Weekly Biopharma Report (Week 4, 2024): Major Deals Surge in Oligonucleotide Therapeutics – Industry Trends and Pipeline Insights from Alnylam

Core Viewpoint

This week, the pharmaceuticals sector underperformed the overall market, with the biologics segment leading the decline. The entire A-share market fell by 2.25% (weighted average by total market capitalization), the CSI 300 dropped by 0.44%, the SME Board Index fell by 2.03%, the ChiNext Index declined by 2.60%, and the biomedical sector as a whole decreased by 3.09%. The biomedical sector performed worse than the overall market. Breaking it down by sub-sector, the chemical pharmaceuticals segment fell by 3.76%, biologics dropped by 4.61%, healthcare services declined by 1.77%, medical devices fell by 3.37%, pharmaceutical commerce dropped by 2.90%, and traditional Chinese medicine decreased by 1.47%. The pharmaceuticals and biotechnology sector’s P/E ratio (TTM) is 26.00x, which is at the 22.08th percentile of its historical valuation over the past five years.

At the beginning of 2024, China's small nucleic acid sector ushered in a promising start: 1) Argo Biopharma signed two exclusive licensing and collaboration agreements with Novartis. Argo will grant Novartis licenses for two cardiovascular pipelines at clinical stages and options for up to two additional cardiovascular pipeline targets. The agreements include an upfront payment of $185 million and potential milestone payments totaling up to $4.165 billion, along with tiered royalties. 2) Ribo Life Science entered into a collaboration with Boehringer Ingelheim to jointly develop innovative small nucleic acid therapies for treating non-alcoholic or metabolic dysfunction-associated steatohepatitis (NASH/MASH), with the total transaction value expected to exceed $2 billion.

Guoxin Pharmaceutical Perspective: 1) Key technological breakthroughs in small nucleic acid drugs and continuous upgrades are supporting the rapid advancement of products and clinical pipelines. The sales of Spinraza, a treatment for the rare disease SMA, have exceeded $2 billion. In the long term, the lipid-lowering drug Leqvio, administered twice a year, has the potential to become a blockbuster drug. Overseas pharmaceutical giants are entering the small nucleic acid field through cooperation, development, and mergers and acquisitions, and the industry is at a turning point of commercial explosion. In the short term, focus on pipelines with fast clinical progress and commercial prospects; in the long term, favor platform enterprises with sustained innovation capabilities. 2) In recent years, China's innovative drug companies' pipeline License-Outs have continuously made progress, especially in emerging fields such as ADC and small nucleic acids where significant deals frequently occur. It is recommended to pay attention to differentiated innovation and high-quality pipelines with overseas potential and related companies.

Risk Warning: Risk of R&D failure; Risk of commercialization falling short of expectations; Geopolitical risks; Risk of policy exceeding expectations.