Huajin Securities: Domestic ADC Outbound Licensing Deals Heat Up – Focus on ADC Globalization Outlook

China-Made ADCs See Booming Overseas Licensing Deals: According to the Zhicheng Finance app, Huajin Securities released a research report stating that on December 12, Biokin announced that its wholly-owned subsidiary, SystImmune, had reached an exclusive licensing and cooperation agreement with Bristol-Myers Squibb (BMS) regarding the BL-B01D1 (EGFR×HER3 bispecific antibody ADC) project. The report notes that overseas licensing deals for China-made ADCs are booming, with their innovative R&D capabilities gaining wide recognition from foreign pharmaceutical companies. It suggests keeping an eye on innovative drug companies that are building next-generation ADC technology platforms or have successfully expanded overseas (or are expected to do so), such as RemeGen (688331.SH), Mabwell (688062.SH), Kelun-Biotech (06990), and Biokin (688506.SH).

Event:On December 12, 2023, Biokin announced that its wholly-owned subsidiary SystImmune had entered into an exclusive license and collaboration agreement with Bristol-Myers Squibb (BMS) for the BL-B01D1 (EGFR×HER3 bispecific antibody ADC) project. Under the collaboration agreement, the two parties will jointly advance the development and commercialization of BL-B01D1 in the United States, sharing profits and losses in the U.S. market. Additionally, Biokin retains the rights to BL-B01D1 in mainland China, while BMS exclusively holds the rights for all other global regions excluding the U.S. and mainland China. BMS will pay SystImmune an upfront payment of $800 million and near-term contingent payments of up to $500 million. Upon achieving development, regulatory, and sales milestones, SystImmune could receive additional payments of up to $7.1 billion, with a potential total transaction value reaching up to $8.4 billion.

Joaquin Securities' view is as follows:

Global pharmaceutical giants increase ADC layout, large transactions frequently appear.

The breakthrough of DS-8201 in the field of breast cancer has validated the strong development potential of ADC, further stimulating global enthusiasm for ADC research and development as well as transactions. Since 2023, global pharmaceutical giants have intensified their layout in the ADC sector through mergers and acquisitions, licensing deals, and other means, aiming to strengthen their position in the oncology field while seeking new business growth points. Specifically, in March 2023, Pfizer acquired Seagen for $43 billion, marking one of the most significant transactions involving an ADC drug developer; in November 2023, AbbVie acquired ImmunoGen for $10.1 billion, with ImmunoGen’s acquisition meaning that nearly all leading biotechnology companies in the ADC space have been acquired by multinational pharmaceutical corporations; additionally, in October 2023, Merck licensed three ADCs from Daiichi Sankyo targeting HER3, B7-H3, and CDH6, all designed using Daiichi Sankyo's proprietary Dxd ADC technology, in a deal worth up to $22 billion.

China-produced ADC overseas licensing deals are booming, with innovative R&D capabilities widely recognized by foreign pharmaceutical companies.

Although ADC development in China started relatively late, with increased government support for innovation and the growing R&D capabilities of domestic pharmaceutical companies, China's ADC technology platforms and pipeline projects have rapidly gained widespread recognition from foreign pharmaceutical enterprises. Specifically, in 2021, RemeGen licensed the overseas rights of its drug Disitamab Vedotin to Seagen, setting a precedent for Chinese ADC innovations going global. In 2022, Kelun-Biotech collaborated with Merck three times to explore the global ADC market potential. Since 2023, there have been more than 10 overseas licensing deals for Chinese ADCs, including three agreements involving BioNTech, YingBio, and YilianBio covering four ADC drugs. Additionally, the deal between Bristol-Myers Squibb and Biokin set a new record for upfront payments in overseas licensing of Chinese ADC innovations. The drug involved, BL-B01D1, is the third bispecific ADC globally and the first in China to enter clinical trials, as well as the first domestically produced bispecific ADC to be successfully licensed overseas. Preclinical trials have already demonstrated efficacy superior to DS-8201, currently a leading global ADC drug.

Risk Warning:Industry policy risks, intensified industry competition risks, new drug R&D risks, uncertainties in the market launch of products under development, risks of overseas expansion falling short of expectations, and sales underperformance risks, etc.