Abbisko Therapeutics' CSO Dr. Chen Zhui on BD Strategy: Success Through Persistence, Systematic Approach, and Global Collaboration

Dec 05, 2023 08:00 CST Updated 08:00

Abbisko

Small Molecule Tumor Therapy Developer

Merck Group

Pharmaceutical R&D Developer

On December 4, Abbisko announced a significant BD deal with multinational pharmaceutical giant Merck KGaA, licensing the commercial rights of its self-developed potential best-in-class CSF-1R inhibitor Pimicotinib (ABSK021) to Merck for total payments exceeding $605.5 million and double-digit sales royalties. The upfront payment for this transaction is as high as $70 million.

In March this year, Abbisko also entered into an exclusive licensing agreement with Ailis for the development and commercialization of the preclinical molecule ABK3376 (EGFR-TKI), with a total contract value of up to 188 million US dollars, along with additional sales royalties.

What Makes Abbisko's BD Unique? Successful Commercialization of Late-Stage Pipeline and Profit Generation from Early-Stage Molecules

For Dr. Zhi Chen, co-founder and Chief Scientific Officer of Abbisko, this year has been particularly special. Amid a challenging capital environment and with the company’s clinical pipeline starting to bear fruit, multiple projects have reached the stage for Business Development (BD) discussions, consuming nearly one-third of his time on BD-related work.

At several major industry conferences this year, Abbisko announced significant clinical results:

In April, Abbisko announced five latest preclinical research results at the AACR Annual Meeting; in May, it presented key clinical Phase Ib study data of CSF-1R inhibitor Pimicotinib (ABSK021) at the ASCO Annual Meeting; in October, at the ESMO Annual Meeting, it published the first-in-human clinical data of FGFR4 inhibitor Irpagratinib (ABSK011) and small molecule PD-L1 inhibitor ABSK043; in the same month, at the ENA (EORTC-NCI-AACR) conference, it released the latest preclinical research progress of a next-generation PRMT5*MTA inhibitor and a brain-penetrant small molecule PD-L1 inhibitor.

Abbisko is an innovative drug research and development company established 7 years ago, with a team of approximately 250 employees. It has disclosed 16 pipelines, 10 of which are in the clinical stage. These 16 pipelines can be divided into two groups of projects initiated in different periods. The first group of projects, such as those targeting FGFR4 and CSF-1R, mostly focus on well-established targets with relatively controllable risks. However, the selected indications are quite distinctive, ensuring that the competitive landscape is not overly crowded.

In Chen Zhui's view, it is more difficult to discuss out-licensing cooperation for such projects in the early stage because the market sales potential is harder to evaluate. However, when the R&D advances to the middle and later stages of clinical trials and approaches drug approval, the commercial value can be estimated more accurately, and the BD value increases significantly. This is the case with Pimicotinib, which was also a key focus of Abbisko's BD efforts in the first half of this year. After the data release at the ASCO meeting, Pimicotinib received many cooperation intentions, and the collaboration with Merck Group is the result of Abbisko selecting the best from the best.

The second batch of approved projects marks Abbisko's strategic move into indications that are broader and more innovative, such as the synthetic lethal target PRMT5*MTA, for which preclinical research progress was presented at this year’s ENA conference. Although the pipeline is still in its early stages, it has attracted significant interest from many companies due to its alignment with current industry trends, advanced global progress, wide-ranging indications, and substantial commercial value potential.

Abbisko began systematic business development (BD) work in 2017, its second year of establishment. It was relatively uncommon for a company to do this in its early stages within the industry. Moreover, Chen Zhui described Abbisko as a...Companies that do BD in an "academic" way。In the past few years, they have studied almost all of the license deals that have occurred in China's biopharmaceuticals industry in recent years: whether it be license-in or license-out, whether transferring rights within China or abroad, and whether involving preclinical products, early clinical products, or late-stage products. This work has internally accumulated into a knowledge base, reflecting Abbisko's systematic approach to business development (BD).

