SHANGHAI – Drug developers in China just received a strong signal that homegrown innovation can be very lucrative.
In a generics-dominated market where innovation is typically in-licensed from abroad, Shanghai-based Jiangsu Hengrui Medicine Co. Ltd. has set a benchmark by selling to Incyte Corp. the ex-China rights for its anti-PD-1 monoclonal antibody, SHR-1210. The deal is valued at a whopping $795 million, dependent on milestones being met, and the $25 million up-front payment puts it at the top of the heap for China-based biotech companies.
The SHR-1210 deal with Wilmington, Del.-based Incyte looks to be China's largest out-licensing deal of its kind.
"This is the first one we have out-licensed; that is why this is historic for Hengrui. And if you look at the size of the deal, it is historic for the entire Chinese pharmaceutical industry," Mike Liu, head of business development at Hengrui, told BioWorld Today.
For Hengrui, a pharma that only entered biologics four years ago, the first out-licensng foray went very smoothly; discussions were wrapped up in an efficient four months, said Liu, adding that commitment on both sides was critical to ensuring things progressed so swiftly.
Incyte, with a rich cancer-fighting pipeline, lacked a PD-1 inhibitor, which has come to be a cornerstone in cancer treatment for its ability to work in combination with other treatments to deliver impressive results. Getting its hands on that hot immune therapy was a priority, while Incyte CEO Hervé Hoppenot told BioWorld Today the two companies also had a very clear geographic fit, with Hengrui seeking to grow in the China territories and Incyte looking toward Europe and Japan. (See BioWorld Today, Sept. 3, 2015.)
Hengrui, however, does have a U.S. strategy, one that is particular to its situation as a China-focused biotech. The firm has five generics already approved by the FDA, but without a U.S. sales force, it relies on partners. Meanwhile, U.S. approval provides an extra brand-bump with those Chinese consumers worried about local standards of quality.
Hengrui is also pursuing trials for novel candidates in the U.S. Some of the money from the SHR-1210 deal will help to support more candidates to be tested stateside, said Liu.
Earlier this year, Hengrui began recruiting patients in a phase II China study of kinase inhibitor pyrotinib in patients with HER2-mutation advanced non-small-cell lung cancer. That study is expected to enroll 40 patients who failed previous second-line treatments, according to Cortellis Clinical Trials Intelligence. And in June, the company launched a phase I trial in the U.S. testing pyprotinib in patients with HER2-positive solid tumors who have failed prior HER2-targeted therapy.
Given the uncertain timelines for obtaining clinical trial approval in China, going to the U.S. is a good option – for companies that can afford it – to speed things along.
Hengrui might also employ that approach with SHR-1210 development. The firm filed the investigative new drug (IND) application for SHR-1210 with the CFDA in December 2014 and is hoping to begin recruiting patients in China by year-end. But it is looking to initiate trials abroad as well.
PD-1 IN CHINA
According to Liu, Hengrui was the first to file for a PD-1 IND in China. But it is not the only China-based company to pursue that hugely promising cancer treatment.
Shanghai Junshi Biosciences Ltd. has a PD-1, known as JS-0001, waiting for IND approval from the CFDA. That compound is listed as a national priority project, which means it should benefit from an expedited process.
In October 2014, Hong Kong-based Lee's Pharmaceutical Holdings Ltd. licensed from Sorrento Therapeutics Inc., of San Diego, the China rights for its PD-1 inhibitor, STI-A104. Lee's made an up-front payment of $3.6 million to purchase Sorrento stock in a deal that included $46 million in potential milestones. At the time, Benjamin Li, CEO of Lee's, told BioWorld Today the company envisaged a four-year development timeline in China with plans to start clinical trials in China this year. (See BioWorld Today, Oct. 8, 2014.)
Given the prevalence of cancer in China, Li said the potential for that class of drugs was enormous, forecasting a market potential of ¥10 billion to ¥20 billion (US$1.6 billion to $3.3 billion).
Meanwhile, homegrown innovator Beigene Co. Ltd., of Beijing, decided to go to Australia first to initiate clinical trials with its PD-1 drug, known as BGB-A317. The company disclosed first-in-human dosing for the proof-of-concept study three months ago. (See BioWorld Today, June 10, 2015.)
CHINA DELIVERING INNOVATION ABROAD
Few China-based biotechs have been able to see their innovations fetch a significant price abroad. Beigene is one that has done well. In 2013, it partnered with Merck Serono SA in two deals for the ex-China rights for two cancer-fighting compounds, BRAF-inhibitor BGB-283 and PARP inhibitor BGB-290. The combined deal value was $461 million – with undisclosed up-front payments. (See BioWorld Today, June 12, 2013, and Nov. 14, 2013.)
In 2011, Shanghai-based Hutchison China Meditech Ltd. (Chi-Med) was the first to ink a hefty deal with big pharma, adopting a partnership approach to help fund and expand its clinical trial reach. Hutchison received from Astrazeneca plc $20 million up front with the potential for $120 million contingent on milestones for Volitinib (HMPL-504), a selective c-Met tyrosine kinase inhibitor. (See BioWorld Today, Feb. 29, 2012.)
In 2013, Chi-Med partnered with Eli Lilly and Co. for a VEGF inhibitor, fruquintinib (HMPL-013), to treat solid tumors, in a deal valued at $86.5 million in up-front and milestone payments.
However, those deals not only differ from Hengrui's in terms of dollar value, they are also all for small-molecule drugs, a far less complex proposition compared to a PD-1monoclonal antibody.
Liu said he is hopeful his firm's latest announcement will have a positive impact on the industry overall, spurring on more Chinese pharma companies to take on the urgent challenge of developing new drugs to meet China's unmet medical needs.
"The majority of Chinese pharmaceutical companies are working on generics and are not willing to take much risk," he said. "For us, we have been an innovation leader in China – about fours years ago we entered into the biologics field – basically now [this deal] recognizes our innovation efforts.
"This is a big reward for innovation in China."