MNCs Withdraw from SHP2 Inhibitor Deals as Chinese Biotechs Race to Acquire Returned Assets
Sanofi
Pharmaceutical R&D Developer
Revolution
A venture capital firm based in Washington, D.C.
Source: E Drug Manager
For SHP2 inhibitors, everyone is currently in a painful exploration phase, but which FIC isn't difficult?
The development of new drugs can always encounter unexpected issues until they reach the market.
On December 7, Sanofi announced the termination of its collaboration with Revolution, a biotech company listed on the US stock market. The two parties plan to transfer the development and commercial cooperation rights of the SHP2 inhibitor-RMC-4630 in the first half of 2023.
In 2016, Novartis reported the world's first SHP2 allosteric inhibitor, SHP099, in Nature. Subsequently, pharmaceutical giants such as Pfizer, Roche, AbbVie, and Sanofi also made their moves. In China, Norvatis Sinovest, JACOBIO,Beta PharmaCompanies such as BMS have also been following up. In May 2022, BMS announced a $90 million upfront payment and up to $815 million in development milestones to exclusively license SHP2 inhibitor BBP-398 from BridgeBio for development and commercialization.
Although there are many players, so far, no SHP2 inhibitor has been approved for marketing globally. The finish line is still ahead, and the outcome remains unclear. Has the SHP2 inhibitor lost its appeal since Sanofi exited the race prematurely? What are the key strategies for successful collaboration between Pharma and Biotech?
01
"Revolutionary Deal" Comes to an Abrupt Halt: Where Does Sanofi's Desire to Back Out Come From?
A Sanofi spokesperson said in an email that the decision to terminate the partnership with Revolution was made following a "recent portfolio review and prioritization."
The two parties signed an exclusive global cooperation agreement on RMC-4630 in 2018, just nearly two years apart from Novartis' public announcement. According to the agreement, Sanofi will be responsible for conducting Phase I/II studies and providing financial support, sharing research costs with Mirati. At the center of the deal, including a $50 million upfront payment, Sanofi ultimately participated in Revolution’s SHP2 program with a total potential payment of up to $500 million. The program aims to treat cancer through the RAS-MAP kinase pathway, in which the SHP2 enzyme appears to play a role in the development of malignant tumors. This forward-looking investment can be described as "revolutionary" for the French traditional pharmaceutical company.
According to the terms of the deal, Revolution is responsible for early research and clinical development, while Sanofi is in charge of later-stage development activities. While the two companies share profits 50/50 in the U.S. market, Sanofi is entitled to receive tiered royalties ranging from high single digits to the teens on sales in other markets, subject to certain limitations.
It can be seen that Sanofi has shown a high level of sincerity and expectation for this deal.
In the preclinical data of this drug, the disease control rate (DCR) reached 58% in 40 patients with KRAS-mutant advanced non-small cell lung cancer (NSCLC), and the DCR was 75% in patients with KRAS G12C mutations. The first-in-human Phase I study showed that RMC-4630 demonstrated anti-tumor activity in cancer patients with KRAS G12C, KRAS G12D, NF1 loss-of-function, and BRAF Class 3 mutations.
At the end of September 2019, Revolution announced the enrollment of the first patient in a Phase 1b/2 clinical trial combining RMC-4630 with the marketed MEK inhibitor cobimetinib. On January 11, 2020, Revolution published a preliminary assessment PPT on its official website for the first-in-human Phase 1 clinical trial of the SHP2 inhibitor RMC-4630 in patients with KRAS-mutant non-small cell lung cancer.
In August 2022, according to data presented by Revolution at the World Conference on Lung Cancer (WCLC), among four previously untreated KRAS G12C inhibitor non-small cell lung cancer (NSCLC) patients who received RMC-4630 in combination with sotorasib, three patients (75%) achieved confirmed PR, and all four patients (100%) achieved disease control.
After being "dropped" by Sanofi, Revolution estimates its full-year loss to be between $245 million and $265 million. Its current cash, cash equivalents, and marketable securities can sustain its operations and fund its planned activities until 2024.
Jiamo Securities once mentioned in a public research report that Revolution expected its core product RMC-4630 to be launched and start generating revenue in 2024, with other products expected to be launched in 2027. Clearly, this prospect is now shrouded in layers of uncertainty.
02
Lilly, Johnson & Johnson, Innovent... Many well-known pharmaceutical companies have "canceled orders"
This is not the first time Sanofi has "canceled an order."
As early as January this year, Sanofi announced the termination of its collaboration with Sangamo, abandoning personalized cell therapy and returning full control of the sickle cell disease candidate drug SAR445136 to Sangamo, effective June 28 this year.
