Global ADC Deals Surge as China Embraces the 'Magic Bullet' in Oncology Drug Development

Dec 30, 2023 21:05 CST Updated 21:05

GSK China

Pharmaceutical Manufacturer

Hansoh Pharma

Pharmaceutical Research, Production, and Sales

"51% of clinical ADC drugs in China have entered Phase II and beyond, while globally this figure is only 42% (including China). Meanwhile, China has a large and well-progressed pipeline, with these assets widely recognized globally, as evidenced by the increase in global ADC deals."

As the year-end approaches, how did antibody-drug conjugates (ADCs), which have been under "close attention" throughout 2023, perform for the entire year?

According to the third-quarter financial reports disclosed by major pharmaceutical companies, the global ADC market size reached 7.4 billion USD in the first three quarters of 2023, with an expected annual total surpassing 10 billion USD for the first time. Six ADC drugs, including Kadcyla (Trastuzumab Emtansine) and Enhertu (Trastuzumab Deruxtecan), are each projected to exceed 1 billion USD in sales, among which Enhertu's sales this year are anticipated to surpass 2.5 billion USD.

Antibody-drug conjugates (ADCs) are complexes composed of cytotoxic drugs (a class of drugs commonly used in cancer treatment) linked to tumor-targeting monoclonal antibodies. They combine the advantages of highly specific targeting and potent killing effects in anti-tumor therapy, enabling precise and efficient elimination of cancer cells, and are known as "magic bullets."

"Strong-Strong Alliance" in Pharmaceutical Companies

Recently, GSK China and Hansoh Pharmaceutical Group Company Limited ("Hansoh Pharma" for short) announced that they have signed an agreement with an upfront payment of 185 million US dollars to achieve cooperation in new drug development.

According to the agreement, GSK will obtain the development and commercialization rights for a B7-H3-targeted ADC named HS-20093 in regions outside of China. Hansoh Pharma will receive milestone payments of up to $1.525 billion during the research and development phase (conditional phased payment plan). After the product’s commercialization, GSK will also pay royalties based on global net sales in regions outside of China.

Hesham Abdullah, Senior Vice President of Global Oncology R&D at GSK, stated: "B7-H3 is highly expressed in a variety of solid tumors, for which there remains an urgent need for new treatment options. We look forward to advancing this potential new therapy across multiple indications, with the possibility of forming a combination treatment with our existing products in the future."

This is not the first time GSK has entered into an ADC drug strategic partnership with Hansoh Pharma. In October 2023, GSK reached an agreement with Hansoh Pharma on the B7-H4-targeted ADC candidate drug HS-20089, which is currently undergoing Phase II clinical trials in China, for the treatment of ovarian and endometrial cancers. The terms of this agreement were broadly similar to the current one, albeit at a slightly lower price. GSK paid an upfront fee of $85 million and committed to milestone payments of up to $1.4 billion.

In the major ADC deals, the presence of China's innovative pharmaceutical companies is not uncommon. A research report by Huajin Securities on December 12 pointed out that although ADC development in China started relatively late, with increased government support for innovation and the growing R&D capabilities of domestic ADC companies, China’s ADC technology platforms and R&D pipelines are rapidly gaining widespread recognition from foreign pharmaceutical firms.

According to the PharmaOcean database, HS-20093 is currently undergoing six Phase I and Phase II clinical trials in China for the treatment of lung cancer, sarcoma, head and neck cancer, and other solid tumors. GSK plans to initiate a Phase I clinical trial of HS-20093 outside of China in 2024.

Since March this year, German pharmaceutical company BioNTech has reached cooperation with two Chinese innovative drug companies on four ADC candidate drugs. On October 12, Medilink Therapeutics (Suzhou) Co., Ltd. announced that it would grant BioNTech the exclusive rights to develop, manufacture, and commercialize globally (excluding mainland China, Hong Kong, and Macao) an ADC candidate drug targeting HER3 (human epidermal growth factor receptor 3) owned by the company. On August 7 and April 3, DualityBio (Suzhou) Co., Ltd. reached exclusive licensing and cooperation agreements with BioNTech for the ADC candidate drugs DB-1305 and DB-1303, DB-1311 respectively.