"We have a clear understanding of all the deals that have happened in China in recent years. What kind of targets, at what stage, what rights were transferred, who is the other party, how much was the upfront payment? What kind of cooperation format, and more details behind it. Additionally, we have spent a lot of effort studying the logic before and after these deals occurred," Chen Zhui told VCBeat.

Chen Chui is very confident, "BD is definitely the trend. I think this year, next year, and the year after, Abbisko will have at least one or two external collaborations each year. The project has reached this stage, and I am very confident." Last year, Abbisko also hired Dr. Hua Jiang as the new BD head with extensive experience. Currently, the core BD team consists of four people, while receiving daily support from various departments within the company.

Of course, Chen Chui is well aware that it is quite challenging for some biotech companies to quickly build a BD team in the short term, strike deals, and resolve the company's cash flow crisis. BD is a systematic project and also a long-term endeavor. Through his many years of BD work, he has accumulated numerous experiences and insights that he hopes to share with the industry.

The following is a conversation between VCBeat and Chen Zhui, edited for clarity:

VCBeat:Is it rare for a biotech like Abbisko, which was established in 2016 and already had a BD head in 2017?

Chen Zhui:Indeed, at that time, there were not many companies with this idea. Because it was just when the financing boom started, there was less need to share costs through cooperation. Everyone could secure funding and work on their own. Our BD head at the time was half responsible for financing and half for BD. But in recent years, many biotechs established have adopted the model of setting up a BD department early on, because as soon as the company is established, they need to collaborate with others for development, sharing costs and risks. Some companies have quickly closed four or five deals, which naturally requires a BD team to support these efforts.

Moreover, looking at the changes in the industry over the past three to four years, from hot to cold, we believe that it has entered a window period for BD transactions that aligns more closely with industry norms. Biotech should focus on R&D, pursue internationalization, and engage in external cooperation—this is a development path that conforms more to the inherent logic of the industry. This year, everyone sees this more clearly and is focusing more on this aspect of work.

VCBeat:You said that Abbisko is a company that does BD in an academic way. What are the academic aspects?

Chen Zhui:In order to do BD, we may have researched all the license deals in the biomedical field in China.

In 2017 and 2018, we started conducting basic competitive landscape analyses, reviewing the pipelines and strategies of both domestic and international large pharmaceutical companies, such as the top 200 pharmaceutical enterprises. What are these companies lacking? What kind of companies have pipelines that complement ours? What is the background of their management teams? What areas do they prefer to focus on? Have there been any recent personnel changes? We conducted extensive internal analyses and even hired external consulting firms to assist with our evaluations.

These routine analysis tasks and internal systematization efforts are what I refer to as the academic component.

After the analysis, who do you reach out to? What is the strategy for contact? How many companies do you reach out to each year? How often do you follow up, and after contacting, what analysis, record-keeping, and tracking needs to be done upon return?

VCBeat:What are the findings after studying almost all of the license deals in China?

Chen Zhui:There is no strong regularity, and I think any approach could potentially succeed. Some deals are more high-end, with the CEO or core executives directly reaching out to senior management of large companies abroad in a top-down manner; at the other extreme are deals akin to handing out flyers or grassroots promotions; and there are also many that fall in between, combining conventional BD methods and strategies. We mainly study what kind of projects may have better chances through what kinds of approaches.

The industry is indeed changing. If you had asked me two years ago, I would have firmly believed that apart from the quality level of the project and product itself, a top-down approach was essential, and upper-level relationships were crucial. However, over the past two years, you’ll find that other paths work as well.

For example, we find that some foreign small and medium-sized biotech companies with cash but failed core pipelines are very suitable targets for project transfer authorization. We can see that many deals made by traditional pharmaceutical companies in China this year are mostly of this type, authorizing such partners.

VCBeat:Which BD meetings are mandatory to attend?

Chen Zhui:At least two types of conferences exist: scientific conferences. In the oncology field, the early-stage R&D focuses on AACR in the first half of the year, which centers on Phase I clinical trials and preclinical research, while the second half of the year features ENA (EORTC-NCI-AACR). For clinical development, there is ASCO in the summer, ESMO in the fall, and ASH at the end of the year. In science-focused conferences, apart from researchers, a large number of business development personnel from pharmaceutical companies and related enterprises attend, bringing numerous opportunities for BD outreach and negotiations.