In response, Sangamo attributed the termination of this collaboration to "Sanofi's shift in strategic direction" — focusing on allogeneic universal genomic medicine approaches in the future, rather than autologous personalized cell therapies.
Such events of first "cooperation" and then "breakup" are not uncommon, with constant cycles of coming together and splitting apart becoming a regular occurrence in the industry.
Not long ago, the incident of "Lilly relinquishing the rights to Innovent Biologics' PD-1 product sintilimab outside of China" is still fresh in memory. In August 2020, Lilly and Innovent Biologics reached a cooperation agreement regarding the overseas rights of sintilimab, with Lilly planning to introduce it to the U.S. and other regional markets. Innovent Biologics was set to receive an upfront payment of $200 million and milestone payments of up to $825 million for development and sales, along with double-digit percentage royalties on net sales.
After Innovent Biologics' PD-1 encountered obstacles in its U.S. market launch, in December 2022, Eli Lilly and Innovent ended their collaboration. Innovent Biologics' CFO Hao Xi stated that the reclaiming of overseas rights for Sintilimab "may be an anticipated negotiation outcome for many."
However, some part ways amicably, while others end in acrimony, inevitably drawing sighs from onlookers.
In addition to the aforementioned Sanofi and Eli Lilly, according to incomplete statistics from E Medical Manager, several well-known pharmaceutical companies have also reportedly ended collaborations to varying degrees, such as the vaccine newcomerCanSinoThe breakup between Bio and MNC giant Pfizer in less than two years once caused a great stir.
The two companies began their partnership in July 2020. According to the agreement, CanSino Biologics granted Pfizer exclusive rights to promote the ACYW135 Meningococcal Polysaccharide Conjugate Vaccine (MCV4), named Menhycia, within mainland China. The cooperation is valid for a maximum of 10 years from the date of signing the agreement until the MCV4 receives its drug registration certificate.
However, in June 2022, CanSino terminated the distribution agreement with Pfizer. CanSino's reason was that "the company has established a comprehensive commercial operation center, and the company’s commercialization team will be responsible for the domestic and international market strategies, marketing activities planning and execution of MCV4," which gives a sense of "different times, different situations."
Meanwhile, in June this year, Johnson & Johnson decided to terminate its COVID-19 vaccine supply agreement with Emergent BioSolutions. What was once considered a "win-win collaboration" ended on bad terms.
Both parties accused each other. Emergent accused Johnson & Johnson of violating the contract, claiming that Janssen, a subsidiary of Johnson & Johnson, did not intend to purchase the minimum quantity of products as per the agreement. After Johnson & Johnson terminated the agreement, it would owe Emergent between $125 million and $420 million. Johnson & Johnson, on the other hand, accused Emergent of breach of contract, including failure to supply the active pharmaceutical ingredient for the COVID-19 vaccine, and responded that Emergent's previous allegations were "false and misleading."
Coincidentally, in May, Johnson & Johnson also terminated its collaboration and license agreement with Bavarian Nordic. The main content of the agreement was to use Bavarian Nordic's MVA-BN technology to develop potential vaccines for the hepatitis B virus and human papillomavirus.
Chinese Biotech star Innovent Biologics and multinational pharmaceutical giant Bayer have each experienced different "breakups."
In May, Innovent Biologics terminated its collaboration with Coherus and reclaimed the relevant rights to IBI-305. The partnership between Innovent Biologics and Coherus began in January 2020, when Innovent granted Coherus the commercial rights to Bevacizumab biosimilar (IBI-305) in the United States and Canada.
In the same month, Bayer also decided not to further collaborate with Atara on the development of mesothelin-targeted CAR-T cell therapy programs, including autologous ATA2271 and allogeneic ATA3271 CAR-T therapies. The reason was "a serious adverse event involving the death of a patient during Phase I clinical trials of ATA2271 therapy," and Bayer's decision to suspend cooperation also forced Atara to make necessary modifications to its CAR-T therapy pipeline plans.
In addition, AbbVie, one of the MNC giants, has also terminated several partnerships. In February, AbbVie announced it was ending its partnership with Morphic Therapeutic in fibrosis, and would abandon all development work on alphaVbeta6 inhibitors in collaboration with the company; in April, AbbVie announced the termination of its collaboration with BioArctic, halting the further clinical development of the Parkinson's disease treatment drug α-synuclein antibody ABBV-0805.
Similar cases are not few, and there is no need to enumerate them one by one here. There are thousands of reasons for "breakups," and each company has its own considerations, following the principle of "if it works, stay together; if not, part ways." So, are there any tricks to cooperation between pharmaceutical companies?
