Chinese Biotech CStone Pharma Subsidiary Secures $185M Deal for Two Bispecific Antibodies, Files for IPO

On July 9, 2024, Kang Nuoya Biomedical Technology (Chengdu) Co., Ltd., a wholly-owned subsidiary of Keymed Biosciences, entered into a license agreement with Belenos Biosciences (“Belenos”). Pursuant to the license agreement, Keymed Biosciences granted Belenos exclusive rights (for research, development, registration, manufacturing, and commercialization) to develop, manufacture, and commercialize the Group’s candidate drugs CM512 and CM536 globally, excluding the Greater China region.

As consideration, Chengdu Keymed Biosciences will receive an upfront payment and near-term payments totaling USD 15 million, while Yiqiao Hong Kong Holdings Limited (“Yiqiao Hong Kong,” a wholly-owned subsidiary of the Group) will acquire approximately 30.01% equity interest in Belenos. Upon achievement of certain development, regulatory, and commercial milestones, Chengdu Keymed Biosciences may also receive additional payments of up to USD 170 million, as well as tiered sales royalties. Unless otherwise agreed, Belenos shall bear all costs associated with the development, regulatory approval, and commercialization activities for CM512 and CM536 in the licensed territories. (Note: The total transaction value amounts to USD 185 million, equivalent to approximately RMB 1.35 billion.)

With respect to the license agreement, Belenos and Chengdu Keymed will enter into a supply agreement, pursuant to which Belenos shall have the right to procure from Chengdu Keymed or its contract manufacturing organizations such quantities of CM512 and CM536 as are required for conducting such clinical trials.

It is reported that both CM512 and CM536 are bispecific antibodies independently developed by Keymed Biosciences. CM512 submitted an Investigational New Drug (IND) application in China on May 12, 2024 (CXSL2400309), while CM536 remains in the preclinical stage. Keymed Biosciences has not disclosed further public information regarding these two bispecific antibodies.

This marks another case similar to Hengrui Medicine’s overseas expansion model for its GLP-1 product portfolio, whereby establishing a new company through capital investment ensures the retention of a significant proportion of overseas equity even after the products enter the commercialization phase abroad. While this operational approach has long been mature among overseas investors—nurturing numerous companies listed on U.S. stock exchanges—their current focus on high-quality Chinese assets is bringing greater opportunities to the Chinese market.

According to the official website of Keymed Biosciences, the company currently has 11 candidate drugs in clinical development or under application for clinical trials, including one antibody-drug conjugate (ADC) product. Its autoimmune pipeline comprises five products in development, including its core assets CM310, CM326, and CM338, with R&D progress ranking among the forefront of domestically produced drugs in the same class. The oncology pipeline includes six products in development, such as CMG901, CM355, and CM369.

Among all pipeline candidates, the autoimmune product CM310 is advancing most rapidly. CM310 is a highly potent, humanized antibody targeting the interleukin-4 receptor alpha subunit (IL-4Rα). It is the first domestically developed IL-4Rα antibody to receive clinical trial approval from the National Medical Products Administration (NMPA). The drug has been positioned for five indications, with a marketing authorization application already submitted for the treatment of moderate-to-severe atopic dermatitis (AD) in adults, and approval is expected within 2024.

Furthermore, CM310 is in the NDA submission stage for the treatment of chronic rhinosinusitis with nasal polyps and seasonal allergic rhinitis; it is in Phase III clinical trials for indications in pediatric and adolescent atopic dermatitis and asthma.

According to the Phase III clinical trial results of CM310 for the treatment of moderate-to-severe atopic dermatitis (AD), 66.9% of subjects in the CM310 group achieved an EASI-75 response at Week 16, and 44.2% achieved an Investigator’s Global Assessment (IGA) score of 0 or 1 (indicating complete or almost complete clearance of skin lesions) with a reduction of ≥2 points from baseline. These outcomes were superior to those observed in the placebo group (25.8% and 16.1%, respectively), and CM310 demonstrated a favorable safety profile.

