Hengrui Pharma Licenses Lp(a) Oral Inhibitor HRS-5346 to Merck in $19.7B Deal

On March 25, Hengrui Pharma and MSD jointly announced that they had reached an exclusive licensing agreement. Hengrui's lipoprotein(a) [Lp(a)] oral small molecule project (including the lead compound named HRS-5346) was licensed to MSD for a fee. MSD will obtain the exclusive rights to develop, manufacture, and commercialize HRS-5346 globally outside of Greater China.

According to the terms of the agreement, Hengrui Pharma will receive an upfront payment of 200 million US dollars and is eligible for milestone payments of up to 1.77 billion US dollars related to specific development, regulatory, and commercialization milestones (for a total of 1.97 billion US dollars, approximately 14.317 billion RMB). Additionally, if the relevant product is approved for marketing, Hengrui Pharma will receive sales royalties based on the net sales of HRS-5346.

The proposed transaction is subject to approval under the U.S. Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions before completion. The transaction is expected to be completed in the second quarter of 2025.

In China's pharmaceutical industry, there is a saying: "For innovation in China's pharmaceuticals, look to Jiangsu; for innovation in Jiangsu's pharmaceuticals, look to Lianyungang." This treasure trove of land in Lianyungang has nurtured top pharmaceutical companies such as Hengrui Pharma, Hansoh Pharma, Kangyuan Pharma, and Chia Tai Tianqing, continuously delivering several blockbuster new drugs to China's pharmaceutical industry.

And it's not the first time that MSD has purchased small molecule drugs from Lianyungang.

In December 2024, MSD reached a collaboration with Hansoh Pharma, a Lianyungang-based pharmaceutical company, and signed a global exclusive licensing agreement for HS-10535 (an investigational oral small-molecule GLP-1 receptor agonist). Under the agreement, Hansoh Pharma grants MSD the global exclusive rights to develop, manufacture, and commercialize HS-10535. Hansoh Pharma will receive an upfront payment of $112 million and is eligible to receive milestone payments of up to $1.9 billion based on the development, regulatory approval, and commercialization progress of the drug candidate. Additionally, Hansoh Pharma will also receive royalties based on product sales (totaling $2.012 billion, approximately RMB 14.66 billion). Under specific conditions, Hansoh Pharma may co-promote or exclusively commercialize HS-10535 in China.

Hengrui Pharma and Hansoh Pharma, two leading pharmaceutical companies in China, share a close relationship behind the scenes. Zhong Hujuan, the founder of Hansoh Pharma Group, is the spouse of Sun Piaoyang, Chairman of Hengrui Pharma. However, the two companies have no ambiguous ties, and relevant documents confirm their relationship is clear, with both operating legally. The reason MSD chose to purchase small-molecule drugs from Lianyungang again lies in the innovative strength behind "China's top pharmaceutical company," Hengrui Pharma.

With the return of founder Sun Piaoyang, Hengrui Pharma has been increasing its investment in innovative drug research and development in recent years. Its performance began to rebound sharply from 2023. According to Hengrui Pharma's semi-annual report for 2024, during the reporting period, its innovative drug revenue (including tax, excluding external licensing revenue) reached 6.612 billion yuan, with external licensing revenue amounting to 160 million euros. It is estimated that the combined total of these two innovative revenue streams accounted for more than half of the total revenue, becoming the main driver of performance growth.

In addition, Hengrui Pharma's innovative drug internationalization has started to show results in recent years, becoming the second growth engine for performance. According to the 2024 half-year report, during the reporting period, the company recognized the upfront payment of 160 million euros received from Merck & Co., Inc. as revenue under an out-licensing agreement, further driving the growth of operating performance indicators. In terms of innovative R&D, Hengrui Pharma invested a total of 3.86 billion yuan in R&D in the first half of 2024, representing a year-on-year increase of 26.23%. With this support, Hengrui’s R&D achievements have continued to materialize. As of the release date of the 2024 half-year report, Hengrui Pharma has increased its number of marketed Class 1 innovative drugs to 16.

Hengrui Pharma, which started with generic drugs, has successfully transformed into the "Innovative Drug Leader" under the nurturing environment of Lianyungang, reclaiming its peak position.

HRS-5346, the subject of this transaction, is an orally available small molecule Lp(a) inhibitor independently developed by Hengrui Pharma. Preclinical data shows that HRS-5346 can effectively improve dyslipidemia after administration, with good safety.

Lp(a) is a lipoprotein produced in the liver and responsible for transporting cholesterol, fats, and proteins in the blood. Lp(a) can accumulate on the walls of blood vessels, forming atherosclerotic plaques similar to low-density lipoprotein cholesterol (LDL), which may restrict blood flow to vital organs, leading to heart disease, stroke, and other cardiovascular conditions. Elevated Lp(a) levels represent the most common monogenic lipid disorder, with an estimated 1.4 billion people globally having elevated Lp(a). High Lp(a) is an independent risk factor for atherosclerotic cardiovascular disease and also a risk factor for aortic valve stenosis.

Therefore, lipid-lowering therapies targeting Lp(a) have become one of the significant breakthroughs in the prevention and treatment of cardiovascular diseases, with major MNCs and domestic pharmaceutical companies fiercely competing in this field.Last October, AstraZeneca reached a relevant collaboration with CSPC Pharmaceutical Group to advance the development of the early-stage novel small molecule lipoprotein(a) antagonist YS2302018. According to the agreement, CSPC Pharmaceutical Group received an upfront payment of $100 million from AstraZeneca, along with potential development milestone payments of up to $370 million and potential sales milestone payments of up to $1.55 billion. Additionally, tiered sales royalties will be calculated based on the product's annual net sales.

According to the VBInsight database, there are currently 12 Lp(a)-targeting drugs globally that have entered clinical research stages, including 5 products in Phase III, 4 products in Phase II, and 4 products in Phase I. Upon inquiry, no similar products have been approved for marketing either domestically or internationally. Companies involved in this field include MSD, which has recently entered the market, as well as multinational pharmaceutical companies such as AstraZeneca, Novartis, Eli Lilly, and Amgen, along with domestic enterprises like Hengrui Pharma, Bowang Pharmaceutical, and CSPC Group.

Currently, HRS-5346 is undergoing Phase II clinical trials in China. In response to questions about the development program of this experimental drug, according to information from MedTrend, MSD stated: "It is still too early to disclose the clinical development plan, but we plan to evaluate the efficacy and safety of HRS-5346 in a global patient population."

We look forward to MSD's excellent clinical R&D capabilities and global layout accelerating the development process of Hengrui Pharma's HRS-5346, bringing new treatment options for reducing the risk of atherosclerosis to more patients faster.

References:

1. "MSD, Novartis, Lilly and Others Rush Into the New Frontier of Lipid-Lowering Therapies Amidst Intense Competition!"

2. "Hengrui Pharma + MSD Forge Nearly $2 Billion Heavyweight Collaboration, Opening New Track in Cardiovascular Treatment"