03
Seven Secrets to Successful Pharma and Biotech Collaborations
Collaboration with large pharmaceutical companies or other Biotech firms can bring numerous benefits to small Biotech companies. In addition to cash flow, the right partner can increase the chances of successful product development and reduce the time required.
"Pharma and Biotech each have distinct advantages that complement each other. Emerging Biotech companies possess differentiated product pipelines, technology platforms, and clinical operation strengths, which become essential prerequisites for attracting Pharma to collaborate with them; while traditional Pharma brings broad sales channels, mature production-research-sales capabilities, and substantial financial resources to Biotech. For Pharma itself, it can achieve rapid innovation transformation through methods like licensing-in and independent research and development. The collaboration between the two will help both parties improve the entire process of drug development from platform to commercialization," said Wang Yu, founder of a Biopharma company.
However, collaborations involving multiple parties are often affected by differences in business models, team philosophies, professional fields, and corporate strategies, which can impact the progress and success rate of the cooperation. Numerous interviews have revealed that a successful collaboration needs to meet seven conditions.
First, Biotech needs to consider the development stage of their technology and whether it can contribute to the product lines of large pharmaceutical companies. "Instead of merely looking for someone who can help you, start from a win-win perspective," said Li Ying, an industry insider responsible for business development and cooperation.
Particularly, Biotech companies interested in preclinical collaborations should consider that drugs in the preclinical development stage may be effective for indications that have not yet been tested. They may face changes in "technology, indication, or formulation" and the method of product delivery might not yet be determined. Consequently, as drug development progresses, Biotech firms may need to adjust their collaboration objectives. In contrast, for drugs in the clinical stage, partner companies can conduct broader investigations into the drug’s characteristics to enhance the terms of commercial collaboration.
Second, scientists are often only proficient in product innovation and R&D, but lack a clear understanding of the complexities of the business world. Therefore, when products enter commercialization, they must cultivate trust relationships with potential collaborators. "Science is only about data and facts, while commercialization is more about people, with good data becoming the stakes."
"Before attending the meeting, what I need to try to do is not only give a speech on stage but also consider how to interact with the audience on a personal level and show a more interesting side," said Zhao Lei, founder of a Biotech company.
Third, be prepared for adventure. Biotech companies are generally very familiar with collaborators in China, but relatively unfamiliar with those from Europe and the U.S., and collaboration is "a matter of taking shared risks." "American companies are very optimistic, very visionary, and like taking risks. But if they are optimistic or overly optimistic, it doesn't mean everything will go smoothly. Biotechs should take note of this," said Li Ying.
"In Europe, everyone is more cautious and they want to plan for success. But this lacks a bit of adventurous spirit when it comes to developing biotechnology." Understanding this can help Chinese companies make changes in cooperation.
Fourth, do not let language barriers become an obstacle. Given the large number of recruitable patients in Asia for clinical trials, collaborating with Asian partners can bring significant benefits to Biotech companies in Europe and the US.
"Very few European biotech companies speak Chinese, Japanese, or Korean. Moreover, not all employees of Chinese biotech companies can speak fluent English. It is important to recognize this and communicate with them in a very simple, clear, and easily understandable manner, as well as visit them regularly to build good relationships and trust," said Li Ying.
Fifth, it is crucial to consider the timing of establishing a partnership. "You don't always have to say yes." For instance, when a certain Hong Kong-listed company in China was introducing a potentially significant ADC product, the initial price during negotiations was high due to numerous competitors, but a few months later, the transaction price dropped significantly. There are many such examples.
Sixth, do not underestimate the resources you need. After the partnership is reached, managing the partnership may be one of the biggest challenges faced by Biotech entrepreneurs. Because dedicating resources specifically for the partnership can contribute to its success. For example, Johnson & Johnson.
The collaboration with Legend Biotech has seen Johnson & Johnson invest substantial resources globally in clinical development to help Legend’s BCMA CAR-T successfully reach the market. Of course, if this capability is lacking, hiring external consultants could be considered.
Seventh, maintain a positive attitude. Biotech collaboration itself is a risky activity, and "sharing hardships" is very important; a positive attitude can help companies get through challenging times. The uncertainty in new drug development is increasing, and clinical failures can happen at any time. This year, targets like CD47 and TIGIT have encountered crises.
"When things are going well, you may get recognition; but when things go wrong, you will be hit. So you have to be very strong and plan a path in advance. Maintain a friendly relationship with your partners and thank them for their acceptance. Never interact with them only when you want something from them," said Zhao Lei.
Editorial Responsibility: Chang Fuqiang