On December 1-2, 2021, the 4th International Synthetic Biology & Gene and Cell Therapy Whole Industry Chain Forum was held in Nanjing. Hosted by the world's leading life science R&D and production service provider Kingsway Biotechnology Co., Ltd., nine Chinese and foreign academicians and dozens of well-known entrepreneurs, investors and medical experts in the industry conducted in-depth discussions on hot topics such as industrial policy development trends, cutting-edge technologies, industrialization and commercialization processes, and jointly promoted the prosperous future of biotechnology and bioeconomy. During the meeting, the development prospects of CDMO institutions that are in the limelight in the capital market were once again hotly debated.
CDMO full name is pharmaceutical contract custom R & D and production enterprises, mainly for pharmaceutical companies to provide process research and development and preparation, process optimization, scale-up production, registration and verification of batch production and commercial production and other services, the past two years with the rapid growth of biological drugs research and development fever.
In 2021, the market value of CDMO company WuXi AppTec climbed to the first place in the A-share pharmaceutical sector, and many companies such as Jinsrui Biotechnology, Kanglong Chemical, and Gloria Ying achieved double growth in revenue and net profit in the first half of the year. For example, Jinsrui Vigorous Biologics, which focuses on biological drug CDMO, achieved a revenue growth of 65.8% year-on-year in the first half of 2021, thanks to the development of gene and cell therapy business.
After entering November, the stock price of the pharmaceutical industry has fluctuated sharply, and CDMO is particularly prominent, which is related to the problem of China's biological innovative drug research and development targets and high repetition rate, which may trigger industrial transformation at any time. Therefore, the industry is more concerned about whether there is a bubble behind the high valuation of the industry, how long can the prosperity of the industry last, and what kind of companies can stand out?
In this regard, Dr. Brian Min, CEO of Jinsrui Boom Bio, believes that China's CDMO industry started late compared with overseas, and compared with the global pharmaceutical development service market, China's pharmaceutical development service market is small. Compared with the development path of leading CDMO companies at home and abroad, most of the leading CDMO overseas cooperates with pharmaceutical and biotechnology companies from the manufacturing stage, while most of the leading CDMO in China cooperates with these companies from the research and development stage. Although still in its infancy, the time is ripe for CDMO in China to implement new technologies and innovations. Overall, it will continue to grow at a high rate, especially the biopharmaceutical CDMO will grow faster.
Demand is growing under the blessing of the new crown epidemic
Since the outbreak of the new crown epidemic, the anti-cyclical performance of the biomedical industry has been obvious, and every breakthrough in the research and development of new crown vaccines and new crown drugs will cause a lot of waves in the capital market, and CDMO companies have also participated in this research and development competition.
China has approved seven COVID-19 vaccines, including five inactivated vaccines, an adenovirus vector vaccine and a recombinant protein vaccine. Inactivated new coronavirus vaccines are the most widely used in China, the United Kingdom has the most adenovirus vector vaccines, and the United States, Germany and other countries have received mRNA vaccines on a large scale.
At present, no mRNA covid-19 vaccine has been approved for marketing in Chinese mainland. The first domestic mRNA vaccine officially began Phase III clinical trials in June 2021. It is jointly developed by the Institute of Military Medicine of the Academy of Military Sciences, Suzhou Aibo Biotechnology Co., Ltd., and Yunnan Watson Biology.
In the production process of this vaccine, there is a key link that needs to be outsourced to professional CDMO companies.
The biggest difference between mRNA vaccines and inactivated vaccines is that although they can produce specific neutralizing antibodies through the body's normal immune response after injection, inactivated vaccines are dead viruses or dead bacteria, while mRNA vaccines are genes that encode a certain antigen protein.
Therefore, a very critical point in making mRNA vaccines is the production of plasmids, because the plasmid is used as a template to modify mRNA in various ways, but there has been no linear plasmid supplier required for GMP-level mRNA vaccines in China before. Thanks to its strong R&D capabilities and technical precipitation, Jinsrui Has taken the lead in having a complete linearized plasmid GMP production technology and quality management platform that can provide in vitro transcription for mRNA vaccines, and it is logical to become a commercial production plasmid enterprise required for the exclusive supply of the first domestic mRNA vaccine.
In fact, before the outbreak of the new crown epidemic, the industry did not have much research on domestic therapeutic mRNA. However, Jinsry's years of gene synthesis technology have helped it quickly translate new plasmid standards for therapeutic mRNA, and has accelerated the research and development process of mRNA vaccine companies. At present, Jinsrui has reached cooperation with the top three companies in China that have received clinical approvals for the mRNA covid-19 vaccine IND.
Thanks to the epidemic, there are not a few CDMO companies, and Zhijiang Biologics, which develops large molecule double anti-new crown drugs, does not have drug production capacity and has also chosen to outsource to CDMO company Boehringer Ingelheim. The COVID-19-related business has become the most prominent segment of WuXi Biologics' financial report, and has signed 15 COVID-19 neutralizing antibody projects, in addition to providing COVID-19 vaccine stock solutions and preparations to multinational pharmaceutical companies, and negotiating contracts with a number of mRNA vaccine companies.
In late November 2021, another new strain of the new coronavirus variant, Omicron, spread internationally, whether the existing vaccines and drugs can successfully resist Themikron is still unknown, and the response plans of major companies at home and abroad have been launched, which also means that the demand for CDMO companies is still increasing.
