral Tablets TTYP01 in China from Aozong Biotechnology and acquired Hengba Pharmaceutical, a Miao medicine company, for 528 million yuan, gaining products such as the latter's Shangkeling Spray. These two transactions respectively enriched the company’s product lines in the cardiovascular and cerebrovascular fields as well as topical formulations.

In terms of projects, Huadong Medicine has made numerous investments in popular fields. For instance, currently, the focus in the medical aesthetics field is shifting from surgical procedures to injectables and energy-based devices. Huadong Medicine previously acquired two international energy-based aesthetic device companies, and its injectable products cover three major categories: regenerative products, hyaluronic acid, and botulinum toxin. In pharmaceuticals, the company has also entered the popular fields of ADC and GLP-1.

However, while the hotspot areas have a huge market, it also means fierce competition. The extent to which acquisitions and BD can boost Huadong Medicine's performance remains to be seen over time.

Currently, Huadong Medicine's main business is divided into four major segments: pharmaceuticals industry, medical aesthetics, pharmaceuticals commerce, and industrial microbiology. In 2023, the company's revenue and net profit attributable to shareholders reached 40.624 billion yuan and 2.839 billion yuan respectively, representing year-on-year growth of 7.71% and 13.59%. However, this net profit attributable to shareholders was only on par with that of 2019, and the growth rates of the company’s revenue and net profit attributable to shareholders have consistently remained below the levels seen prior to 2019.

Among these, nearly 70% of Huadong Medicine's revenue in recent years has been contributed by its pharmaceutical commercial sector. In 2023, its medical aesthetics segment achieved a revenue of 2.447 billion yuan, representing a year-on-year increase of 27.79%, the fastest growth among all segments, but currently accounting for only 6.02% of total revenue.

In the secondary market, Huadong Medicine closed at RMB 29.10 per share on August 5, with a slight increase of 0.66%, and its current market value is RMB 51.1 billion.

Interface News Reporter |Chen Yang

Interface News Editor |Xie Xin

On August 4, Huadong Medicine Co., Ltd. announced that its wholly-owned subsidiary, Huadong Medicine (Hangzhou), had signed a commercialization cooperation agreement with Beijing Yimiaoshenzhou Medical Technology Co., Ltd. Huadong Medicine (Hangzhou) obtained the exclusive commercial rights in mainland China for the latter's autologous CAR-T candidate product IM19 targeting CD19. For this, Huadong Medicine (Hangzhou) will pay an upfront payment of 125 million yuan to Yimiao Shenzhou, as well as registration and sales milestone payments of up to 950 million yuan.

Specifically, Yimiao Shenzhou is a company focused on CAR-T therapy. IM19 is the company’s most advanced product, with three indications—relapsed/refractory diffuse large B-cell lymphoma (r/r DLBCL), acute B lymphoblastic leukemia (B-ALL), and mantle cell lymphoma (MCL)—all having entered the registration clinical trial stage. The scope of this authorization covers the treatment of all B-cell hematological malignancies with this product, including the aforementioned three indications.

Among these, the research of IM19 for r/rDLBCL end-line treatment is about to complete Phase II clinical trials (confirmatory clinical trial), with an anticipated submission of the drug marketing authorization application in the fourth quarter of 2024. Additionally, the research targeting B-ALL and MCL has completed the infusion for all subjects in Phase I and is about to enter Phase II clinical trials. In the future, Beijing Yimiaoshenzhou Medical Technology Co., Ltd. also plans to initiate clinical trials for second-line treatment of DLBCL.

Compared with similar products, IM19 is not in the leading position in terms of progress. In June and September 2021, Fosun Kite's Axicabtagene Ciloleucel Injection (trade name: Yikaida) and Wuxi Juno's Relmacabtagene Autoleucel Injection (trade name: Benuo达) were successively approved for marketing. These two products also target CD19, with the first indication being third-line treatment for large B-cell lymphoma. The former’s second-line treatment was also approved in June 2023.

However, from the perspective of Yimiao Shenzhou and Huadong Medicine, both parties have a need to collaborate. On one hand, due to reasons such as the million-level pricing of CAR-T, difficulties in entering medical insurance, and the smaller market for end-line treatment of blood tumors, multiple CAR-T companies have chosen to partner with large pharmaceutical enterprises for commercialization.

