Dongcheng Pharmaceutical Subsidiary Acquires Hepatic Diagnostic Radiopharmaceutical 99mTc-GSA for RMB 85 Million

In contrast to the general slump in the pharmaceutical industry, the past few years have marked a renaissance for radiopharmaceuticals in China. Frequent disclosures of financing activities, product advancements, and commercial collaborations, along with the emergence of new market entrants, novel targets, and new radionuclides, have made radiopharmaceuticals a bright spot in an otherwise sluggish innovative drug market. As of early 2024, radiopharmaceuticals remain at the forefront of the innovative drug sector, sustaining their strong momentum.

Just in the past two days, DC PHARMA, one of China’s leading nuclear medicine companies, has announced a series of positive developments. On February 19, Lannacheng, a subsidiary of DC PHARMA, developed a Class I radiopharmaceutical therapeutic drug¹⁷⁷The clinical trial application for Lu-LNC1008 Injection has been accepted and publicly disclosed by the Center for Drug Evaluation (CDE) of the National Medical Products Administration.

On the evening of February 20, Dongcheng Pharmaceutical issued an announcement stating that its subsidiary, Yantai Yitai Pharmaceutical Technology Co., Ltd. (hereinafter referred to as “Yitai Pharmaceutical”), intends to purchase from Rongcheng Medical Technology Wuxi Co., Ltd. (hereinafter referred to as “Rongcheng Medical”) in cash for RMB 85 million.^99mTc-GSA Injection and GSA Cold Kit (hereinafter referred to as the “Target Products”), with a full buyout acquiring all rights, titles, and interests in the Target Products, including those for use in all diagnostic and therapeutic fields and indications. In accordance with relevant regulations, this transaction does not constitute a related-party transaction, nor does it qualify as a major asset restructuring under the Measures for the Administration of Major Asset Restructuring of Listed Companies. CEC Capital served as the exclusive financial advisor to Rongcheng Medical Technology Wuxi Co., Ltd. in this transaction.

DC PHARMA, established in 1998, was successfully listed on the Shenzhen Stock Exchange in May 2012. As a large-scale pharmaceutical enterprise group integrating drug research and development, manufacturing, and sales, its business spans four major sectors: biochemical active pharmaceutical ingredients (APIs), traditional Chinese medicine (TCM) proprietary formulations, chemical drugs, and radiopharmaceuticals. Yitai Medicine is a wholly-owned subsidiary of DC PHARMA, focusing on the nuclear medicine and healthcare industry, primarily engaged in the research and development of new technologies and products in the biopharmaceutical field, as well as the commercialization of scientific achievements.

As early as 2014, DC PHARMA began to lay out its presence in the nuclear medicine industry.According to data from Xin Kang Jie, DC PHARMA holds a market share of approximately 21.6% in the radiopharmaceutical sector, ranking second only to China Isotope & Radiation Corporation.Its main product, Yunke Injection (Technetium [⁹⁹Tc] Methylene Diphosphonate Injection) is a radionuclide drug independently developed in China for the clinical treatment of RA. Iodine [¹³¹I] Sodium Chloride Oral Solution, Carbon [¹⁴C] Urea capsules are the most commonly used formulation in clinical practice. Their oral administration offers superior convenience, enhancing patient acceptance and making them suitable for large-scale application.

In the field of radiopharmaceuticals for diagnostic imaging, [^99mTc] has become an irreplaceable radionuclide in clinical nuclear medicine. Fluorine[¹⁸F] Deoxyglucose injection can be used for early diagnosis of tumors and evaluation of treatment efficacy. Iodine [¹²⁵[I] As the sole domestic manufacturer producing sealed seed sources for this class of drugs at an international standard, the company’s products are primarily used for brachytherapy of various malignant tumors.

In terms of R&D, rhenium [¹⁸⁸Re] Etidronate Injection, a therapeutic radiopharmaceutical independently developed in China, is currently in Phase II clinical trials.

Currently, DC PHARMA has established nuclear medicine subsidiaries or branches in dozens of cities across China.In recent years, DC PHARMA has acquired Chengdu Yunke Pharmaceutical, Shanghai Yitai Pharmaceutical, and GMS (China), completing its full industrial chain layout from diagnostic radiopharmaceuticals to therapeutic radiopharmaceuticals. In 2017, DC PHARMA acquired 100% equity of Nanjing Andike Positron Research and Development Co., Ltd., further enriching its presence in the radiopharmaceutical sector and establishing itself as a company capable of providing comprehensive solutions for nuclear medicine in the Chinese market.

DC PHARMA, through multiple acquisitions, shares the leading position in China's nuclear medicine sector with China Isotope & Radiation Corporation.DC PHARMA, originally focused on the production of active pharmaceutical ingredients (APIs), has now invested over RMB 3 billion in the field of radiopharmaceuticals. It has established a comprehensive layout covering diagnostic radiopharmaceuticals, therapeutic radiopharmaceuticals, and nuclear pharmacies, capturing half of the radiopharmaceutical market. Currently, DC PHARMA has initially formed five major platforms: a stable radionuclide supply platform, a drug incubation platform, a translational service platform, a production and distribution platform, and a diagnosis and treatment marketing platform. The company has basically completed its full-industry-chain layout in nuclear medicine, spanning raw material supply, research and development, clinical translation, production, and sales, thereby constructing a complete DC PHARMA nuclear medicine ecosystem.

