HBM Announces $604M Licensing Deal with AstraZeneca for Preclinical Oncology Antibody
AstraZeneca
Biopharmaceutical Manufacturer
Cross-border collaborations between local biotech companies and multinational pharmaceutical enterprises continue.
On May 23, Harbour BioMed announced that its subsidiary, Harbour BioMed (Suzhou) Co., Ltd, had reached a collaboration agreement with AstraZeneca to license a preclinical-stage monoclonal antibody for targeted cancer therapy to AstraZeneca. According to the agreement, AstraZeneca will pay a $19 million upfront payment, a $10 million near-term milestone payment, up to $575 million in milestone payments, and a certain percentage of sales royalties. Based on these terms, the total potential value of this deal could reach $604 million.
Affected by this news, Harbour BioMed once surged nearly 20% during the trading session on the 23rd, and closed up 10.71%.
In recent years, cross-border BD (Business Development) deals between biotech companies in China and foreign pharmaceutical enterprises have been continuously announced, with the majority of buyers being multinational pharmaceutical giants. Foreign pharmaceutical companies, armed with abundant cash flow, acquire pipelines through BD, while domestic innovative drugs take the opportunity to go global, marking a significant step toward internationalization. This industry trend has continued into 2024, showing new characteristics, such as an increasing number of early-stage research products being favored. Amid increasingly frequent BD transactions, local biotech companies are also continuously learning to strengthen their bargaining power.
Multinational Pharma Companies Snap Up Chinese Innovative Drugs
Early Products Begin to Gain Attention
Due to factors such as the expiration of patents on mature products and pipeline adjustments, in recent years, many foreign companies have come to China to "shop" for innovative drugs.
Before the official announcement of the collaboration on the 23rd, in April 2022, AstraZeneca introduced Claudin18.2/CD3 bispecific antibody HBM7022, with the total collaboration amount exceeding $350 million. According to PharmaCube, in 2023, there were 228 BD deals for innovative drugs in China, with the total upfront payments reaching 21.021 billion yuan, the highest level in nearly four years. In the same year, China's antibody-drug conjugates (ADC) overseas licensing reached 22 deals. Additionally, according to incomplete statistics, in the first quarter of 2024, China's pharmaceutical industry completed and publicly disclosed 24 outbound licensing transactions.
Leo Wang, Executive Vice President of AstraZeneca Global and President of International Business & China, previously stated in an interview with media including The Paper that there are many ways to go global. One way is to do it entirely on your own, another is to find partners overseas, and yet another is technology transfer. Many Chinese companies possess proven technologies, and collaborating with multinational pharmaceutical companies may be the most thorough and optimal approach.
Most BD deals focus on innovative drugs themselves. Based on publicly available transaction information, the deals in 2024 not only include popular categories such as ADCs and GLP-1 (glucagon-like peptide-1), but also an increasing number of early-stage products are becoming subjects of transactions. In this case, the monoclonal antibody new drug for targeted cancer therapy licensed by Harbour BioMed to AstraZeneca is currently in the preclinical stage.
Pharmaceutical R&D is characterized by high risks, and the development stage of a drug directly impacts the value of BD (Business Development) deals. A senior executive from a pharmaceutical company in China once told reporters that in product licensing collaborations, buyers either take a gamble on early-stage products at a lower price while facing greater R&D risks, or they pay a higher price for more advanced products with a higher likelihood of commercialization.
In addition to product licensing cooperation, multinational pharmaceutical companies have also taken steps to acquire Chinese innovative pharmaceutical enterprises.
So far this year, Novartis' acquisition of Xiran Therapeutics, Nuvation Bio's acquisition of Baoyuan Pharmaceuticals, and Danish pharmaceutical company Genmab's acquisition of Protheon Biologics have all drawn industry attention. On May 22, Protheon Biologics announced that Genmab completed an $1.8 billion all-cash acquisition of the company. Through the acquisition, Genmab obtained the rights to three new drugs in clinical development stages worldwide and Protheon Biologics' novel ADC drug technology platform.
Fangzheng Securities research report believes that in recent years, the number of BD events in the ADC field has been increasing, and the competition among international leading pharmaceutical companies for the layout of the ADC field has continued. The acquisition of Provention Bio sends a strong signal: the relatively low valuation of China's biotech companies in the global capital market has been noticed by more and more international pharmaceutical companies. Not only multinational pharmaceutical companies but also international second-tier pharmaceutical giants have started to enter the market to buy up China's biotech companies at a low price.
How Domestic Pharmaceutical Companies Navigate BD Deals
Enhance bargaining power?
Unlike Hengrui Medicine and Kelun Pharmaceutical, which are comprehensive pharmaceutical companies with both R&D and commercialization capabilities, biotech companies are more research-oriented, with many pipelines but not yet commercialized. Influenced by various factors, the past two years have not been easy for biotech companies in China. Cooperation with multinational pharmaceutical enterprises is undoubtedly a way to quickly recover. So, in BD deals, how can they achieve higher transaction amounts?
"Differentiation and innovation of the product itself are crucial." On May 23, Wang Jinsong, founder, chairman, and CEO of Harbour BioMed, told reporters from The Paper that the collaboration between his company and AstraZeneca this year is one of the largest preclinical pipeline licensing deals by a Chinese biotech company, indirectly reflecting the alignment between the innovation and value of the company’s products.
In addition to the product itself being sufficiently innovative, if a biotech company already has products in collaboration with multinational pharmaceutical companies or has products directly listed overseas, it will become an advantage in BD transactions.
"Just like everyone is playing now, first you have to sit at the card table, and then you can consider what position you can get on the table."
Jun Zhu, Executive Director, CEO, and CFO of Henlius, previously pointed out in an interview that once a product is approved in the U.S., the company will gain higher bargaining power for its other products and businesses. "For the upcoming BD deals, what could have been negotiated for $50 can now be negotiated for $100."
At the end of 2023, Harbour BioMed (Suzhou) Co., Ltd announced that it had entered into a licensing agreement with Seagen, a subsidiary of Pfizer, for the global clinical development and commercialization of the mesothelioma ADC drug HBM9033. According to the agreement, the company will receive an upfront payment and near-term payment totaling $53 million, as well as potential milestone payments and royalties of up to $1.05 billion. Wang Jinsong stated that the company's robust platform and R&D capabilities are continuously being demonstrated and validated through collaborations with leading global pharmaceutical companies. The team’s deep understanding of the platform and technology enables the pipeline under development to gain attention and favor at a very early stage, which is also one of the ways to enhance the product’s bargaining power.
