Over $100 Million Upfront Payment: Chinese-developed ADC Drug SYS6005 Licensed for Global Development

On February 19, CSPC announced that its subsidiary, CSPC Megalith Biopharmaceutical Co., Ltd. (“Megalith Biopharma”), had entered into an agreement with Radiance Biopharma, under which Radiance Biopharma will obtain the rights to develop and commercialize SYS6005, a recombinant human receptor tyrosine kinase-like orphan receptor 1 (ROR1) antibody-drug conjugate independently developed by Megalith Biopharma, within specified territories.

Under the agreement, Radiance Biopharma will obtain exclusive rights to develop and commercialize SYS6005, a product independently developed by CSPC Megalith Biopharmaceutical Co., Ltd. (“Megalith Biopharma”), in the United States, the European Union, the United Kingdom, Switzerland, Norway, Iceland, Liechtenstein, Albania, Montenegro, North Macedonia, Serbia, Australia, and Canada. Radiance Biopharma will subsequently secure exclusive manufacturing rights for the product pursuant to a clinical/commercial supply agreement. Megalith Biopharma will receive an upfront payment of USD 15 million (approximately RMB 109 million), as well as corresponding milestone payments, including development milestones totaling up to USD 150 million and sales milestones totaling up to USD 1.075 billion.

SYS6005, developed by CSPC Megalith Biopharmaceutical Co., Ltd., is a monoclonal antibody-drug conjugate that binds to specific receptors on the tumor cell surface, enters cells via endocytosis, and releases toxins to kill tumor cells.

SYS6005 utilizes Megalith Biopharma’s enzyme-catalyzed site-specific antibody-drug conjugation technology. Through stable linkage, it effectively reduces systemic exposure to the mitotic inhibitor MMAE, targets ROR1-expressing cancer cells for toxin release, and thereby minimizes drug-related adverse effects.

Compared with normal tissues, ROR1 is highly expressed in various hematologic malignancies and solid tumors. Its expression is closely correlated with disease progression and treatment response, making ROR1 an attractive therapeutic target for anticancer drug development. SYS6005 is designed with a uniform drug-to-antibody ratio (DAR) distribution, proprietary linkers with enhanced stability, and a lower DAR to improve blood stability and enable tumor-specific drug release, thereby achieving better safety and efficacy.

According to the official website of the Center for Drug Evaluation (CDE) under China’s National Medical Products Administration, SYS6005 was submitted as a Class 1 therapeutic biological product and received Investigational New Drug (IND) approval in China in December 2024. Its proposed indications are for advanced-stage cancers, with expected applicability in the treatment of hematologic malignancies, ovarian cancer, non-small cell lung cancer, and other conditions.

Throughout the development of China's pharmaceutical industry, CSPC has remained an undeniable force.

Established in 1997, CSPC Pharmaceutical Group Limited is now an international innovative enterprise with total assets exceeding RMB 73 billion and a workforce of 28,000 employees. It boasts a rich product portfolio across multiple therapeutic areas, including neurological disorders, oncology, anti-infectives, and cardiovascular diseases. Its core products—such as NBP, Doxil, Jinyouli, and Xuanning—are all best-selling innovative drugs in China, holding significant market share in the pharmaceutical industry.

However, as the national centralized procurement becomes normalized, CSPC’s “cash cow” products, such as NBP and Doxil, are facing the dilemma of prices being halved. For instance, Doxil saw a 23% price reduction in the 2024 Beijing-Tianjin-Hebei Alliance Centralized Procurement, followed by a further 89% cut in the 10th National Centralized Procurement, leading to a significant year-on-year decline in its sales revenue in the third quarter of 2024. In the first three quarters of 2024, CSPC’s revenue from finished pharmaceutical products decreased by 3.5% year-on-year, while its net profit fell by 15.9% year-on-year.

Amid mounting pressure on its generic drug business, CSPC has no choice but to pursue an innovation-driven transformation. However, the group has encountered certain challenges in this transition. Although CSPC boasts a robust pipeline of innovative drug candidates—with over 130 projects under development as of 2024, spanning large molecules, small molecules, and novel formulations—few new products have successfully achieved commercial launch and made significant contributions to its financial performance.

In recent years, CSPC has also been intensifying its investments in hot sectors such as antibody-drug conjugates (ADCs), mRNA vaccines, and CAR-T therapies. However, the proportion of revenue derived from innovative drugs remains significantly lower than that of competitors like Hengrui Medicine. In the first half of 2024, innovative drugs accounted for nearly 50% of Hengrui’s revenue, whereas CSPC still relies on generic drugs and products vulnerable to volume-based procurement (VBP) to support its revenue. This structural imbalance has caused CSPC to gradually lose its first-mover advantage amid the industry’s wave of innovation.

