Hengrui Medicine's New Breakthrough: PDE3/4 Inhibitor HRS-9821 and Immuno-Respiratory Pipeline Drive $12.5B Global Deal with GSK

(Source: Pharma Talks)

Recently,Hengrui PharmaLands Another Major BD Deal:Hengrui Pharma Licenses Overseas Rights of PDE3/4 Inhibitor HRS-9821 and Exclusive Options for 11 Innovative Projects to GSK, with Potential Total Deal Value of $12.5 Billion (Including $500 Million Upfront Payment).

This positive news caused Hengrui Pharma's A-shares to hit the upper limit, successfully breaking through the 400 billion yuan mark in total market value, while its H-shares' total market value once exceeded 560 billion Hong Kong dollars.

This BD collaboration once again validates Hengrui's R&D capabilities in the field of immunology and respiratory diseases. More importantly,Hengrui Pharma in this field alsoHiddenMany with BD potential"Rising Star of Tomorrow"。

01

Why is GSK making a big bet?

What Makes HRS-9821 the Pivot for a Billion-Dollar Collaboration?

HRS-9821It is a potential blockbuster drug in Hengrui Pharma's respiratory disease field and is currently under development for treatment.Chronic Obstructive Pulmonary Disease (COPD)The Phase I clinical trial, as adjuvant maintenance therapy, does not consider previous treatment regimens.

There are multiple reasons why GSK has heavily invested in HRS-9821:

First, HRS-9821 has demonstrated potent PDE3 and PDE4 inhibitory effects in early clinical and preclinical studies, thereby enhancing bronchodilation and anti-inflammatory actions, and providing an opportunity for the development of a convenient dry powder inhaler (DPI) formulation.It is a potential best-in-class PDE3/4 inhibitor.

Secondly, there is a huge unmet clinical need for COPD drugs, which has become a battleground for MNC giants.The number of COPD patients worldwide exceeds 380 million, with over 100 million in China, supporting a broad market space.According to a Precedence Research report, the global COPD drug market size is expected to reach $33.03 billion by 2034.

Moreover, the commercial potential of PDE3/4 inhibitors has been validated,World's First PDE3/4 Inhibitor Ohtuvayre (Ensifentrine) Acquired by Merck for $10 Billion。Ohtuvayre is the first novel inhaled drug mechanism for COPD treatment in over 20 years, with analysts forecasting peak sales of $4 billion, offering significant potential for PDE3/4 inhibitors.

Finally, GSK is the traditional leader in the respiratory field, with respiratory business revenue reaching £8.997 billion in 2024 (contributing nearly 30% of the company's income). It is also the leader in the global asthma/COPD inhalation market, having developed several blockbuster drugs, including Trelegy Ellipta (Relvar Ellipta) and Nucala (Mepolizumab). GSK has comprehensively laid out pipelines targeting different indications for COPD. The acquisition of Hengrui Pharma’s HRS-9821 will undoubtedly further strengthen its position.

In terms of the competitive landscape, the market competition for PDE3/4 inhibitors is relatively moderate.Currently, only Verona/Merck's Ohtuvayre has been approved for marketing globally.There are not many other pipelines that have entered the clinical research stage, and the competitors include TQC3721 from Zhengda Tianqing, a subsidiary of China Biologic Products.HaiscoHSK39004。

CTTQ's TQC3721 is a novel mechanism inhaled PDE3/4 inhibitor with dual effects of bronchodilation and anti-inflammation, thereby alleviating patient symptoms, suppressing inflammation, and controlling disease progression. Currently, the inhalable TQC3721 suspension is undergoing Phase III clinical trials for the maintenance treatment of COPD, while the TQC3721 inhalation powder is in Phase I clinical trials.

Clinical study results show that TQC3721 significantly improved lung function and symptom scores in COPD patients with either single or dual bronchodilator background therapy. Compared to Ohtuvayre, the Phase III study of TQC3721 will additionally include patients on dual bronchodilator background therapy, covering a broader population.

