Hansoh Pharma: A Globally Focused Chinese Big Pharma

On December 18, the pharmaceutical industry witnessed a major development as Hansoh Pharma entered into a collaboration agreement exceeding $2 billion with MSD (Merck & Co.), granting MSD exclusive global rights to develop, manufacture, and commercialize its investigational oral small-molecule GLP-1 receptor agonist, HS-10535. This significant transaction in the highly anticipated GLP-1 space has drawn attention from the industry, patients, and investors alike. The partnership highlights the tangible impact of drug research and clinical applications on public health while setting a successful example of efficient technology and resource sharing within the industry, marking a bold stroke in strategic pharmaceutical collaborations for 2024.

As a leading innovation-driven pharmaceutical enterprise in China, Hansoh Pharma's self-renewal and resilient growth in recent years, along with its innovation and internationalization strategies, can offer significant insights to the industry.

Overseas Transactions Quickly Realize Innovative Value

This transaction is the third significant outbound licensing deal for Hansoh Pharma following two ADC project collaborations with multinational corporation (MNC) GSK in 2023. Under this agreement, Hansoh Pharma will receive an upfront payment of $112 million from Merck and is eligible to obtain milestone payments of up to $1.9 billion based on the development, regulatory approval, and commercialization progress of the candidate drug. Additionally, Hansong Pharma will also receive royalties based on product sales. Under specific conditions, Hansong Pharma may co-promote or exclusively commercialize HS-10535 in China, a detail that has become another highlight of this collaboration, showcasing Hansong Pharma's confidence in this drug and aiming to provide Chinese consumers with more treatment options.

Merck & Co. has a recognized leadership position in the cardiometabolic disease field, while Hansoh Pharma is emerging as a new leader in the metabolic disease space. Hansoh Pharma stated that Merck's expertise plays a pivotal role in accelerating the development of HS-10535, enabling better service to patients worldwide.

Hansoh Pharma previously made headlines twice in October and December 2023, when it granted GlaxoSmithKline (GSK) exclusive overseas licenses for the development and commercialization of HS-20089 (B7-H4 ADC) and HS-20093 (B7-H3 ADC), with total amounts reaching $1.57 billion and $1.7 billion, respectively.

These are two ADC drugs from Hansoh Pharma's differentiated portfolio. Currently, there are no ADC drugs targeting B7-H3 or B7-H4 approved globally. Hansoh Pharma’s HS-20093 (B7-H3 ADC) is the leading China-produced candidate and is currently in Phase III clinical trials for limited-stage/recurrent small cell lung cancer indications. HS-20089 (B7-H4 ADC) is at the forefront of global development and has entered Phase II clinical trials for ovarian cancer and endometrial cancer indications.

In 2024, the Phase I clinical trial results of HS-20093 were selected for the Latest Breakthrough Abstract (LBA) at the 2024 World Conference on Lung Cancer (WCLC). It subsequently received FDA Breakthrough Therapy designation, was included in the NMPA Breakthrough Treatment Drug list, and granted EMA Priority Medicine (PRIME) designation, highlighting its significant potential value while accelerating the internationalization process of this innovative drug.

Hansoh Pharma's important BD cooperation strategy is to reserve self-developed high-potential products that are either First-in-Class (FIC) or Best-in-Class (BIC), and steadily expand into the international market through collaboration with multinational corporations (MNCs). It is reported that the company currently has a rich pipeline of early- to mid-stage products and holds a very positive and open attitude towards various cooperation models, including out-licensing.

To date, the total amount of three deals authorized by Hansoh Pharma to multinational corporations (MNCs) has exceeded 5 billion US dollars, which has already started to realize the market value for the company's early-stage products. Its internationalization experience is also more worthy of reference by the industry: R&D in China and international R&D support each other, relying on the full-chain R&D capabilities such as international multi-center research (MRCT) and data mutual recognition under the ICH alliance, achieving or promoting global synchronized R&D and accelerating the realization of innovative value of the products.

Global Consideration of Pipeline Value

The cooperation with MNC fully demonstrates Hansoh Pharma's innovation capability, BD capability, and the advantages of its comprehensive technology platform, also confirming the pipeline value with global competitiveness. In fact, looking at its R&D platform and pipeline layout, it is not difficult to find that the pipeline value of Hansoh Pharma has transitioned to a global consideration system.