The disproportionate relationship between R&D investment and output is also a major issue plaguing CSPC. Despite CSPC’s continuous increase in R&D spending, its innovative drug pipeline is characterized by being “broad but not deep,” covering eight major technology platforms—including ADC, PROTAC, and LYTAC—with over 60 projects in clinical stages. This scattered investment has led to slow progress in key pipelines; for instance, although the HER2 ADC DP303c demonstrated an objective response rate of 51.5% in breast cancer, it is not expected to gain approval until 2025, lagging behind competitors such as Daiichi Sankyo/AstraZeneca’s Enhertu.

Furthermore, the profit contraction resulting from centralized volume-based procurement has exacerbated financial pressure; as of the third quarter of 2024, monetary funds stood at only RMB 665 million, which is insufficient to support a multi-pronged R&D strategy.

Since 2024, CSPC and its innovative drug subsidiary have undergone a series of personnel and innovation strategy changes, signaling the start of a new chapter. Leveraging its ADC technology platform advantages and multiple pipeline licensing deals, CSPC is also achieving differentiated breakthroughs.

Technologically, the core of CSPC’s ADC strategy lies in its enzyme-catalyzed site-specific conjugation technology. Unlike traditional random conjugation, this approach utilizes engineered transglutaminase (TGase) to achieve precise linkage between the antibody and the toxin, ensuring a stable drug-to-antibody ratio (DAR) of 2.0 and significantly reducing off-target toxicity.

This advantage is fully demonstrated in SYS6005: its proprietary linker design reduces systemic exposure to the MMAE toxin by 30% and improves blood stability by 50%, making it a key attraction for Radiance Biopharma.

In terms of target selection, early strategic positioning has enabled the capture of emerging targets such as ROR1, thereby avoiding intense competition in saturated markets like HER2 and TROP2. Currently, CSPC’s portfolio in the antibody-drug conjugate (ADC) field has achieved a matrix effect, covering four major targets—ROR1, Claudin 18.2, Nectin-4, and EGFR—thus establishing a differentiated competitive advantage.

In terms of business development (BD) strategy, CSPC has adopted an “early-stage licensing + risk-sharing” model to accelerate commercialization. For early-stage clinical assets (such as the MAT2A inhibitor SYH2039), it licensed them to BeiGene with a $150 million upfront payment to quickly recoup capital; for mid-to-late stage assets (such as the Claudin18.2 ADC SYSA1801), it retained sales royalties to secure long-term revenue; meanwhile, it introduced external resources (such as Keymed Biosciences’ HER2 bispecific antibody-drug conjugate JSKN003) to address technological gaps.

In addition to the licensing collaboration for SYS6005 reached this time, CSPC Megalith Biopharmaceutical Co., Ltd. entered into an exclusive licensing agreement with Elevation Oncology in 2022 for SYSA1801, an anti-Claudin 18.2 antibody-drug conjugate (ADC), with a total potential value of nearly $1.2 billion. In 2024, CSPC entered into a licensing collaboration with Alphamab Oncology for the latter’s HER2 bispecific ADC, JSKN003, with a total deal value of up to RMB 3.08 billion.

It can be said that CSPC is shifting from “broad-based innovation” to a dual-engine strategy focused on “ADCs plus core neuroscience/oncology areas.” By divesting non-core assets, the company is concentrating resources to advance key pipeline candidates such as DP303c (HER2 ADC) and SYS6010 (EGFR ADC). Meanwhile, through its subsidiary Xinnuowei, CSPC is integrating innovative drug assets to secure capital channels for the long-term commercialization of ADCs.

CSPC stands at a critical crossroads. Although ADC licensing deals and a series of strategic adjustments have opened up new opportunities for the company, it still faces multiple challenges. The first is clinical efficiency: while the Phase I clinical trial of SYS6005 has just commenced, Merck’s ROR1 ADC has already entered Phase II, necessitating an acceleration of CSPC’s clinical development. The second is the build-out of international capabilities, requiring a shift from mere out-licensing to establishing independent overseas clinical development and commercialization capacities. Furthermore, strengthening pipeline synergy and avoiding internal competition among single-agent therapies are also crucial.

CSPC’s Path to Breakthrough: A Microcosm of Chinese Pharmaceutical Companies’ Transition from “Imitative Following” to “Original Innovation Leadership”As Wouter Joustra, Partner at the Dutch venture capital fund Forbion, stated, “The R&D efficiency and cost advantages of Chinese biotechnology companies are reshaping the landscape of global drug innovation.”

In the future, if CSPC can leverage its ADC technology platform to continuously deliver high-value pipeline assets and achieve a virtuous cycle of “R&D–licensing–reinvestment” through business development (BD) transactions, it is poised to reshape its competitiveness amid the wave of internationalization for innovative drugs.

References:

CSPC Mired in Crisis: Where Is This Pharmaceutical Giant Heading? — Yidu Pharma

In Just Three Months, Liu Yongjun Departs CSPC—E-Drug Manager

CSPC: Innovation Runs Through the Company’s Development — Shanghai Securities News