Akeso, Inc. Launches IPO Subscription: Pioneering Bispecific Antibodies to Overcome PD-1 Therapeutic Limitations

Akeso Begins Subscription; Hong Kong Stock Exchange to Welcome Another Chinese Innovative Drug Company.

Akeso’s current offering features a price range of HK$14.88 to HK$16.18 per share, with a lot size of 1,000 shares and an estimated entry fee of HK$16,343.05. The company plans to issue 159 million shares, with the subscription period running from April 14 to April 17, and is expected to list on the Stock Exchange of Hong Kong on April 24.

Despite the unfavorable conditions in the secondary market due to the pandemic in recent months, the pharmaceutical sector has maintained its strong momentum, with many companies achieving growth against the trend. InnoCare Pharma, which recently went public, has seen its stock price continue to rise since its listing, with its total market capitalization now exceeding HK$15 billion.

With the broader market sentiment improving, Akeso’s upcoming IPO is likely to proceed more smoothly. Based on our review of Akeso’s prospectus and related materials, we have summarized the following key characteristics of the company:

1. The core founding team has long been engaged in R&D in the pharmaceutical and medical fields, with many members having previously worked together, resulting in a high level of team synergy;

2. Jointly sponsored by Morgan Stanley and JPMorgan Chase;

3. Multiple institutions have continued to increase their capital contributions; the Series D financing round raised $150 million, with a valuation approaching $6 billion;

4. Established collaborations with multiple domestic and international pharmaceutical companies, including licensing products to Merck & Co.;

4. Proprietary ACE platform manages the entire new drug R&D process, while TETRABODY technology addresses key challenges in biologics development;

5. Two leading products are poised to file for market approval, with AK-104 (PD-1/CTLA-4) breaking through the efficacy bottleneck of immunotherapy;

6. A robust pipeline of follow-on products to mitigate risks in new drug development;

7. R&D expenditure continues to grow, with ample cash reserves but a high debt ratio.

Akeso is a clinical-stage biopharmaceutical company founded in March 2012 by a team of returning immunology experts. The company is dedicated to the independent discovery, development, and commercialization of first-in-class and best-in-class therapies. Its vision is to become a global leader in the development, manufacturing, and commercialization of affordable next-generation innovative therapeutic antibodies.

Dr. Xia Yu, founder of Akeso, has over 20 years of experience in academia and the biopharmaceutical industry. After earning his bachelor’s and master’s degrees in biochemistry from Sun Yat-sen University, he obtained his Ph.D. in molecular biology and microbiology from Newcastle University in the United Kingdom. He subsequently conducted research in biochemistry, immunology, and cancer immunotherapy at the University of Glasgow in the UK and the School of Medicine at the University of Louisville in the US.

After completing his postdoctoral research, Dr. Xia Yu joined the pharmaceutical industry, where he engaged in a range of activities including preclinical research, process development, process scale-up, technology transfer, and even GMP manufacturing of antibodies. He previously held positions at Bayer, PDL BioPharma (now AbbVie), and Celera Genomics. In 2008, Dr. Xia returned to China to join Crown Bioscience as Senior Vice President, while also serving as General Manager of Crown Bioscience’s Taicang facility and as the Crown Bioscience lead for the Pfizer–Crown Bioscience Asia Cancer Research Center.

Most of Akeso’s senior executives have over a decade of experience in the pharmaceutical industry, with extensive expertise in their respective fields. For instance, Dr. Li Baiyong, Chief Scientist; Dr. Wang Zhongmin, Senior Vice President; and Dr. Zhang Peng, Vice President, all previously worked alongside Xia Yu at Crown Bioscience in Taicang. As a result, the team members at Akeso have developed strong working synergy, which has contributed to the company’s smooth and successful development over the past eight years.

Akeso's Pre-IPO Financing Journey

Supported by a high-caliber team, Akeso secured angel investment from CCB Capital Shanghai shortly after its establishment in March 2012. In July 2015, the company completed its Series A financing round, raising RMB 130 million from investors including Shenzhen Capital Group and CCB Capital Shanghai. These institutions have remained steadfast partners throughout Akeso’s growth, repeatedly increasing their stakes in subsequent funding rounds. At the time of the Series A round, Akeso’s valuation stood at approximately RMB 330 million. By the Series D round at the end of 2019, its valuation had surged to RMB 5.82 billion (USD 836 million), representing a 16-fold increase in just four years.