In addition, Haisco's HSK39004 inhalation powder and inhalation suspension are both undergoing Phase II studies for the treatment of COPD.

Hengrui Pharma is also accelerating the R&D progress. Currently, the HRS9821 inhalation formulation has completed Phase I study in China.A more convenient DPI formulation is currently in Phase I clinical trials in China, with a globally advanced progress.From the preclinical structure, HRS9821 has improved activity against PDE3A/PDE4B compared to Ohtuvayre.

02

The Field of Immunology Enters a Period of Intensive Harvest

HRS9821 is merely a small part of Hengrui Pharma's vast portfolio in the field of immunology and respiratory diseases, behind which lies a rich, diverse, and promising pipeline.

In the field of immunology, for example, the approved and marketed fenebrutinib、Imacitini is one of Hengrui Pharma's two key new drugs.Among them, IL-17A inhibitorsFunaqizumabHas obtained approvals for multiple indications (plaque psoriasis, ankylosing spondylitis), with several other indications entering Phase III clinical trials, showing potential for future sales growth.

JAK1 InhibitorAima XitiniIt was approved for marketing in China this March, and has already obtained two indications (ankylosing spondylitis, moderate to severe active rheumatoid arthritis), with multiple indications already in Phase III clinical trials and the review stage for market approval, marking an intensive harvest period.

However, whether it is IL-17A-targeted drugs or JAK inhibitors, the market competition is extremely fierce. If Hengrui Pharma's two key new drugs are to break through, they will face significant pressure.

Hengrui Pharma's Immunology Pipeline

ImageSource: 2024 Annual Report

Hengrui Pharma has multiple new drugs in the immunology field that have reached a "critical sprint phase."Including IL-4Rα monoclonal antibody SHR-1819, novel oral CFB inhibitor HRS-5965, and multiple pipeline products that have entered clinical stages, such as HRS-7085 for inflammatory bowel disease, RSS0393 and SHR-1139 for psoriasis, and SHR-2173 for systemic lupus erythematosus.

SHR-1819Phase III studies for the treatment of atopic dermatitis and prurigo nodularis are currently underway, with other indications under investigation including chronic spontaneous urticaria, pediatric/adolescent atopic dermatitis, etc.

From the perspective of the competitive landscape, the IL-4Rα monoclonal antibody track where SHR-1819 is located is highly competitive, with two competing products already approved for marketing. Ledejibaimab from Simcere Pharmaceutical is close behind and has already been submitted for marketing approval.ZhiXiang JinTaiGR1802、3SBioSSGJ-611, Akeso Biopharma's Mandoki mAb, and several other competing products have entered Phase III clinical trials.

HRS-5965Multiple Phase III studies are ongoing for the treatment of untreated paroxysmal nocturnal hemoglobinuria, C5 antibody-treated paroxysmal nocturnal hemoglobinuria, and a Phase II clinical trial for the treatment of IgA nephropathy. From a competitive landscape perspective, currently, Novartis' Iptacopan is the only CFB inhibitor approved for marketing globally.HRS-5965 and MY008211A from Wuhan Langlai Technology rank among the top tier of Chinese-produced products.

It is worth mentioning that Ipkepan outperformed AstraZeneca's two blockbuster complement C5 inhibitors—Soliris (eculizumab) and Ultomiris (ravulizumab)—in a head-to-head Phase III study. Hengrui Pharma has also initiated a Phase III head-to-head study of HRS-5965 versus eculizumab for PNH, with clinical data eagerly awaited.

In addition, the treatment of inflammatory bowel disease (IBD)HRS-7085It is also worth noting. In recent years, many MNC giants such as AbbVie and Eli Lilly have entered the IBD field. This also indicates that HRS-7085 has demonstrated BD potential.

03

Next BD Explosion Point?

In addition to the immunology field, the respiratory disease field also holds many highly promising "rising stars," including SHR-1905 (TSLP antibody), HRS-9821 (PDE3/4 inhibitor), and SHR-1703 (IL-5 monoclonal antibody), with the first two having already achieved BD deals.