In addition, there are BD-focused conferences such as the JP Morgan Healthcare Conference, Bio-Europe, and Bio-USA. For any company, if it wants to go global, it should try to attend these conferences. Generally, if possible, we make an effort to attend these conferences every year.

VCBeat:Why has Abbisko released so much information at industry conferences this year?

Chen Zhui:Why does Abbisko appear to be more aggressive this year? It is actually related to the development of the company's pipeline. Multiple projects have indeed progressed to a more mature stage this year, making them more suitable for external collaboration.

From the perspective of BD collaboration, each product has specific inflection points,It is at a certain stage that the value of a project will explode. For new drug R&D projects, this mostly occurs in the early clinical stage, right when they enter clinical trials, because once the clinical concept is validated, the value of the project will increase many times over. From a BD perspective, this is when the return on investment is highest—these are the inflection points. Most projects reach this stage where licensing cooperation is easiest to negotiate; most BD deals also happen at this stage. It’s more challenging both earlier and later than this phase.

We have about four or five projects, which are also the first batch of projects initiated by Abbisko. Currently, they have progressed to clinical phases I to III and have reached the stage mentioned above.

VCBeat:The Phase Ib study results of Pimicotinib (ABSK021) for the treatment of Tenosynovial Giant Cell Tumor (TGCT) presented at this year's ASCO were also impressive. This was one of the first projects initiated when Abbisko was founded. Why has the timing for BD (Business Development) arrived now?

Chen Zhui:Yes, the BD focus of our first half of the year is on the latest-stage Pimicotinib. Many companies in and outside of China have shown interest, and indeed, most of the specific business negotiation progress has occurred after ASCO.

At last year's Connective Tissue Oncology Society (CTOS), we first disclosed the early Ib phase data of the project, which generated interest in the first part of BD. However, the concern at that time was that to be confident about this indication, it still needed to progress to Phase III. This year, with the publication of the ASCO data, compared to the CTOS data, it has been further validated. In addition, we have successively obtained Breakthrough Therapy designations in China, the US, and Europe, as well as approval for the pivotal global multicenter clinical Phase III trial, and are preparing to initiate it. All of these have driven BD partnership discussions for the project after ASCO.

At this year's CTOS, we further presented the updated pimicotinib pivotal global multicenter Phase III clinical trial protocol and the long-term follow-up data from the Phase Ib clinical trial. This one-year follow-up conveys an important message: the potential treatment duration for patients is extended, which is crucial for evaluating commercial value. Industry experts can easily analyze and understand this.

VCBeat:What are the BD potentials for early-stage projects?

Chen Zhui:Earlier-stage projects, especially the two projects with data announced at ESMO—Irpagratinib (ABSK011) and ABSK043—were not actually the main focus of our business development outreach this year. We wanted to wait until clinical data was disclosed before advancing those efforts. Indeed, after the ESMO data was released, there has been significant interest from both domestic and international pharmaceutical companies.

The target of Irpagratinib, FGFR4, is a traditional near-druggable target, but no company has successfully developed it before because it is extremely challenging. Success requires evaluating compound activity, selectivity, physicochemical properties, and safety, demanding a high level of expertise. We know that our expertise enables us to achieve this. Although we were not the earliest starters in this project, ranking around ninth or tenth globally when we began, we have now advanced to become the first-in-class as most of the previously leading projects have ceased development. This project fully demonstrates the professional expertise and capabilities of the company's early research and clinical teams.

The publication of this clinical data, in our opinion, serves two purposes: First, it is a proof of concept, demonstrating strong drug development potential within the current treatment landscape. If later-stage clinical trials can maintain such a high ORR of 40.7%, it could surpass existing standard therapies; Second, it has the potential to become best-in-class or even first-in-class. It is expected to enter pivotal late-stage clinical trials next year.

Moreover, the indication for Irpagratinib is relatively broad, including liver cancer.