Leveraging its in-house R&D capabilities, Akeso has repeatedly entered into collaborations with large pharmaceutical companies. In 2015, Akeso licensed its self-developed oncology immunotherapy antibody drug, AK107, to the pharmaceutical giant Merck & Co. (known as MSD outside the United States and Canada). In 2016, Akeso established a joint venture with Dongrui Pharmaceutical to jointly develop AK102 and AK109. In 2018, it partnered with GE Healthcare to build the first biologics manufacturing facility in South China utilizing GE’s FlexFactory technology. In 2019, Akeso signed a joint venture agreement with Chia Tai Tianqing Pharmaceutical Group Co., Ltd., a subsidiary of Sino Biopharmaceutical Limited, to jointly develop and commercialize AK105 (Penpulimab).

Akeso is highly confident in its R&D capabilities. The company believes that its fully integrated in-house R&D capabilities are crucial to its success in China.

ACE Platform

Since its inception, Akeso has developed a management system known as the Akeso Comprehensive Exploration (ACE) Platform. The ACE Platform encompasses comprehensive modern biologic drug discovery, research, and process development, enabling Akeso to operate with minimal reliance on external suppliers.

In line with its strategic priorities, Akeso has implemented targeted optimizations for each function of the ACE platform, with a particular focus on establishing cross-functional integration at key milestones throughout the candidate drug lifecycle. The ACE platform ensures seamless collaboration among diverse functional teams at these critical stages, thereby accelerating development timelines, enhancing the probability of success, and reducing development costs.

In the R&D sector, Akeso’s core technologies lie in its TETRABODY platform and its expertise in crystallography and structure-based antibody design and engineering.

The TETRABODY technology platform enables Akeso to overcome three recurrent CMC challenges encountered in the development and manufacturing of bispecific antibodies: low expression levels due to the high molecular weight of bispecific antibodies, process development hurdles caused by structural heterogeneity, and poor drugability resulting from instability.

To address these common challenges, TETRABODY technology optimizes the scaffold architecture and linker sequences to achieve enhanced stability and expression levels; its symmetric configuration ensures homogeneity and improved stability; and its tetravalent design boosts potency and clinical efficacy.

After eight years of development, Akeso has established a drug R&D pipeline centered on oncology and immunology therapeutics. Its two lead candidates, AK104 and AK105, have entered pivotal clinical stages, with marketing applications for multiple indications scheduled to be submitted progressively between 2020 and 2021. Four additional candidates have also entered clinical trials, while several preclinical programs are currently under development.

Akeso's Pipeline in Development

Akeso’s flagship product, AK104, is a bispecific antibody targeting PD-1 and CTLA-4. The commercialization rights are held by Akeso Pharmaceutical, in which Akeso holds a 95% controlling stake.

Like PD-1, CTLA-4 is an immune checkpoint molecule expressed on the surface of activated T cells. In the field of immunotherapy, CTLA-4 is the most prominent therapeutic target after PD-1/PD-L1. Currently, the only approved drug targeting this pathway is Yervoy (generic name: ipilimumab) from Bristol-Myers Squibb (hereinafter referred to as BMS). This agent was also the first immunotherapy drug to receive regulatory approval, indicated for the treatment of melanoma. Although its global sales reached $1.489 billion in 2019, qualifying it as a blockbuster drug, its performance is not particularly strong compared with other star drugs in the immunotherapy space, such as Keytruda, which has achieved annual sales exceeding $10 billion.

Current development efforts targeting CTLA-4 primarily focus on combination therapy with CTLA-4 and PD-1 monoclonal antibodies. Bristol Myers Squibb (BMS) has launched multiple clinical trials for its two proprietary products, Yervoy and Opdivo, across various cancer types, including esophageal, bladder, gastric, and head and neck cancers. Clinical trial results to date indicate that while the combination therapy indeed enhances the efficacy of PD-1 monoclonal antibodies, it also leads to a significant increase in the incidence of adverse events in patients.

AK104, developed by Akeso, may represent a superior therapeutic option. AK104 simultaneously targets both PD-1 and CTLA-4, achieving efficacy equivalent to that of combination therapy, a finding largely corroborated by current clinical trial results.

As of February 26, 2020, in the study cohorts of AK104 monotherapy for selected solid tumors, among the 33 subjects included in the data analysis, 7 achieved partial response (PR) and 16 had stable disease, resulting in an objective response rate (ORR) of 21.2%. In another study evaluating AK104 in combination with mXELOX (oxaliplatin plus capecitabine regimen) for gastric cancer and esophageal adenocarcinoma, 10 out of 16 subjects achieved partial response (PR), yielding an ORR of 62.5%. These data demonstrate the therapeutic potential of AK104.

