Hengrui's $12.5B COPD Drug Deal with GSK Ignites Chronic Disease Spring

In the first half of 2025, BD activities by Chinese biotechs are no longer news; however, the "batch-style" BD of star companies remains a focal point of attention.

On July 28, Hengrui Pharma and GSK reached a license-out cooperation.Due to the total transaction value reaching $12.5 billion and involving the licensing of up to 12 pipelines, it has drawn strong attention from the industry.

One of the drugs in the clinical stage, HRS-9821, is used for chronic obstructive pulmonary disease (COPD). It can inhibit phosphodiesterase type 3 and type 4 (PDE3/4), thereby reducing inflammatory responses.

The other 11 non-clinical stage products cover therapeutic areas such as oncology, respiratory, autoimmune, and inflammation, with GSK holding the option to develop them.In other words, GSK can decide whether to continue investing in the development or acquire the global rights to the drug based on the data before the node.

After the news was released, market enthusiasm surged. On the same day, Hengrui Pharma's shares rose by 10% and hit the upper limit, reaching a new high in nearly four years.

For a company with a market value of 400 billion, a limit-up is an extremely rare event. On the 29th, the company's stock price continued to rise by about 3%.

The discussion about this deal mainly focuses on: first, for Hengrui Pharma, this collaboration is undoubtedly an important milestone in its overseas expansion process, also showcasing to the outside world a rich pipeline arsenal and robust overseas channels.Secondly, the core product HRS-9821 in the transaction, a non-oncology product, has also brought a sense of novelty. Combined with GSK's own product line in the COPD field, it also provides some new ideas for product portfolio in BD between Chinese biotechs and MNCs.

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The Future of Chronic Disease Transactions

COPD is a general term used to describe chronic diseases that affect the lungs and cause breathing difficulties, mainly including chronic bronchitis and emphysema.Nowadays, COPD has become the third leading cause of death globally, with approximately 550 million people affected worldwide as of 2020.

Although the market is large, innovation in this field has been relatively slow over the past decade. The main reason lies in the fact that COPD is a complex disease with strong heterogeneity, making it difficult to treat precisely through mutated targets. Therefore, for a long time, treatment has almost entirely relied on the "old trio" of drug combinations: ICS (inhaled corticosteroids), LABA (long-acting β agonists), and LAMA (long-acting muscarinic antagonists).

An investor in the pharmaceuticals sector introduced that in the past, developing new drugs for COPD mainly faced significant challenges in clinical design and execution. Although many targets were found to be involved in the inflammatory process, the lack of precise biomarkers and effective clinical classification methods led to a high failure rate in clinical trials.

Currently, popular targets surrounding COPD include TSLP, with representative drugs such as SHR-1905, a product from the 2023 deal between GSK and Hengrui Pharma. MNCs like AstraZeneca, Novartis, and Merck also have a presence in this field. Other well-received targets include IL-4Rα, IL-5, and IL-33. In addition to major pharmaceutical companies like Amgen, Sanofi, and Regeneron, domestic biotechs such as 3SBio and Mabwell are also among the faster-progressing players in their respective fields.

This transaction involves PDE3/4, a novel mechanism therapy, with Ensifentrine, launched in the U.S. in August 2024, being its most representative example. This is the world's first inhaled dual-target drug, offering both bronchodilation and anti-inflammatory effects.

This transaction between Hengrui Pharma and GSK in chronic disease drugs also highlights the diversified potential of China's biotech industry going global.According to PharmaCube data, from 2023 to 2024, the proportion of overseas licensing deals for oncology pipelines decreased from 72% to 61%, while the proportion for metabolic and autoimmune indications increased from 12% to 25%.

The aforementioned investor mentioned the transaction advantages of chronic disease drugs as BD entities compared to tumor drugs: First, the indications are extensive, and the patient base is large; second, the duration of medication is long, and the reimbursement willingness of local medical insurance is high, making it very suitable for enterprises to generate revenue "steadily over time" through co-development + sales sharing.Moreover, since the field of chronic diseases has clearer and more mature pathways both in terms of research and development and regulation in Europe and America, the efficiency and volume of transactions will also be more significant.

This trend has become evident from this year's BD deals: Sciwind Biosciences and Verdiva Bio struck a deal worth a total of $2.47 billion, licensing a GLP-1 receptor agonist and an amylin receptor agonist; the TSLP antibody for treating asthma and COPD, co-developed by Kelun Botai and Harbour BioMed, was licensed to newly established Windward Bio AG – it is clear that the Newco model particularly favors drugs in metabolic, respiratory, and autoimmune categories, indirectly reflecting overseas investors' confidence in China's chronic disease pipeline assets.

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Hengrui's Chronic Disease Portfolio

In 2024, Hengrui Pharma reached a milestone in the field of autoimmune diseases — the successful launch of its first innovative drug, Funaqizumab.

At the time, Dr. Lianshan Zhang, Global R&D President of Hengrui Pharma, wasAcceptChina Fund NewsInterviewWhen stating,"Hengrui Pharma's future growth, in addition to the oncology sector, will rely significantly on the chronic disease field, including autoimmune diseases, metabolic disorders, and respiratory conditions."More of the company's future growth may come from our strategic layout in these new areas.”

This is not the first time Zhang Lianshan has emphasized the strategic significance of chronic diseases to Hengrui Pharma. The achievements of "going overseas" in the past two years have clearly confirmed this point, and the field of chronic diseases is becoming the second growth curve for the development of Hengrui Pharma's innovative drugs.

