Chinese-Originated ADC Sacituzumab Tirumotecan (sac-TMT) Secures $700M from Blackstone to Fuel Global Development

On November 4, multinational pharmaceutical company MSD announced a research and development collaboration with Blackstone Life Sciences.

According to the agreement between both parties, Blackstone will provide MSD with $700 million in non-refundable funds to support part of the development costs expected for MSD's candidate drug sacituzumab tirumotecan (sac-TMT) during 2026.

As consideration, once sac-TMT receives U.S. regulatory approval for first-line triple-negative breast cancer (based on the TroFuse-011 trial), Blackstone will be entitled to receive a "low-to-mid single-digit" royalty on net sales of the approved indication.

At the same time, MSD retains full decision-making and control rights over the development, production, and commercialization of this product, and Blackstone does not obtain any product rights.

MSD emphasized that the above-mentioned funding arrangements with Blackstone do not changeThe Rights of the sac-TMT PipelinePattern and Project-led Model.

In other words, MSDAfter sac-TMT is approved for marketing in the future, single-digit percentage royalties were exchanged for a one-time payment of 700 million US dollars in cash for research and development expenses.

As for the split ratio, MSD only vaguely described it as"Low to mid-single digits," a blind guess would be around 5%?

According to this口径,The net sales amount of sac-TMT after its market launch must reach at least 14 billion US dollars for Blackstone to break even on this deal.

sac-TMT is a product currently in the research and development process.TROP2-ADC, the original research party of this pipeline is Kelun-Biotech, a Chinese Biotech company listed on the Hong Kong Stock Exchange.

In May 2022, MSDA $47 million upfront payment and a total transaction value of $1.363 billion to acquire Kelun-Biotech's investigational TROP2-ADC drug.LukansatuzumabRights outside Greater China.

The internal code name of MSD isThe pipeline of sac-TMT is this Lumoxiti antibody introduced from Kelun-Biotech.

Lukansatuzumab is a novel ADC drug developed based on Kelun-Biotech's proprietary platform.Composed of sacituzumab, a high-affinity monoclonal antibody targeting TROP2, and a potent cytotoxic topoisomerase I inhibitor, the antibody and drug are precisely linked through a hydrolysable irreversible linker, ensuring accurate delivery of the drug to tumor cells.

The counterparty of MSD in this transaction, Blackstone Life Sciences, isBlackstone's internal platform focused on life sciences investment and development, established after Blackstone acquired the veteran life sciences investment firm Clarus in 2018 and completed the integration.

Blackstone Life Sciences' strategy is relatively unconventional, itsFocusing on late-stage clinical/near-registration pharmaceuticals and medical technologies, accelerate product implementation by designing, funding, and even personally participating in the execution of pivotal clinical trials, ultimately benefiting from product milestones and future sales.

The pipelines that can catch the attention of Blackstone Life Sciences undoubtedly have enormous potential market imagination space.

For instance, in 2024, Blackstone Life Sciences once provided up to $750 million in research and development funding for Moderna's influenza mRNA project, with the agreed return being a low single-digit percentage of future net sales.

The lulamab, which has caught the attention of Blackstone this time, is also a "rising star" in the future global ADC field.

MSD revealed,Lukansatuzumab (sac-TMT) Currently conducting 15 global Phase III studies across six tumor types, it is one of the core pipelines being prioritized.

By the end of 2024,Lukang Satuzumab has been approved for marketing in China.The indication is for adult patients with unresectable locally advanced or metastatic triple-negative breast cancer.It is the first TROP2 ADC drug approved for marketing in China and the second globally.

In addition,The second indication for Lecanemab has also been submitted for marketing approval in August this year, for adult patients with locally advanced or metastatic EGFR-mutated non-small cell lung cancer who have failed treatment with EGFR-TKI and platinum-based chemotherapy.

The tremendous success of Lupkynis™ (Lukang Satuzumab) serves as a typical example of the comprehensive rise of China's ADC drug industry in recent years.

According to 2024 data, third-party statistics show that the total BD amount for China-originated oncology treatment pipelines is approximately US$30 billion, of which ADCs account for 56%, reaching about US$19 billion.

Chinese innovative drug companies that have been quietly developing in this field have also reaped significant capital returns.

InTaking Kelun-Biotech, the developer of Lukansatuzumab, as an example, since its listing on the Hong Kong Stock Exchange in July 2023, its stock price has surged nearly eightfold in just over two years, rising from an opening price of HK$60.6 per share to a high of HK$581 per share.

The comprehensive rise of leading Chinese innovative drug companies with global competitive advantages is undoubtedly one of the biggest investment opportunities in the pharmaceutical industry in recent years.

The Hang Seng Hong Kong Innovative Pharmaceuticals Index, which closely tracks leading innovative drug companies in the Hong Kong stock market, has achieved a return rate exceeding 80% so far this year, making it one of the top-performing indices in the entire market. The corresponding ETF fund (Hong Kong Innovative Pharma 50ETF 513780) also shows notable returns worth attention.

The reason for this market performance lies in the index investment strategy represented by ETF funds, which can not only avoid the non-systematic risks of individual stocks but also achieve comprehensive coverage of all representative targets under a specific theme.

For example, as a benchmark company in the ADC track, Kelun-Biotech ranksThe Top Ten Holdings of Hong Kong Stock Innovative Drug 50ETF (513780).

For individual investors who lack sufficient industry expertise, investing in the innovative drug sector through index funds is one of the best choices in terms of risk-reward ratio.

At the same time, ETF funds are also becoming one of the key tools for many professional investment institutions to focus on innovative drugs.

According to the semi-annual report information, inAmong the top ten holders of Hong Kong Stock Innovative Drug 50ETF (513780) are Barclays Bank and Swiss Bank Group.

Currently, the development of ETF tools is becoming increasingly complete. For off-exchange investors, the Hong Kong Stock Connect Innovative Drug 50 ETF (513780) and its linked funds A/C (023597/023598) are available options.