GienTech's Proprietary NCG Mouse Models Expand Global Reach Through Strategic Distribution Agreement with Charles River

“Smart Manufacturing in China” Model Mice Are Also Setting Sail for Global Markets.

According to VCBeat, on July 26, Jiangsu Jicui Yaokang Biotechnology Co., Ltd. (stock abbreviation: GemPharmatech; stock code: 688046), a company listed on the STAR Market, announced that it had entered into a strategic distribution agreement with Charles River Laboratories (stock abbreviation: CRL), one of the world’s largest suppliers of animal models.

Under the agreement, Charles River will obtain exclusive distribution rights for GemPharmatech’s third-generation immunodeficient mouse model—the NCG mouse and its derivative products—in the North American market, as well as non-exclusive distribution rights in Europe and the United Kingdom. The execution of this agreement is expected to introduce cutting-edge animal models to the market, accelerate the development of novel therapies primarily focused on immuno-oncology, and address significant unmet clinical needs.

Public information indicates that GemPharmatech was established in December 2017. In less than five years, the company has grown into a high-tech enterprise ranking first in the industry globally for the number of mouse model strains. Its accumulated “hard tech” capabilities in the field of mouse models have also gained recognition from the capital market. Since its listing on April 25, GemPharmatech’s stock price has risen more than 45% above the issue price, with its latest total market capitalization exceeding RMB 13 billion.

“After years of technological R&D, GemPharmatech has developed a large portfolio of proprietary mouse models, among which the immunodeficient NCG mouse model and its derivative products serve as highly valuable tools supporting drug development and preclinical research,” said Gao Xiang, Chairman of GemPharmatech. Currently, the company has established subsidiaries in the United States and representative offices in Europe. The recent license-out of its mouse model strains to leading international CROs not only demonstrates recognition by global institutions of the quality and technical sophistication of GemPharmatech’s mouse models but also marks a new opportunity for the company’s international expansion strategy.

In fact, the laboratory mouse models that GemPharmatech focuses on are precisely a hot sector attracting significant market attention.

In recent years, with increased R&D investment in life sciences, a rapid growth in the number of clinical trials, and the swift advancement of targeted and immunotherapies, laboratory animals—primarily mice—have gained access to broad development platforms. According to Frost & Sullivan statistics, the global market size for animal models was approximately USD 14.6 billion in 2019 and is projected to reach USD 22.6 billion by 2024, representing a compound annual growth rate (CAGR) of approximately 9.2% from 2019 to 2024. The market position that GemPharmatech can secure within this landscape is highly promising.

Market Position of GemPharmatech's Business Segments

It is reported that one party to this licensing transaction, Charles River, is a U.S.-headquartered CRO company and one of the world’s largest suppliers of animal models, having been listed on the NASDAQ stock exchange in 2001. Its Chinese subsidiary, Vital River, is also primarily engaged in the sales of laboratory animal models.

Data released by Frost & Sullivan shows that in China’s laboratory mouse products and services market, Vital River held the largest market share of 7.7% in 2019, ranking first. GemPharmatech followed with a 6.7% market share, ranking second. However, unlike other laboratory mouse suppliers, GemPharmatech has a significantly higher proportion of high-end mouse strains, reflecting greater technological sophistication.

The ability to export technical achievements to top-tier international competitors further highlights GemPharmatech’s R&D strength and the distinctiveness of its business model. A closer examination of GemPharmatech reveals that, although the company operates in the field of laboratory mouse models, its industrial positioning is not limited to serving innovative pharmaceutical companies in drug development; it also serves as an upstream supplier of drug research materials to a broad range of CROs.

Specifically, unlike other competitors in the industry that simply sell various mouse models required by customers, GemPharmatech provides commercial mouse models with independent intellectual property rights, based on experimental animal creation strategies and genetic engineering modification technologies. Meanwhile, leveraging one-stop services such as model customization, customized breeding, and functional efficacy analysis, GemPharmatech can also meet customers' needs for experimental mouse models in areas including basic research and new drug development, such as understanding gene functions, elucidating disease mechanisms, discovering drug targets, and screening and validating drug efficacy.

The NCG mouse models and their derivative products licensed out by GemPharmatech are highly representative.

Generally, immunodeficient mice can be broadly categorized into three generations. Listed in order of increasing severity of immunodeficiency, they are nude mice, NOD-scid mice, and third-generation immunodeficient mice. The more severe the immune system deficiency, the lower the mouse’s rejection of human cells or xenogeneic tissues (such as tumors), and the higher the success rate of transplantation.

The NCG mice launched by GemPharmatech represent one of the most profoundly immunodeficient mouse models currently available, making them highly suitable for human immune system reconstitution. Consequently, they are widely used in preclinical research on immuno-oncology (IO) therapies and in the evaluation of chimeric antigen receptor T-cell (CAR-T) immunotherapy.