VCBeat:It seems that many companies will be interested.

Chen Zhui:Yes, in the weeks following the end of ESMO, many pharmaceutical companies from both within and outside of China reached out to us.

VCBeat:How to choose? What are the criteria?

Chen Zhui:It must be a company interested in liver cancer. Some foreign companies have traditionally not been interested in liver cancer and stomach cancer because these are diseases with high incidence in Asia. Secondly, rights in China are very important because the number of liver cancer patients in China accounts for nearly half of the global total, a significant proportion. Therefore, how this project proceeds with external cooperation is relatively complex, with many factors to consider.

VCBeat:The Emerging Target PRMT5: Still in the Preclinical Stage, Are There Any Companies Interested? Why?

Chen Zhui:At the ENA (EORTC-NCI-AACR) conference, we announced the preclinical progress of the emerging synthetic lethal target PRMT5-MTA. Although still in the preclinical stage, this project has attracted significant interest from many companies as it is currently a global R&D hotspot in the field of oncology.

Mirati Therapeutics and Amgen have drawn significant attention to the PRMT5 target. A substantial part of Mirati's value, which was acquired by BMS, is attributed to PRMT5. This has made it one of the major highlights in the industry this summer. Moreover, not only are we among the frontrunners globally in terms of progress, but the early-stage research data also indicates best-in-class potential.

The PRMT5 pipeline has the advantage of having broad and extensive indications, but it also poses significant clinical challenges. Conducting clinical trials for such a wide range of indications will certainly require collaboration with large companies, so I hope this kind of project can be licensed out earlier. Overall, the timing for business development (BD) still needs to be weighed according to the specific circumstances of different projects.

VCBeat:Do foreign big Pharma companies have specific requirements, such as whether the progress should be among the top few globally?

Chen Zhui:New targets: Big Pharma hopes that by the time you reach the Phase I clinical proof-of-concept stage, you can rank among the top three globally. Of course, this depends on whether you are the first or second generation of drugs for the same target. If you are the second generation, then you should be among the top three of the second-generation drugs. Because overseas, there are usually only three to four drugs of the same type that succeed. The first drug might capture 50-80% of the market, while the second and third approved drugs take the rest. The commercial value of the fourth and fifth drugs will be very low. Therefore, big Pharma often only acquires the top three, or in some cases, a few places behind, since pipelines that are further ahead still carry the risk of failure.

VCBeat:Abbisko focuses on small-molecule oncology drugs, but its first early-stage research collaboration with an MNC was in the cardiometabolic field. Moreover, due to its collaboration with Eli Lilly, Abbisko has garnered significant attention from major pharmaceutical companies in the areas of metabolism and cardiovascular diseases. Is there a story behind this?

Chen Zhui:Reflections on Lilly Partnership: The Fruits of Persistent Effort in BD DealsThis collaboration with Lilly has given us many insights. Any successful business development (BD) deal requires significant effort. This successfully negotiated partnership was not the first project we discussed with Lilly; since the early days of our company’s establishment, we had been in talks with them regarding multiple projects. Some of these even reached advanced stages but, for various reasons on both sides, did not make it to the final step. However, it is precisely based on the experience gained from numerous exchanges and negotiations that Lilly has developed a strong trust relationship with us. Both their global team and their China-based team have gradually come to recognize our R&D capabilities. Therefore, in BD work, failure truly is the mother of success.

Cardiometabolic FieldThis deal began with the other party showing interest and initiating contact in mid-2021. After about half a year of communication, the agreement was signed at the end of 2021. Behind the success of this partnership, trust played a crucial role, along with making contact through every possible means to enhance communication. Our CEO, Dr. Yaochang Xu, who previously worked at Eli Lilly for many years, provided significant assistance in this area.

As a company that started with oncology, after this deal, many large and small pharmaceutical companies approached us, hoping to collaborate on early-stage R&D across fields ranging from oncology to metabolic and cardiovascular diseases, and even other disease areas.This effect exceeds the monetary value specified in the terms of a deal itself. Therefore, any external cooperation must be evaluated in terms of what it brings to the company’s long-term development.