Meanwhile, the safety profile of monotherapy is significantly improved compared with combination therapy. Among 184 patients treated with AK104, the incidence of grade ≥3 treatment-related adverse events (TRAEs) was only 13%, and even in the highest dose group (450 mg), this rate was merely 18%. In contrast, in the CheckMate series of trials evaluating the combination of Opdivo and Yervoy, the incidence of grade ≥3 TRAEs reached 33% in the CheckMate-227 trial (the lowest among these studies) and as high as 59% in the CheckMate-067 trial (the highest).

AK104 Clinical Study Protocol

Akeso has currently initiated multiple Phase II clinical trials in China for various indications. In 2021, several additional clinical trials will continue, including a Phase II trial evaluating second- and third-line treatment for cervical cancer being conducted in the United States and Australia. Akeso expects to sequentially submit new drug marketing applications in China, the United States, and Australia in the second half of 2021.

To date, no bispecific antibodies have been approved for marketing in China. However, the six PD-1 monoclonal antibodies already on the market have demonstrated strong therapeutic efficacy, significantly advancing the maturity of the immunotherapy market. AK104 has an indication profile as broad as that of PD-1 monoclonal antibodies and holds the potential to achieve superior efficacy. Therefore, the future market potential for AK104 is highly promising.

AK105 is a PD-1 monoclonal antibody independently developed by Akeso. Compared with currently marketed PD-1 monoclonal antibodies, AK105 has been engineered to remove unnecessary functional domains, enabling it to focus more specifically on the PD-1 target. Therefore, it can be considered a potential best-in-class therapy.

In early clinical studies, AK105 demonstrated best-in-class potential. In the Phase I clinical trial for R/R cHL (relapsed/refractory classical Hodgkin lymphoma), 3 out of 5 evaluable patients achieved complete response (CR) and 2 achieved partial response (PR).

AK105 Clinical Development Plan

Currently, six PD-1 monoclonal antibodies are marketed in China, including two imported products and four domestically produced ones. Although the indications for these six products are not entirely identical, the domestic market for PD-1 monoclonal antibodies has already become quite crowded. Therefore, Akeso has adopted a strategy of differentiated development. In addition to classic Hodgkin’s lymphoma, for which it already has a marketed product, Akeso has devoted greater efforts to nasopharyngeal carcinoma and combination therapies.

Nasopharyngeal carcinoma is a cancer type with a markedly uneven geographic distribution. Among the three major racial groups, individuals of East Asian descent have the highest incidence rate of nasopharyngeal carcinoma. The incidence is particularly high in South China. The Phase II clinical trial of AK105 as third-line treatment for patients with nasopharyngeal carcinoma enrolled its first patient in March 2019, and the Center for Drug Evaluation (CDE) has designated this study as a pivotal clinical trial. Akeso expects to submit a New Drug Application (NDA) for this indication in the first half of 2021. To date, no PD-1 monoclonal antibody has been approved for the treatment of nasopharyngeal carcinoma; therefore, AK105 has the potential to become the first PD-1 monoclonal antibody approved globally for this indication.

AK105 in Combination with Chemotherapy Demonstrates Superior Efficacy in the Treatment of Non-Small Cell Lung Cancer. Among 43 evaluable subjects in the AK105 combination therapy group, 19 achieved partial response, yielding an objective response rate (ORR) of 44.2%, compared to an ORR of only 18.2% in the placebo combination group.

The combination regimen of AK105 and anlotinib is currently under investigation in hepatocellular carcinoma (HCC) and non-small cell lung cancer (NSCLC). In the HCC study, 6 out of 28 evaluable subjects achieved partial response, yielding an objective response rate (ORR) of 21.4%.

Akeso has established a joint venture with Chia Tai Tianqing to accelerate the development of AK105. Chia Tai Tianqing will provide distribution channels to support the commercialization pathway for Akeso’s products. The New Drug Application (NDA) for the combination therapy of AK105 and anlotinib is expected to be submitted in 2022.

In addition to its two core pipelines, Akeso’s other pipeline candidates are primarily focused on autoimmune diseases and hypercholesterolemia, and have been gradually transitioning from the preclinical stage to the clinical stage.

AK101 Clinical Development Plan

AK101 is a monoclonal antibody drug targeting IL-12/IL-23., which can simultaneously inhibit the interaction between IL-12 and IL-23 and their receptors. A drug with the same target, Johnson & Johnson’s Stelara (ustekinumab), has already been approved for marketing to treat plaque psoriasis and Crohn's disease.

