ADC (Antibody-Drug Conjugates) Sector Welcomes a New Player. South Korean food giant Orion Group announced this week that it will "cross over" and acquire 25.7% of biopharmaceutical company LegoChem Biosciences (LCB) for 550 billion Korean won (approximately 2.948 billion yuan), entering the ADC field. Not long ago, two collaborations by Johnson & Johnson with a total value exceeding 20 billion yuan were also related to the ADC sector.


As multiple companies' ADC drugs have successively entered international markets, and with continuous exploration of innovative targets, ADCs are expected to become the next platform-level product.


Orion, Johnson & Johnson Enter the ADC Field


It is reported that Orion's subsidiary, Pan Orion Corp. Limited, will acquire approximately 7.9633 million new shares of LCB at a price of 59,000 Korean won per share and will purchase 1.4 million issued shares at a benchmark price of approximately 56,186 Korean won per share. Through this acquisition, Orion will hold 25.7% of LCB’s shares. The payment date and the scheduled date for the shareholder change are set for March 29, 2024. Orion, which holds 95.15% of its subsidiary, will directly become the largest shareholder of LCB.


LCB, founded in 2006, is a clinical-stage biopharmaceutical company focused on developing next-generation therapies using its proprietary drug discovery technology, LegoChemistry, and its ADC platform technology, ConjuAll. Prior to Orion, several Chinese companies, such as Harbour BioMed, CStone Pharmaceuticals, and Lee's Pharmaceutical, have collaborated with LCB.


As a well-known food company, Orion is not making its first move in the biopharmaceutical field. In 2019, Orion signed a letter of intent with Lupin Pharmaceuticals and stated that while focusing on its core food business, it was also paying attention to the biotechnology industry. In October 2020, Lupin Pharmaceutical's wholly-owned subsidiary introduced investors Orion Holdings and Orion China through capital increase and share expansion to jointly engage in the research, development, and production of chemical and biological drugs as well as diagnostic reagents.


Another multinational pharmaceutical giant, Johnson & Johnson, is also making frequent moves in the ADC field. In December 2023, Johnson & Johnson reached a licensing agreement with LCB to jointly develop and commercialize the Trop2-targeted ADC drug LCB84, with a total deal value of $1.7 billion. Not long into the new year, Johnson & Johnson announced a $2 billion all-cash acquisition of ADC biopharmaceutical company Ambrx. This transaction is expected to be completed in the first half of 2024. In a short period of time, Johnson & Johnson has invested RMB 26.5 billion into entering the ADC track.


Why Is the "Biological Missile" So Tempting?


ADC drugs are composed of three parts: antibody, linker, and toxin. Theoretically, any part can be linked with other parts, and through various "combinations," new products can be iterated. Because of this, ADC drugs are called "biological missiles" and are also considered by the industry as potentially becoming the next platform-level product.


According to IQVIA data, from 2016 to 2020, the sales revenue of the ADC market in the United States increased from 329 million USD to 1.47 billion USD, with an average annual compound growth rate as high as 45%. According to market forecasts in a Natrue sub-journal, by 2026, the global ADC drug market size will reach 16.4 billion USD. Due to its applicability to various types of cancer, DS-8201 from Daiichi Sankyo/AstraZeneca is expected to achieve sales of 6.2 billion USD.


Data released by SullivanIt shows that from January to November 2023, the proportion of ADC and other antibody drugs in License-out (overseas licensing) transactions in China reached 56.3%, showing an increase compared to 2022.


Public data shows that globally, the number of approved ADC drugs has reached over ten, with more than 150 in clinical development, including 11 in Phase III clinical trials. In China, aside from the five approved drugs, there are also double-digit numbers in Phase III clinical trials. Based on this, it is predicted that the ADC market in China is expected to enter a boom period within 2-3 years.


Specifically, some target tracks are quite crowded. The HER2 target has the largest number of drugs under research, with over 20 candidates. This also implies that once the products are marketed, they will face a rather brutal competitive landscape. Meanwhile, some ADC research and development companies have started to explore innovative targets. As Ping An Securities pointed out in their research report, these types of target tracks have not yet formed a significant competitive landscape and still hold considerable development potential, with blockbuster varieties expected to emerge.


Xinhua News Agency reporter Zhang Xiulan

Proofread by Baoqing Liu