For example, JW Therapeutics has partnered with Shanghai Pharma's SPD. The injectable Ixazomib (brand name: Fokusu) was previously co-developed and commercialized by IASO Biotherapeutics and Innovent Biologics until July 2024, when IASO Biotherapeutics bought back all rights to the product.

Moreover, Yimiao Shenzhou is not the first CAR-T company Huadong Medicine has collaborated with. In January 2023, Hong Kong Stock Exchange-listed CARsgen Therapeutics granted Huadong Medicine the exclusive commercial rights in mainland China for its Zevor-cel injection (brand name: Sekarz). In March 2024, the product was approved in China, becoming the fifth CAR-T product in the country.

However, Sikiz targets BCMA and has been approved for fourth-line treatment of relapsed or refractory multiple myeloma (r/r MM) in adult patients. The official website of CARsgen Therapeutics shows that the indications for this product are also limited to MM. In other words, for Huadong Medicine, the licensed products from Yimiao Shenzhou and CARsgen Therapeutics do not have direct competition but instead enrich Huadong Medicine's layout in hematological tumors.

Regarding the reasons for entering the innovative therapy CAR-T field, Huadong Medicine mentioned in its May 2024 research activity that oncology is one of the three key areas of the company's innovative R&D layout. Currently, cell and gene therapies (CGT) are popular directions. However, these therapies have high production requirements and require significant fixed asset investment. Therefore, the company decided not to invest in R&D and production initially but to first enter CAR-T through its expertise in commercialization.

This actually reflects the business transformation of Huadong Medicine, a veteran pharmaceutical company, following the end of the high-growth dividend period for generic drugs, as well as its style of excelling in sales and business development (BD) rather than research and development.

In 2018, Huadong Medicine acquired Sinclair in the UK, marking its entry into the "safe haven from medical insurance price cuts" of the medical aesthetics field. By early and late 2020, the company’s key product, Acarbose, failed to secure a bid in the second round of centralized procurement, while its product Bailiang Capsules entered the medical insurance with a price reduction, causing the company's revenue to decline for the first time. This also intensified the urgency for Huadong Medicine to transform. Consequently, the company adopted a strategy of "buy, buy, buy." Between 2019 and 2021, Huadong Medicine completed 20 BD transactions, earning it the nickname "BD Maniac" within the industry.

In July this year, Huadong Medicine also obtained the rights in China for TTY01, an oral edaravone tablet from Aozong Biotech, and acquired Hengba Pharmaceutical, a Miao medicine company, for 528 million yuan, gaining products such as the latter's Shangkeling Spray. These two transactions respectively enriched the company’s product lines in the cardiovascular and cerebrovascular fields and in topical formulations.

In terms of projects, Huadong Medicine has made numerous investments in popular fields. For instance, currently, the focus in the medical aesthetics field has shifted from surgical procedures to injectables and energy-based devices. Huadong Medicine previously acquired two international energy-based aesthetic device companies, and its injectable products cover three major categories: regenerative products, hyaluronic acid, and botulinum toxin. In pharmaceuticals, the company has also entered popular areas such as ADC and GLP-1.

However, while the hotspot areas have a huge market, it also means fierce competition. The extent to which acquisitions and BD can boost Huadong Medicine's performance remains to be seen over time.

Currently, Huadong Medicine's main business is divided into four major segments: pharmaceuticals industry, medical aesthetics, pharmaceuticals commerce, and industrial microbiology. In 2023, the company’s revenue and net profit attributable to shareholders reached 40.624 billion yuan and 2.839 billion yuan respectively, representing year-on-year growth of 7.71% and 13.59%. However, this net profit attributable to shareholders was only on par with that of 2019, and the growth rates of the company’s revenue and net profit attributable to shareholders have consistently lagged behind the levels seen prior to 2019.

Among these, nearly 70% of Huadong Medicine's revenue in recent years has been contributed by its pharmaceutical commercial sector. In 2023, its medical aesthetics segment generated a revenue of 2.447 billion yuan, representing a year-on-year increase of 27.79%, the fastest growth among all segments, but currently accounting for only 6.02% of total revenue.

In the secondary market, Huadong Medicine closed at RMB 29.10 per share on August 5, with a slight increase of 0.66%. Its current market value is RMB 51.1 billion.