To further improve the engraftment success rate of human tissues and cells in the NCG mouse strain, GemPharmatech is continuously conducting genetic engineering modifications on NCG mice. The company has launched derivative immunodeficient mouse strains based on the NCG background across numerous specialized fields, catering to more complex humanized application requirements, reducing the experimental difficulty of human immune system reconstitution, and facilitating more convenient efficacy evaluation.

Behind a series of industry-leading innovations lies robust in-house R&D capability. According to the company’s prospectus, GemPharmatech’s cumulative R&D expenses from 2018 to the first half of 2021 amounted to RMB 113 million. As of the first half of 2021, GemPharmatech held a total of 49 granted patents. Except for two patents acquired from third parties at the time of establishment for business purposes, all other patents were obtained after 2018.

Through years of technological accumulation, as of the first half of 2021, GemPharmatech had cumulatively developed approximately 20,000 commercially available mouse models with independent intellectual property rights, ranking first in the industry in terms of strain resource volume.

Charles RiverThe number of mouse model strains is56 strains—this also makes it easy to understand why Charles River, a leading global supplier of animal models, entered into an agreement with GemPharmatech to introduce high-value-added mouse models.

In fact, Charles River had already reached an agreement with GemPharmatech in its early years to become the exclusive distributor of NCG mice in the United States. This strategic distribution agreement expands the distribution scope while providing updated derivative products of NCG mice.

In addition to Charles River, GemPharmatech currently provides services to leading domestic CROs such as WuXi AppTec, GenScript, CrownBio, and Pharmaron, as well as top-tier global pharmaceutical companies including Hengrui Medicine, BeiGene, Innovent Biologics, and Novartis.

“We have collaborated with GemPharmatech on numerous humanized mouse models, and this new phase of partnership will provide researchers worldwide with greater access to related innovative technologies and products, thereby advancing global drug discovery and preclinical research,” said Dr. Steve Festin, Senior Director of Scientific and Business Development at Charles River.

The licensing out of mouse model strains by GemPharmatech to a top-tier international CRO serves as a microcosm of the company’s efforts in recent years to expand its overseas presence.

In a research report, Industrial Securities noted that “GemPharmatech has essentially completed its domestic layout and has initiated its internationalization process.” Headquartered in Nanjing, GemPharmatech has established subsidiaries or branches in Changzhou (Jiangsu), Chengdu (Sichuan), Foshan (Guangdong), and Daxing (Beijing), covering major markets across China. Meanwhile, the company has set up a U.S. subsidiary and a European office to actively expand into overseas markets. The company’s annual sales volume of mouse models exceeds one million, and it currently serves over 1,000 clients.

Based on the company’s historical performance, GemPharmatech’s revenue from overseas core operations rose steadily from 2018 to the first half of 2021, reaching RMB 12.5371 million in H1 2021 and surpassing the full-year level of 2020. The proportion of overseas revenue to total revenue increased year by year, from 1.36% in 2018 to 7.05% in the first half of 2021.

Furthermore, the prospectus reveals that GemPharmatech is actively recruiting high-caliber overseas management talent at competitive compensation packages to accelerate its business expansion in the U.S. market and the development of its U.S. subsidiary.

“Overseas markets are the company’s next breakthrough point; with a subsidiary established in the United States, its business is poised for rapid growth.” Huatai Securities stated in a research report that GemPharmatech currently possesses an extensive strain library surpassing those of its competitors, positioning it well to meet customer demands for basic research and new drug development.

From a product supply perspective, GemPharmatech has also partnered with the University of California, Davis, one of the National Mutant Mouse Resource Centers in the United States. By storing thousands of mouse strains via cryopreserved sperm and leveraging mature cryorecovery technologies, the company can rapidly provide mouse models to U.S. customers. Additionally, by licensing certain strains to Charles River, the global leader in laboratory animal services, GemPharmatech can tap into its robust sales channel to expand market reach.

David Leroux-Petersen, Vice President of Charles River’s North America Research Models and Services business, also stated in connection with this collaboration that the company will leverage its extensive commercial and distribution network to promote the novel mouse models developed by GemPharmatech across North America, Europe, and the United Kingdom.

GemPharmatech, which has already established a foothold in overseas markets, is also facing a vast market opportunity. According to data from GMI, the global market size for mouse models was approximately $7.6 billion in 2019 and is projected to reach $10.5 billion by 2023, representing a compound annual growth rate (CAGR) of 8.4% during this period, which remains substantial.

“Existing mouse models suffer from limitations such as a monogenic background and significant divergence from real-world murine populations, thereby constraining the efficiency of new drug development. Leveraging its large-fragment gene editing technology and high-standard germ-free platforms, GemPharmatech’s introduction of real-world animal models is poised to drive industry innovation and substantially raise the sector’s growth ceiling,” stated Huatai Securities.