Regarding competitors, currently only Sanofi’s dupilumab has been approved for marketing in China. In 2023, global revenue from dupilumab increased by 33.49%, reaching $11.588 billion in global sales—surpassing the $10 billion mark for the first time and ranking fifth among global drug sales in 2023.

Faced with such a vast market opportunity, there are nearly 10 domestically developed IL-4Rα monoclonal antibodies currently in clinical trials, with companies such as Akeso, 3SBio, Genrix Pharmaceuticals, and Hengrui Medicine accelerating their R&D efforts. Keymed Biosciences is relatively ahead in terms of progress and has positioned CM310 as a “Me-better” alternative to dupilumab.

Under the new industry cycle, competition among innovative pharmaceutical companies has entered its second half. The previous R&D race rules centered on target pathways and technology platforms are no longer fully applicable, with higher expectations from the industry for companies’ commercialization, business development (BD), and internationalization capabilities.

Securing upfront product revenue and rapidly recouping cash flow through out-licensing has become a new survival rule for biotech companies, and is also one of Keymed Biosciences’ commercialization strategies.

Currently, nearly half of Keymed Biosciences’ 11 drug candidates in development have been out-licensed to partners including AstraZeneca, InnoCare Pharma, and CSPC Pharmaceutical Group, among other renowned domestic and international pharmaceutical companies. This has enabled the company to generate revenue for consecutive years and achieve a turnaround from loss to profitability, even before any of its products have reached commercialization.

For example, Keymed Biosciences achieved a total revenue of RMB 110 million in 2021, of which RMB 70 million was the upfront payment from CSPC Pharmaceutical Group for the domestic rights to the autoimmune product CM310, and RMB 40 million came from collaboration income with InnoCare Pharma regarding the oncology product CM355. According to previous announcements, in March 2021, CSPC Pharmaceutical Group invested RMB 170 million (including an upfront payment of RMB 70 million and a development milestone payment of RMB 100 million) to acquire from Keymed Biosciences the domestic rights to CM310 for the treatment of respiratory diseases such as moderate-to-severe asthma and chronic obstructive pulmonary disease (COPD).

In November of the same year, the two parties joined forces again. Keymed Biosciences granted CSPC Pharmaceutical Group the rights in China (excluding Hong Kong, Macao, and Taiwan) to develop and commercialize CM326 for respiratory diseases such as moderate-to-severe asthma and COPD, in exchange for an upfront payment of RMB 100 million and up to RMB 100 million in development milestone payments based on progress.

In the first half of 2022, Keymed Biosciences again achieved total revenue of RMB 100 million, driven by the upfront payment received from CSPC Pharmaceutical Group for the in-licensing of the autoimmune product CM326. The company also reported a net profit attributable to shareholders of RMB 5.454 million, marking a turnaround from loss to profit compared to the same period last year.

In 2023, Keymed Biosciences reached new heights in its business development (BD) collaborations and delivered impressive results. The company achieved total revenue of RMB 327 million in 2023, representing a significant year-on-year increase of 227%. The primary source of revenue was the upfront payment received from AstraZeneca for the license of its oncology investigational product, CMG901. Net profit attributable to shareholders amounted to RMB 47 million, marking a sevenfold year-on-year growth.

In February 2023, Keymed Biosciences granted AstraZeneca exclusive global development rights to CMG901, under which it will receive a total transaction value of up to $1.2 billion (including a $63 million upfront payment and up to $1.125 billion in additional potential payments upon the achievement of certain development, regulatory, and commercial milestones).

Overall, although most of Keymed Biosciences’ R&D pipeline remains in the clinical stage, it is characterized by differentiation and innovation. Moreover, through business development (BD) transactions, Keymed has achieved product profitability ahead of schedule and accumulated substantial cash reserves to reinvest in its robust product pipeline.

In addition to out-licensing, Keymed Biosciences is also preparing for independent commercialization. The total production capacity of its Chengdu-based manufacturing facility has reached 18,600 liters, and its commercial team is being staffed up, laying a solid foundation for the imminent launch of CM310.

References:

Frequent BD Deals in Oncology and Autoimmune Pipelines: Keymed Biosciences’ “Business Formula” for Profitability? — Pharmadl Data