Hengrui Pharma's advantage in chronic disease drug development lies in its deep accumulation of localized experience and resource networks in long-term medication safety evaluation, complex drug delivery systems (such as controlled-release formulations), and extensive market channel construction. Dr. Lianshan Zhang’s decade-long R&D experience at Eli Lilly, where he was deeply involved in multiple new drug projects, has infused Hengrui with international perspectives and top-tier standards in the autoimmune field.

Results are showing. Of the 17 innovative drugs that Hengrui Pharma has brought to market, eight are in non-oncology fields. In 2024 alone, four Class 1 innovative drugs were approved: Fumaric Acid Tigelotide, Funacizumab, Recasimab, and Emactuzumab Sulfate.

Hengrui's pipeline layout is also very forward-looking: it not only coversGLP-1Receptor Agonist (Diabetes/Obesity),SGLT2Inhibitor (Diabetes)/Cardiorenal Protection),PCSK9Inhibitor (Hyperlipidemia),JAKInhibitors (autoimmune diseases) and novel analgesics are hot targets, especially in dual-target/Actively positioning itself in next-generation therapies such as multi-target drugs and long-acting technologies (e.g., weekly formulations, monthly formulations). This broad-coverage strategy enables Hengrui Pharma to quickly respond to market demands, making it a key player in the eyes of multinational pharmaceutical companies.“Pipeline Supermarket”。

In the first half of this year, Hengrui Pharma accelerated its pace in expanding overseas for chronic disease treatments. Apart from the licensing collaboration with GSK, in March, Hengrui licensed the global rights (outside Greater China) of its self-developed Lp(a) inhibitor HRS-5346 (for hyperlipoproteinemia(a)) to Merck, with an upfront payment of $200 million and a potential total deal value of $1.97 billion. In April, the company also granted Merck the exclusive commercialization rights in mainland China for SHR7280, an oral GnRH receptor antagonist currently in Phase III clinical trials (in the field of assisted reproduction).

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The Appeal of Early Pipelines

Hengrui Pharma and GSK's collaboration in the respiratory field (especially in COPD) provides an excellent case for the value of early pipelines.

CurrentCOPDNew Drug Development Focuses onIL4、PDE4、IL5Such targets. Among them, those that can simultaneously achievePDE3AndPDE4Dual inhibition, however, is relatively rare or perhaps underappreciated.

A turning point occurred in 2022 when Verona Pharma's PDE3/4 soft mist inhaler Ensifentrine successfully met endpoints in two Phase III clinical trials, significantly reducing the exacerbation rate (36%-42%) in patients with mild to moderate COPD.Its efficacy is superior to that of single PDE4 inhibitors (approximately 20%) and standard triple therapy (13-24%), strongly demonstrating the value of this dual-target mechanism.

But just this year7In the month, Merck announced with100Hundreds of millions of dollars in price willVerona PharmaTogether with the revenue from this drug, they have plucked the only ripe fruit.

GSK's blockbuster asthma/COPD drug Trelegy Ellipta patent will expire in 2030, urgently needing a new pipeline to fill the gap.Apart from Ensifentrine, there are only three PDE3/4 inhibitors globally that have entered clinical trials, and all of them are from China:TQC3721 (Phase III) by China Biologic Products, HSK39004 (Phase II) by Haisco, and HRS-9821 (Phase I) by Hengrui Pharma.

An expert in the autoimmune field pointed out that multinational pharmaceutical companies might have underestimated the value of this target in the early stages, which is why they began actively seeking to introduce related drugs after they entered the commercialization phase. Otherwise, they would have likely made a move when the Phase II data showed promising results.But MNCs, including GSK, are not without their late-mover advantages. As long as a drug demonstrates superior efficacy, the market potential remains vast. This is exemplified in the TYK2 inhibitor space, where despite numerous existing products, the data from Yifang Biosciences stands out and is highly anticipated.

Notably, in the PDE3/4 field, Hengrui Pharma's HRS-9821, which is relatively behind in progress, has surprisingly reached a significant BD collaboration with GSK.

Although late-stage pipelines have higher certainty, MNCs' choice of early-stage pipelines also has strategic considerations. The licensing or acquisition costs for early projects (preclinical to Phase I) typically range from tens of millions to hundreds of millions of dollars, far lower than the sky-high prices of billions of dollars for late-stage pipelines, offering higher capital efficiency.MNCs pay a limited upfront fee to obtain a high-potential "R&D option" – if successful, they can secure重磅 assets at a lower premium; if failed, the loss remains controllable.

In addition, early intervention by MNCs can lead global development strategies and clinical trial design, ensuring the data better aligns with European and American regulatory requirements.

The longstanding collaboration between Hengrui Pharma and GSK also laid the foundation for this deal. In August 2023, Hengrui licensed the overseas rights of its TSLP monoclonal antibody SHR-1905 to U.S.-based One Bio, receiving an upfront payment of approximately $25 million. Months later, GSK acquired One Bio for a total of $1.4 billion, indirectly bringing Hengrui's autoimmune pipeline into its portfolio.

Continuous Payment by International Giants for China's Innovative Drugs Endorses Local R&D Capability. Successful BD transactions not only bring direct returns to companies like Hengrui Pharma but also significantly enhance the overall valuation and attractiveness of China's innovative drug industry. This clear path from R&D to BD and then to value realization is attracting more capital into early-stage R&D, forming a positive cycle.

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Li Yun: liyun940820

Wu Ni: nora4409