Hengrui Pharma's R&D Pipeline in the Respiratory System Field

ImageSource: 2024 Annual Financial Report

SHR-1905It is a TSLP monoclonal antibody independently developed by Hengrui Pharma. Recently, a Phase III clinical trial for the treatment of patients with severe uncontrolled asthma has been initiated. Other indications under development include chronic rhinosinusitis with nasal polyps, COPD, and asthma.

In August 2023, Hengrui Pharma granted U.S.-based One Bio (later renamed Aiolos Bio) global rights to SHR-1905 outside Greater China in a deal potentially worth over $1 billion. In 2024, GSK acquired Aiolos Bio for $1.4 billion, bringing SHR-1905 under its ownership.

SHR-1703Multiple Phase III studies are ongoing for the treatment of Eosinophilic Granulomatosis with Polyangiitis (EGPA) and Eosinophilic Asthma.Ranked second globally in progressCurrently, the IL-5 targeted drug market is still in a blue ocean phase, with only GSK's Nucala (mepolizumab) approved for marketing globally. Despite Nucala having been on the market for 10 years, it maintains a growth rate of around 10% by continuously expanding into new indications.

In terms of other competing products, GSK has also developed the next-generation IL-5 antibody Depemokimab, which has a longer half-life compared to Mepolizumab (administered once a month) and only requires injection every six months. Two marketing applications for indications have been submitted. Additionally, 3SBio's IL-15 antibody SSGJ-610 is in Phase III clinical trials, while Rongjikang Bio's RC1416 (IL-4R/IL-5 bispecific antibody) is in Phase II clinical trials.

Hengrui Pharma's respiratory drug pipeline that has entered the clinical stage also includesSHR-4597(For asthma already in Phase I clinical trials),RSS0343(For non-cystic fibrosis bronchiectasis, it is currently in Phase II clinical trials),HRS-9813Phase I Study for the Treatment of Idiopathic Pulmonary Fibrosis and Interstitial Lung Disease is Underway.

04

New Growth Engine

In summary, Hengrui Pharma has established a rich pipeline in the fields of immunology and respiratory diseases, which is expected to become a new growth engine for the company in the future.

After all,Revenue from immunology and respiratory businesses accounts for a small proportion of Hengrui Pharma's total revenue.Revenue increased by 10.77% year-over-year to RMB 777 million in 2024, accounting for only 2.78%, indicating significant room for growth.

By comparison, in 2024, Hengrui Pharma's oncology business contributed to "half of the company's total revenue" (accounting for 52.12%), while the revenue shares of neuroscience, contrast agents, metabolism, and cardiovascular businesses were 15.33%, 9.82%, and 6.25%, respectively.

Hengrui Pharma 2024 Revenue from Immunology and Respiratory Systems

ImageSource：Tonghua ShunFinance

As Hengrui Pharma stated in its financial report, the global healthcare sector faces a significant burden from immune and respiratory diseases.This is closely related to the high prevalence of these diseases and the long-term demand for medication.According to Frost & Sullivan, in 2023, the number of patients with psoriasis, rheumatoid arthritis, asthma, and chronic obstructive pulmonary disease (COPD) worldwide is approximately 136 million, 41 million, 787 million, and 246 million, respectively.

A large patient population supports a broad market space,The global market size for immunology and respiratory diseases drugs was $198.9 billion in 2018, growing at a compound annual growth rate (CAGR) of 2.8% to reach $228.3 billion by 2023, and is projected to reach $294.6 billion by 2028 with a CAGR of 5.2%.

In the Chinese market, the scale of China's immunology and respiratory disease drug market was RMB 96.7 billion in 2018, growing at a compound annual growth rate (CAGR) of 2.4% to RMB 109 billion in 2023, and is expected to reach RMB 204.4 billion by 2028, with a CAGR of 13.4%.

It can be foreseen that the next blockbuster of Hengrui Pharma is coming.。

References:

1. Financial reports, announcements, and official WeChat accounts of various companies

2.Cathay Pacific HealthcareSecurities Research Report