Therefore, BD is actually a long-term job that requires an overall strategic plan. Every cooperation must take into account the company's overall and long-term interests, rather than just the cooperative partner or value of a single cooperation.

Looking back at all of Abbisko's external collaborations over the years, each deal has generated tremendous value from negotiation to post-deal cooperation, far exceeding the economic benefits on paper for every deal. As the company grows, these matters should be viewed with a developmental perspective, which is essentially the work of business development (BD).

VCBeat:Besides the big pharma abroad, which local pharma companies are currently active in BD?

Chen Zhui:They are all very active. The top 50 pharmaceutical companies in China have realized the need to develop innovative drugs and negotiate deals, but they are still very cautious at present.

The biggest difficulty in talking with them is that their understanding of the value and risks of innovative drugs may still deviate from ours, which could affect their potential investment. Currently, most pharmaceutical companies in China are still more interested in late-stage projects. However, we can sense that there has been tremendous progress in the past two years compared to the previous decade. Even just looking at the BD teams of major pharmaceutical companies in China, the level of talent has significantly improved. We hope for even greater shifts in mindset.

VCBeat:Now, biotech companies in China are highly focused on collaborating with local pharma. Why?

Chen Zhui:Five years ago, domestic biotechs in China might have aimed to become biopharmas, but now reality has shown that this is not feasible. So what to do? The developed drugs need to be sold, and selling drugs in China, under the large environment of medical insurance, certainly requires local pharma companies with better sales capabilities to take over commercialization.

I can say with great certainty that the vast majority of early-stage R&D companies are seeking to collaborate with local pharma.

In this aspect, it is also crucial to pay close attention to the changes in the internal structure and personnel of local pharma in recent years. Some collaboration opportunities may arise due to changes in their internal organization, leading to new demands within the company. If you do not stay informed about these aspects, you may fall behind. It is feasible to focus on and understand this area in practice because there are not so many domestic pharmaceutical companies in China, and opportunities to connect and learn about them are abundant, making it relatively easier.

VCBeat:Finally, could you summarize what you most want to convey to biotech founders who want to engage in BD work?

Chen Zhui:First, professionals should handle professional tasks.In the current environment, BD is no longer a part-time job for founders or a side task for the team. Companies must possess a certain level of professional BD capability internally. As for whether to build a large internal team, hire external consultants, or adopt a mixed approach, all these options require consideration. However, the core focus should be on ensuring that the company develops its own BD capabilities.

Second, BD is a systematic project that requires the construction of a supporting system behind it.Especially for early-stage R&D companies, how to build the system? What kind of people to recruit internally? These are very important questions. Some early-stage R&D companies directly hire BD personnel with apparent extensive experience from large multinational corporations, only to quickly find that the results are unsatisfactory. Some talents are more accustomed to working within the large teams and systems of big companies and are not suited to take a hands-on lead in early-stage companies while gradually building a team. If relying on external resources, there are many consultants and intermediary firms available, but they are service providers (Party B). How to make good use of Party B also involves many tricks and experiences. It is advisable to refer to the practices of companies that have been more successful in this aspect.

Third, patience is essential.This patience actually refers not only to "patience," but to "persistence"—having that tenacity. In terms of BD, failure really is the mother of success. Within the limits of one's energy and capability, mobilize all resources and try every opportunity because whether BD succeeds or not has no set example—it involves an element of luck, but relies more on effort and hard work. This is especially challenging for early-stage companies with limited energy, which can only do so much. Therefore, it’s crucial to choose the right direction and strategy.

Another tricky aspect is how much effort the founders and core executives invest in business development (BD). It’s not always ideal for the founder to directly engage in BD discussions because once you lose your hierarchical position, you have no bargaining chips left—your cards are all played at once.

In summary, internal and external coordination is essential. The BD personnel and founders must work together, R&D and BD need to be aligned, and there should be a hierarchy within the BD team. All possible connections must be explored, every reachable person contacted, and every relevant meeting attended. The underlying logic is that extraordinary effort and competitiveness are required.