In recent years, the number of cutting-edge pipeline products disclosed by Hansoh Pharma at authoritative academic conferences or in professional journals has been increasing. Examples include new indications for Ameile, B7-H3 ADC, GLP-1/GIP receptor dual agonist, TYK2 inhibitor, P2X3 antagonist, OX2R antagonist, c-MET TKI, RET inhibitor, KRAS G12C inhibitor, and more. Notably, while Hansoh Pharma continues to deepen its expertise in areas such as oncology, metabolism, and CNS, it is also expanding development in high-potential fields like autoimmune diseases and nephrology, which could further enhance its valuation potential.

Currently, including introduced products, Hansoh Pharma has more than 30 innovative drugs in China at the clinical application stage or above (excluding new drug indications for already marketed drugs). These include drug types such as ADCs, synthetic peptides, siRNA, bispecific antibodies, and small molecules, covering areas such as anti-cancer, anti-infective, central nervous system diseases, metabolic diseases, and autoimmune diseases.

The key products that have currently entered Phase III clinical trials include HS-20094 Injection (GIP/GLP-1 dual receptor agonist), HS-20093 for Injection (B7-H3 ADC), HS-10374 Tablets (TYK2 allosteric inhibitor), HS-10241 Tablets (c-Met inhibitor), and other Class 1 innovative drugs, marking a new harvest period for Hansoh Pharma's pipeline.

Based on the梯队化 layout of the pipeline, starting from 2020, Hansoh Pharma has maintained a pace of 8-10 IND applications and 1-3 new product approvals (including new indications) per year. The company expects to launch more than 15 innovative drugs (including new indications) by 2025.

External collaborations continue to broaden the product pipeline.

Through Hansoh Pharma's globalized, differentiated, and high-quality innovative product pipeline, one can explore the methodology behind its strategic layout — a differentiated R&D strategy centered on self-developed products and complemented by BD products (License-in). As is well known, on the path to scaling up, License-in is the fastest way for pharmaceutical companies to rapidly expand their pipelines and serves as the "second capability" to strengthen innovation capacity.

In 2024, Hansoh Pharma Secures Three External Collaborations, Introduces Early, Mid, and Late-Stage Products, Further Expanding Oncology and Autoimmunity Portfolio. In fact, since 2019, Hansoh Pharma has actively expanded its pipeline through BD, reaching approximately 20 BD collaborations to date. These include mature innovative products that are either marketed or in late-stage clinical trials, early-stage highly differentiated preclinical projects, and empowering R&D platforms with high barriers such as siRNA technology.

Major License-in Projects of Hansoh Pharma from 2019 to Present

Source: Company announcement, organized by Menet

In BD transactions, Hansoh Pharma relies on a clear strategic layout and combines the clinical needs of patients. On one hand, it seeks high-value and high-potential products in niche fields, and on the other hand, it introduces products that can form good synergies with the company's existing products. This greatly enhances R&D efficiency while further exploring the clinical value of self-developed products.

Conclusion

Relying on long-term accumulated insights into industry trends, a solid and far-reaching innovative pipeline, mature commercialization advantages, and abundant resource advantages, Hansoh Pharma has built a strong foundation and completed a successful transformation of its revenue structure. With the market performance of its seven marketed innovative drugs and overseas licensing income, the revenue share of Hansohn Pharma's innovative products increased from less than 20% when it went public in Hong Kong in 2019 to over 70% in the first half of 2024. It is reported that the company plans to increase the revenue share of innovative products to over 80% by 2025.

Continuous innovation is the key to navigating industry cycles. With relentless self-renewal and resilient growth, Hansoh Pharma has preliminarily completed its transformation and upgrading in its 30th year, aiming to enter a new global channel.

Source: Mening Network Database, Company Announcements, etc.

Note: The drug competition pattern of the three major terminals and six markets in China by Menet, the statistical scope includes: urban public hospitals and county public hospitals, urban community centers and township health centers, urban physical pharmacies and online pharmacies. It excludes private hospitals, private clinics, village health rooms, and pharmacies in counties, villages, and towns. The above sales are calculated based on the average retail price of products at the terminal. Data statistics are as of December 18th. If there are any omissions, corrections are welcome!