U.S. pharmaceutical companies Pfizer, Bristol-Myers Squibb (BMS), and German pharmaceutical company Merck KGaA have also followed suit. On December 15, Harbour BioMed (Shanghai) Co., Ltd. announced that its wholly-owned subsidiary, Nanobody (Suzhou) Co., Ltd., has signed an exclusive licensing agreement with Seagen, recently acquired by Pfizer, for the global clinical development and commercialization of the ADC candidate drug HBM9033 targeting Mesothelin (MSLN). The agreement includes a $53 million upfront and near-term payment, as well as up to $1.05 billion in milestone payments and royalties. Currently, HBM9033 is undergoing Phase I clinical trials in the U.S. to evaluate its safety, tolerability, pharmacokinetics, and anti-tumor activity in patients with advanced solid tumors.

R&D Boom in China

In the Chinese market, there are currently more than 120 ADC drug development pipelines in China, with over 70 companies engaged in their research and development. In 2020, Adcetris (for the treatment of Hodgkin's lymphoma and systemic anaplastic large cell lymphoma) and Kadcyla (used for early and metastatic HER2-positive breast cancer treatment) were approved for marketing in China, with combined sales of the two drugs reaching 570,000 USD in 2020.

In June 2021, the first domestically produced innovative ADC drug, RC48 (Aidixi) developed by Rongchang Bio, was launched in China. It is the first ADC drug to receive dual Breakthrough Therapy designations from both the U.S. Food and Drug Administration (FDA) and the National Medical Products Administration (NMPA), mainly used for the treatment of gastric cancer and urothelial carcinoma. Currently, there are three ADC drugs on the market in China. The country has just witnessed a surge in ADC drug development, with the market expected to grow rapidly within the next five years.

On June 7, 2022, Trodelvy (Sacituzumab Govitecan), a TROP-2 ADC drug developed and introduced by Everest Medicines, was officially approved for marketing by the National Medical Products Administration (NMPA) in China. It is indicated for the treatment of unresectable locally advanced or metastatic triple-negative breast cancer (mTNBC) in patients who have received at least two prior systemic therapies, with at least one being for metastatic disease. This drug is the first innovative ADC approved in China for the treatment of mTNBC and is also the world's only approved TROP-2 ADC drug.

"High prices" are one of the factors hindering the widespread use of ADCs in China. According to data from PharmaCube, the current pricing of ADC drugs ranges from 80 to 350 RMB per mg. However, thanks to the introduction of China's medical insurance policies, the pricing of both imported and domestically produced drugs has decreased. Notably, the first domestically produced ADC, Disitamab Vedotin, saw its price drop from 13,500 RMB to 3,800 RMB during the 2021 medical insurance negotiations, marking a significant reduction of 71.85%.

In the new round of medical insurance negotiations, ADC drugs were also not seen. An industry expert told The Paper that ADC therapy belongs to tumor immunotherapy, with high research and development costs, thus leading to a higher price. "The initial price of some drugs even exceeds the threshold for entering the medical insurance negotiation." Moreover, ADC is an emerging technology whose maturity needs further development and verification, and there is insufficient data on its long-term efficacy and safety. "Besides, the use of therapies like ADC and CAR-T is relatively complex, posing challenges to the refined management of medical insurance drugs and the supervision of drug use," the expert added.

In terms of technology, the preparation process of ADC requires the use of various biochemical techniques and complex purification processes. This demands that manufacturers possess a highly skilled technical team and a mature production line. The consideration of drug resistance is also one of the challenges for future ADC development.

However, investors remain confident in China's ADC drug market. Chen Chen, a healthcare industry analyst at UBS Securities China, stated: "In China, 51% of clinical ADC drugs have entered Phase II and beyond, while globally (including China), this figure is only 42%. At the same time, China has a large and well-progressed pipeline, and these assets are widely recognized worldwide, as evidenced by the increase in global ADC deals."

According to the data compiled by LeadLeo Research Institute, the market size of ADC drugs is expected to reach 7.4 billion RMB in 2024 and is projected to grow to 29.2 billion RMB by 2030, with a compound annual growth rate (CAGR) of 25.71% from 2024 to 2030.

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