Seize the advantages of segmentation
With the continuous increase in the vaccination rate of the new crown vaccine, people's concerns about the CDMO industry are becoming more and more obvious, after the impact of the epidemic fades, can CDMO companies that are completely dependent on drug research and development needs continue to maintain high growth?
The problem facing all biopharmaceutical companies is that the research and development targets are piled up, and the development competition is becoming more and more fierce. Innovative drug research and development is nine deaths, and it is not easy to gain a foothold.
The overheated anti-cancer drug PD-1 track is the most problematic, with 154 products under research worldwide as of early February 2021, of which 85 were developed or co-developed by Chinese companies. The high repetition rate value in the context of medical insurance control fees, the expected 100 billion market has shrunk by two-thirds.
It is worth noting that there are not a few PD-1s that have abandoned clinical phase III, and CDMO is inevitably implicated. This highlights the importance of taking the lead in drug development.
In cellular immunotherapy, the same is true. More than 200 companies around the world have publicly announced car-T therapy research, half of which are from China. According to Clinical Trials data, as of June 30, 2020, the number of CAR-T therapeutic clinical trials registered worldwide exceeded 600, and car-T clinical trials with CD19 as the target accounted for 53%.
During this period, Legendary Bio, a subsidiary incubated by Kingsley, was listed on the NASDAQ in 2020 with the highest record financing in the biotechnology sector, becoming the first stock listed on China's CAR-T. The first to take the lead is to rely on the fastest-growing product in its R&D pipeline, cilta-cel, a CAR-T product for the treatment of multiple myeloma with BCMA targets. Currently, only one product of its kind has been approved in the world, and cilta-cel has received priority review after submitting a listing application to the US FDA in 2021.
In Brian Min's view, if the newly added CDMO has a unique technical advantage in the segment, it can establish a differentiated advantage, so that there are greater development opportunities and better growth.
It is precisely with the unique technical advantages of the GCT segment that Jinsrui Vigorous Bio confirms the possibility of rapid development of CDMO in the segment. In the cell gene therapy service line, With its special process platform for long Olig dT plasmids, Jinsrui Has taken the lead in having a complete linearized plasmid GMP production technology platform in China.
In addition, in order to further accelerate and help pharmaceutical and biotechnology companies quickly promote the launch of clinical and new drugs, CDMO needs to ensure the first delivery to customers. Brian Min emphasized that Jinsley's one-stop biopharmaceutical R&D and production platform provides end-to-end services from target development to commercial production, and the quality management system meets the requirements of NMPA and the US FDA, which can do better and better in helping customers save time.
Currently, by combining a single B-cell screening platform with a transgenic rodent platform, Kingsley is able to generate fully human therapeutic antibodies within a month, significantly accelerating research and development.
Meet the challenges of the international market
The tide of Chinese biological drugs is coming. According to incomplete statistics, as of the end of September, Chinese pharmaceutical companies had a total of 22 License-out transactions, with a transaction volume of more than 3.5 billion US dollars. Project licenses introduced License-in transactions, with a total of 82 cases.
More and more innovative pharmaceutical companies are beginning to choose to plan for international development at the beginning of drug research and development projects. CDMO companies that serve this purpose are also moving towards a larger international market.
In mature markets such as the United States and Europe, pharmaceutical companies have outsourced production to 20% of the entire production process. China's CDMO, while just getting started, would lead to a competitive advantage in Dr. Brian Min's view, with all plants using new equipment rather than repurposing old ones.
In fact, the development of the new crown epidemic has pulled CDMO companies into the global battlefield - the battle for production capacity. To this end, the second plasmid GMP production workshop of Kingsway, as the largest plasmid commercial GMP production workshop in China, was officially put into operation recently, which can better serve mRNA vaccine enterprises with mass production opportunities.
In fact, when Kingsley first entered China in 2004, there were very few new drugs that were completely independently innovated in China. Nowadays, like mushrooms, a number of biomedical companies have grown up, especially the antibody protein drugs of biological drugs, which have become an important track, and in the future, cell and gene therapy will also rise rapidly.
In particular, in 2016, the drug marketing authorization (MAH) system was promulgated, and drug marketing licensors can go asset-light and focus on the selection of product lines and the introduction of funds. The price pressure of the drug procurement policy and the medical insurance negotiation that began in 2018 has led to the demand for cost control and capacity flexibility, which has promoted the demand for CDMO business of biopharmaceutical companies that want to save costs and continue to accelerate.
Jinsrui also followed the trend and gradually extended from the CRO business to complete the layout of the whole industry chain of cdMO business. As of October 2021, Kingsway has helped customers around the world complete more than 950 projects, including nearly 200 multi-transmembrane target antibody discovery projects, in the antibody drug discovery service line. In the cell and therapeutic service line, including more than 50 international CMC projects, 10 U.S.-Japan-Korea IND successful projects, involving mRNA, CAR-T, TCR-T and CRISPR and other technical products.
At present, from a global perspective, the size of the biomedical market is still growing at a high speed, with the United States biopharmaceuticals dominating the market, followed by China. In 2016, the size of China's biomedical market reached 183.6 billion yuan, and by 2019, it has risen to 317.2 billion yuan, with an average annual compound growth rate of 20%. It is estimated that in 2025, the overall scale of China's biopharmaceutical market will reach 833.2 billion yuan.
In the face of international competition, in addition to further cooperation with global biotechnology companies, Kingsway will further expand the talent team at home and abroad, and expand overseas logistics and manufacturing capabilities to accelerate the pace of globalization. And China still needs a group of such enterprises to go out in order to truly occupy a place in the international market.