Pharmaceutical & Biotech Weekly Report: Significant Deals Emerge in Oligonucleotide Therapeutics Sector, Highlighting Investment Opportunities Across the Industry Chain

Market Review

Last week (January 2, 2024 - January 5, 2024), the A-share Shenwan Pharmaceutical and Biotechnology sector fell by 3.14%, underperforming the CSI 300 Index by 0.16 percentage points but outperforming the ChiNext Composite Index by 1.77 percentage points. Among the 31 primary sub-sectors of Shenwan, the pharmaceutical sector ranked 22nd in terms of weekly gains and losses. The Hang Seng Healthcare Index dropped by 6.97%, underperforming the Hang Seng Index by 3.96 percentage points. Among the 12 primary sub-sectors of Hang Seng, the healthcare industry ranked 12th in terms of weekly gains and losses.

Core Viewpoints

Significant Deal in Small Nucleic Acid Field: Ribo Life Science Partners with BIAccording to The Paper, on January 3, 2024, Suzhou Ribo Life Science announced via its WeChat Official Account that it has entered into a collaboration with Boehringer Ingelheim to co-develop innovative small nucleic acid therapies for the treatment of non-alcoholic or metabolic dysfunction-associated steatohepatitis (NASH/MASH). Under the terms of the agreement, Suzhou Ribo Life Science will receive an upfront payment and is eligible for milestone payments based on clinical research, drug registration, and commercial success, as well as tiered royalties on product sales. The total deal value exceeds $2 billion. Suzhou Ribo Life Science stated that its RIBO-GalSTARTM technology platform can specifically target pathogenic genes in liver cells, selectively inhibiting their mRNA, thereby enabling the development of small nucleic acid (RNAi) therapies. Small nucleic acid therapies have the potential to target previously undruggable targets with traditional drug molecules, achieving therapeutic goals for corresponding diseases.

Small nucleic acid drugs have multiple advantages and broad market prospects. The principle of small nucleic acid drugs can be briefly described as regulating RNA to achieve the treatment/prevention of diseases. In a narrow sense, small nucleic acid drugs only refer to siRNA. From a broader perspective, according to the mechanism of action, currently popular small nucleic acid drugs can be divided into: nucleic acid-targeting small nucleic acid therapies, such as ASO (antisense oligonucleotides), siRNA; protein-targeting, protein activity-regulating Aptamer (aptamer); targeting coding proteins or antigen mRNA, etc. Unlike traditional small molecule drugs and antibody drugs, small nucleic acid drugs target more upstream points, regulating gene and protein expression through a rich array of RNA targets, thereby achieving disease treatment. In addition to having abundant targets, according to MedChemExpress, small nucleic acid drugs also have advantages such as high specificity and shorter R&D cycles. Overall, theoretically, small nucleic acid drugs can regulate all RNA involved in transcription processes, providing a completely new approach for disease treatment. According to data from CIC cited in Sirnaomics' prospectus, the global small nucleic acid drug market size was $362 million in 2020 and is expected to reach $25 billion by 2030. China's small nucleic acid drug market is estimated at about $4 million in 2022 and is expected to exceed $300 million by 2025, with an annual compound growth rate of over 300%.

Investment Advice

We believe that the market prospect of small nucleic acid drugs is broad. As pharmaceutical companies have successively entered this field, we suggest paying attention to Chinese companies with relevant business layouts, such as Junshi Biosciences, Brii Biosciences, and HitGen.

Risk Warning: Risks of sales falling short of expectations, uncertain risks due to pharmaceutical policies, and risks of intensified market competition.