In addition to nuclear medicine leaders such as DC PHARMA and China Isotope & Radiation Corporation, emerging players like Grand Pharma and Xiantong Medicine are accelerating their entry into the nuclear medicine market through mergers and acquisitions and commercial collaborations. As rising stars in China’s nuclear medicine sector, they are poised to challenge the duopoly currently held by China Isotope & Radiation Corporation and DC PHARMA.

Moreover, the aggressive entry of international pharmaceutical giants such as Novartis has also ignited external enthusiasm for radiopharmaceuticals.Novartis spent $6 billion to acquire two nuclear medicine companies, establishing and expanding its radioligand therapy platform, and obtained two revolutionary nuclear drugs—Lutathera and Pluvicto, with sales of $471 million and $271 million respectively in 2022. Although these two nuclear drug products have not yet been launched in the Chinese market, Novartis's rapid progress and impressive sales data in the nuclear medicine sector have fueled the boom in China’s nuclear medicine market, particularly in the RDC segment, providing a strong boost to the industry.

It is evident that, fueled by enthusiasm across multiple fronts, mergers and acquisitions (M&A) and collaborations in the radiopharmaceutical industry will become more frequent in the future. As a capital-intensive sector with long development cycles, the radiopharmaceutical industry can leverage M&A and commercial partnerships to integrate competitive advantages, rapidly optimize product portfolios, accelerate time-to-market, and drive industry transformation.

Products in This Transaction^99mTc-GSA Injection has completed Phase III clinical trials and is in the preparatory stage for regulatory submission and market approval.

Developed by Rongcheng Medical^99mTc-GSA injection is a synthetic glycoprotein prepared by introducing galactose residues onto human serum albumin, equivalent to natural asialo-glycoprotein, which binds to the ASGPR receptor (asialoglycoprotein receptor) to enter hepatocytes,Compared with existing methods for diagnosing liver function,^99mTc-GSA reflects liver function in a three-dimensional manner, integrating quantitative analysis and assessment of both global and regional function. It is suitable for quantitative analysis of total and partial liver function, aiding in preoperative evaluation of liver function for hepatic surgery, guiding surgical planning, and assessing the impact of postoperative liver function on patients.

According to the latest 2020 global cancer burden data released by the International Agency for Research on Cancer (IARC) of the World Health Organization, there were 910,000 new cases and 830,000 deaths from liver cancer worldwide in 2020. In China, there were 410,000 new cases and 391,000 deaths from liver cancer in 2020. HBV infection is the leading cause of liver cancer in China, accounting for 82%, followed by HCV infection and alcoholic hepatitis.

^99mTc-GSA is the most accurate radiopharmaceutical for assessing liver morphology and function. It can be widely applied to nearly all liver diseases, providing simultaneous results of liver function and three-dimensional imaging through SPECT detection.^99mTc-GSA not only enables visual determination of the liver’s three-dimensional morphology but also accurately assesses hepatic functional reserve, facilitating comprehensive evaluation of both global and regional liver function. Currently, no other diagnostic modalities can achieve such precision. This technology holds promise for driving a transformative advancement in the assessment and diagnosis of liver diseases.

In addition, technetium [^99mTc] This radionuclide is also widely used for organ imaging. Technetium [^99mTc] has a half-life of 6.02 hours, is a pure gamma photon emitter with an energy of 141 keV, technetium[^99mTc] exists in multiple oxidation states and can be formulated into various radiopharmaceuticals that distribute selectively in many human organs. It possesses excellent imaging agent characteristics, with a wide range of labelable agents and extensive applications in nuclear medicine, including thyroid imaging, bone imaging, lung perfusion imaging, and myocardial perfusion imaging. Currently, there are multiple technetium [^99mTc]-labeled drug approved for market launch.

According to the announcement, DC PHARMA, through the introduction of^99mAcquiring all rights, ownership, and interests in Tc-GSA injection will not have a significant impact on the company’s short-term operating performance. However, in the long run, it will help expand the variety of radiopharmaceutical products, enrich the product pipeline, diversify revenue and profit sources, and align with the company’s strategic development needs. In an era characterized by population aging and the increasing incidence of diseases among younger demographics, DC PHARMA is expected to further optimize its layout in the radiopharmaceutical industry, enhance patient access to medications, and inject new momentum into this high-barrier, capital-intensive niche sector.

References:

1. VCBeat “White Paper on the Radiopharmaceutical Industry: Reviewing Nearly 7,000 Global Pipelines in a Race for Innovation in Targets, Ligands, and Radionuclides”

2. New Kangjie: "The $100 Billion Battleground: The 'Pharma Leader' Makes a Forceful Entry!"