$200 Million Upfront Payment! A Domestic Innovative Respiratory Drug Sold

Today, Sino Biopharm (01177.HK) announced that its subsidiary, CHIATAI TIANQING, has entered into an exclusive licensing agreement with AstraZeneca for TQC3721, a self-developed inhaled dual PDE3/4 inhibitor. Under the agreement, Sino Biopharm will grant AstraZeneca an exclusive license to develop, manufacture, and commercialize TQC3721 in regions outside China, as well as an exclusive global license for specific development programs.

In terms of transaction value, Sino Biopharm will receive a $200 million upfront payment, up to $1.7 billion in milestone payments, and tiered royalties based on annual net sales at up to double-digit percentages, with the total potential value reaching up to $1.9 billion.

This marks the second licensing deal secured by Sino Biopharm this year, following the $1.53 billion licensing agreement with Sanofi for rovadicitinib in February 2026. To date, the company's cumulative upfront payments from out-licensing deals have exceeded $1 billion, with the total transaction value surpassing $7 billion.

TQC3721 is a dual phosphodiesterase 3/4 (PDE3/4) inhibitor administered via inhalation, with two formulations currently in development: nebulized inhalation suspension and dry powder inhaler.

From a mechanistic perspective, the rationale for dual PDE3/4 inhibition lies in its "dual-action" capability: PDE3 (phosphodiesterase 3) inhibition increases intracellular cyclic adenosine monophosphate (cAMP) levels, mediating airway smooth muscle relaxation and achieving bronchodilation; PDE4 (phosphodiesterase 4) inhibition reduces airway inflammation by regulating the release of inflammatory cytokines. These two mechanisms are complementary, theoretically enabling improved lung function while controlling inflammation, thereby delivering clinical benefits superior to those of single-target agents.

This therapeutic mechanism has garnered significant attention from global pharmaceutical companies in recent years. In June 2024, the FDA approved Ensifentrine (brand name Ohtuvayre), developed by Verona Pharma, making it the first globally approved PDE3/4 inhibitor for the maintenance treatment of COPD. Within eight months of its launch, cumulative sales reached $114 million. In 2025, MSD announced the acquisition of Verona Pharma for approximately $10 billion, further highlighting the commercial potential of the PDE3/4 sector.

As one of the first innovative drugs in China to target this mechanism, TQC3721 has completed Phase I/II clinical studies. According to data disclosed by CHIATAI TIANQING, TQC3721 nebulized inhalation suspension has demonstrated best-in-class potential in Phase IIb studies for COPD. Currently, Phase III clinical trials for this formulation are underway in China, while the dry powder inhaler is simultaneously advancing to Phase II clinical trials. TQC3721 is poised to become the first domestically produced inhaled PDE3/4 dual inhibitor approved for marketing in China.

Notably, inhaled formulations have long represented a high-barrier segment in the strategic portfolios of Chinese pharmaceutical companies, with R&D encompassing multiple aspects such as control of drug particle size, pulmonary delivery efficiency, and device compatibility. For an extended period, multinational pharmaceutical companies such as AstraZeneca, GSK, and Boehringer Ingelheim have held significant positions in the global market, leveraging their accumulated technological expertise and commercial capabilities.

In this field, CHIATAI TIANQING has strategically positioned itself for many years, successively launching products such as tiotropium bromide powder inhaler (Tianqing Sule) and inhaled methacholine chloride (Tianqing Suxin), thereby accumulating significant expertise in the research and development, manufacturing, and commercialization of inhalation preparations.

To understand why AstraZeneca made its move, it is necessary to examine the action within the context of its long-term strategic layout in the respiratory business portfolio.

Respiratory & Immunology (R&I) is a core long-term strategic business segment for AstraZeneca. By the end of 2025, the company had a total of 15 clinical-stage pipelines in this field, covering airway diseases such as asthma and COPD, as well as various autoimmune diseases. The 2025 financial report showed that the company's total annual revenue was $58.739 billion, with the R&I segment contributing $8.866 billion, a year-on-year increase of 12%. The segment's revenue accounted for approximately 15.1% of the company's total annual revenue, serving as a key foundational business driving stable corporate growth.