AK101 has currently completed its Phase II clinical study for moderate-to-severe plaque psoriasis. The results showed that over 70% of patients receiving different doses of AK101 achieved PASI 75 (a reduction of at least 75% in the Psoriasis Area and Severity Index from baseline) by Week 12. Additionally, 58.3% of patients treated with high-dose (270 mg) AK101 achieved PASI 90 (a reduction of at least 90% in the Psoriasis Area and Severity Index from baseline), compared to only approximately 10% in the placebo group.

Meanwhile, AK101 demonstrated a favorable safety profile in the study; although adverse events were widespread, no serious adverse events occurred. The most common adverse event was upper respiratory tract infection, which may be related to influenza.

AK101 is currently undergoing Phase IIb clinical trials for moderate-to-severe plaque psoriasis, while Phase Ib clinical trials for moderate-to-severe ulcerative colitis (UC) and systemic lupus erythematosus are scheduled to commence sequentially in 2020.

AK102 Clinical Development Plan

AK102 is a PCSK9 monoclonal antibody., which can be degraded and reduce the liver's ability to clear low-density lipoprotein cholesterol (LDL-C). Currently, Amgen's Repatha (evolocumab) has been approved for marketing in China, indicated for the treatment of hypercholesterolemia and atherosclerosis, as well as for reducing the risk of cardiovascular events.

The Phase I clinical trial of AK102 in healthy subjects demonstrated that AK102 was well tolerated and significantly reduced blood lipid levels in healthy subjects across all four dose groups.

AK102 is currently undergoing Phase II clinical trials for homozygous familial hypercholesterolemia (HoFH), and another Phase II clinical trial for hypercholesterolemia will be initiated in the first half of 2020.

AK111 Clinical Development Plan

AK111 is an anti-IL-17 monoclonal antibody., a similar product, Novartis’s Cosentyx (secukinumab), has already been approved for marketing. AK111 demonstrated a favorable safety profile in its Phase I clinical trial conducted in New Zealand, with all drug-related adverse events being mild and no serious adverse events reported. A Phase Ib clinical trial is expected to be initiated in China in 2020.

In addition to these pipelines already in clinical stages, Akeso’s multiple drug candidates—including AK112 (PD-1/VEGF), AK109 (VEGFR-2), AK114 (IL-1 beta), AK119 (CD73), and AK123 (PD-1/CD73)—are poised to initiate clinical trials or have already submitted Investigational New Drug (IND) applications.

Overall, Akeso’s current pipeline is driven by two core assets, AK104 and AK105, supplemented by ongoing clinical development of products such as AK101, AK102, and AK111, with a substantial number of additional candidates slated for upcoming clinical trials or currently in preclinical stages. The product portfolio is arranged in a tiered manner, with clear prioritization between primary and secondary assets. The simultaneous advancement of multiple products also helps Akeso mitigate the risks associated with drug development failures.

First-in-class novel drugs offer significant market potential but entail higher R&D risks; follow-on innovative drugs benefit from greater market maturity and relatively easier regulatory approval, yet face intense competitive pressure. Therefore, Akeso has adopted a multi-pronged strategy in its selection of new drug targets, simultaneously advancing various candidates. This portfolio includes AK104, a potential global first-in-class novel drug; AK105, which pursues differentiated competition in a relatively mature market; and several other products, such as AK101, AK102, and AK111, that have the potential to become best-in-class therapies. Such diversified investment helps Akeso mitigate risks while underscoring its exceptional R&D capabilities.

Selected Financial Data of Akeso

Due to the simultaneous advancement of multiple pipelines, Akeso’s R&D expenditures remain relatively high even among innovative drug companies. In 2019, R&D spending exceeded RMB 300 million, nearly doubling from the previous year. The overall net loss also increased correspondingly compared to the prior year.

Akeso's Asset Profile

In terms of cash reserves, Akeso currently holds total current assets of RMB 1.25 billion; however, its high total liabilities may pose certain future risks.

According to Akeso’s plan, multiple indications for its two flagship products will be submitted for marketing approval in succession from 2020 to 2021. As a result, Akeso may have its first product approved for market launch as early as 2021, with stable product sales revenue beginning in 2022. Therefore, Akeso’s future development prospects are quite promising.

Use of Proceeds from IPO Financing

The funds raised from Akeso’s IPO will be primarily allocated (75%) to product research and development as well as commercialization expenses. Additionally, a portion of the proceeds will be used to develop production and R&D facilities in Guangzhou and Zhongshan. In January 2020, the topping-out ceremony was completed for Akeso’s commercial production base in Guangzhou, ensuring that the company can rapidly bring its products to market following regulatory approval for listing.

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