Within this business landscape, COPD has consistently remained one of AstraZeneca's key therapeutic focus areas. As a chronic respiratory disease with a substantial global patient population, COPD still presents significant unmet needs in disease management. According to WHO data, COPD is the fourth leading cause of death worldwide, resulting in 3.5 million deaths in 2021, accounting for approximately 5% of all global deaths. Data from the China Epidemiological Report on COPD indicates that the prevalence of COPD among individuals aged 40 and above in China exceeds 13.7%, corresponding to a patient population of approximately 100 million, with growing demands for disease management.

However, unmet needs remain in current treatment regimens for COPD. Clinical practice currently relies primarily on LABAs, LAMAs, and ICSs. While these therapies improve airflow limitation and symptom control, they do not fully address disease progression and the risk of acute exacerbations in some patients.

Meanwhile, some mature inhaled formulations are facing slowing sales growth and pressure from price management. The U.S. Inflation Reduction Act (IRA) has included several COPD-related drugs, such as Trelegy Ellipta and Anoro Ellipta, in the scope of Medicare price negotiations, which may impact the pricing and revenue expectations for these products in the U.S. market in the future.

In this context, the search for next-generation innovative assets in the respiratory field has become a key strategic direction for MNCs to maintain their long-term competitiveness. As a novel mechanism garnering significant attention in recent years, dual PDE3/4 inhibitors offer new avenues for exploration in COPD treatment.

From a broader perspective, the TQC3721 collaboration is also part of AstraZeneca's ongoing efforts to deepen innovation partnerships in China.

In recent years, AstraZeneca has been deepening its collaboration with innovative Chinese pharmaceutical companies, further transforming China from a commercial market into a significant source of innovative assets. In January 2026, the company announced plans to invest over RMB 100 billion by 2030 in R&D and production capacity building. One week prior to the TQC3721 licensing deal, AstraZeneca also entered into a joint development agreement with CSPC Pharmaceutical Group in the siRNA field to explore the R&D of next-generation nucleic acid therapeutics. These consecutive strategic moves reflect how MNCs are leveraging partnerships to access China's innovative R&D capabilities and integrate related assets into their global R&D systems.

In recent years, with the approval and market launch of the first PDE3/4 inhibitor, this mechanism—long confined to the R&D exploration phase—has begun to attract industry attention.

This trend has also accelerated strategic deployment by domestic pharmaceutical companies. In recent years, firms such as Hengrui Medicine and Haisco Pharmaceutical have progressively advanced the development of innovative PDE3/4 inhibitors and pursued international collaborations. Notably, Hengrui Medicine's PDE3/4 inhibitor HRS-9821 has entered into a collaboration with GSK, while Haisco's HSK39004 has secured licensing agreements with overseas partners. The recent deal involving TQC3721 and AstraZeneca further underscores the growing interest of MNCs in innovative assets targeting this mechanism.

However, as more companies enter the field, the key to competition in PDE3/4 is no longer just about target layout, but rather revolves around clinical positioning, administration routes, and formulation development capabilities.

Previously, the clinical application of oral PDE inhibitors was somewhat limited by adverse reactions associated with systemic exposure. In contrast, inhalation administration can enhance local drug exposure in the lungs and reduce the risk of systemic side effects, making it a key development direction for innovative PDE3/4 drugs.

For inhaled formulations, dosage form development itself constitutes a competitive barrier. Long-term process accumulation is required for aspects ranging from drug particle control and pulmonary deposition efficiency to inhaler device compatibility. Currently, most PDE3/4 candidates under development focus on a single dosage form, whereas simultaneously pursuing multiple forms—such as nebulized inhalation and dry powder inhalation—helps address diverse patient needs and clinical application scenarios.

In the future, competition in the PDE3/4 therapeutic area may shift further from mechanistic positioning to a contest of clinical value and commercialization capabilities. For TQC3721, the collaboration with AstraZeneca marks the entry of this product into a new phase of global development and subsequent validation of its commercial value.