#5月财经新势力 #
Platform technology, global multi-center clinical trials, differentiated R&D, etc., are important starting points for innovative pharmaceutical companies to compete in the global market
Text | Sun Aimin
Photo: Pixabay
Although more than 100 days have passed, the voices from the backbone of China's pharmaceutical innovation at the J.P. Morgan Annual Meeting in early 2023 still sound deafening.
At that global biomedical event, BeiGene expects 10 new molecules to enter the clinic each year starting in 2024; Innovent said that there are 15 to 20 listed products in the next five years, and the revenue of domestic products is expected to reach 20 billion yuan; Junshi Biologics expects that in the next three years, 5 new drugs are expected to be approved for marketing; Zai Lab expects to be profitable by the end of 2025...
These leading biomedical innovative companies, which have seized the innovation window of the past ten years, are now experiencing valuation panic and "de-bubble" in the capital market for more than a year.
After the big waves, enterprises that really have innovative skills and deep R&D pipelines, the next step to think about is: what kind of company will grow into in the future? How to balance the risks and benefits of innovation investment?
As the market becomes more rational, thousands of biotech companies that are still developing, and investors in the primary and secondary markets need to sort out: is innovative drug research and development a good business worth "burning money"?
Investment is picking up, and innovation is still the main theme of the industry
In the first quarter of this year, Anhui, Zhejiang, Guangzhou, Wuhan and other provinces and cities successively launched more than 100 billion emerging industry guidance fund plans. It is worth noting that biomedicine is an area of common focus for these large funds.
As early as November 2022, the director of a state-owned investment fund company saw signs of recovery, "Although the valuation has not yet risen, the performance of some CRO tracks in the secondary market has obviously risen." At that time, domestic biomedical investment had been "cold" for 17 months, approaching the 17-month decline set by the US Biotechnology Index (XBI) in early 2000.
In the first quarter of this year, the biotechnology index on the secondary market has significantly corrected. The director of the above-mentioned investment fund believes that the de-bubble of the past year is a normal stage of industry development, and "the market is recovering and is returning to its own value." ”
The development logic of the biomedical industry has not changed, and it is still the most common green and anti-cyclical field under the hard demand for life and health. In the past ten years, China's pharmaceutical industry has gone through industry-wide generic drugs, followed innovation, and a number of enterprises competing for Best-in-class, and even First-in-class, and innovative drugs have been deeply rooted in the hearts of patients, clinicians, regulatory agencies, and medical insurance payers.
Song Ruilin, executive president of the China Pharmaceutical Innovation Promotion Association, believes that China's pharmaceutical innovation has entered the 2.0 stage, and emphasizes clinical value-oriented, that is, focusing on solving the needs of clinical diseases.
"Entry relies on innovation, looking at clinical value, it is best to go to sea." This is the standard by which the directors of the above-mentioned investment funds look at biomedical projects. The strong innovation is reflected in the team's research and development capabilities, but only new is not enough, the latest targets and the most cutting-edge mechanisms may not be able to become drugs. "Avoid 'innovation equals effectiveness', only the effectiveness and safety of the variety can be more favored." The above-mentioned investment fund directors analyzed.
Capital risk aversion sentiment in the primary market is high, and investors in the secondary market are more sensitive to intuitive revenue and net profit data.
"You can't expect investors in the secondary market to have a more rational and long-term perspective, but you always need to let investors see the income expectations that they can see." The founder of a capital company focusing on innovative drug investment in China said frankly, "Funds are voted with their feet." ”
Small companies rely on innovation, and large companies rely on operation and management. This is the operational experience of global biopharmaceutical companies. Focusing on pharmaceutical companies that have invested heavily in innovation, whether the layout of the R&D pipeline is reasonable determines how far the company can go and how big it can develop.
"BeiGene, Junshi and other companies have relatively high R&D investment, and although they are all losing money, they can still continue and are within the scope of controllable risks." The founders of the above-mentioned capital believe that the cash flow of the enterprise and the recognition of investors often depend on the richness and allocation of the pipeline.
Compared with traditional pharmaceutical companies such as Hengrui, up-and-coming BeiGene and Junshi need to make greater efforts in the management of R&D pipelines. BeiGene, which was born with innovative genes and pointed to the "global new", has already run out in terms of revenue and product innovation, and R&D investment is also very high, and whether the future model can continue to work depends on whether the product line can continue to have heavy varieties in the next three years.
China's local innovation force is constantly advancing, and its position in the global pharmaceutical market is becoming more and more stable. BeiGene expects 10 new molecules to enter the clinic each year starting in 2024; Junshi Biologics expects that in the next three years, 5 new drugs are expected to be approved for marketing.
How to balance the ideal of innovation with the "immediate situation" to survive? The director of the above-mentioned investment fund suggested that the layout of the R&D pipeline should take into account short-term small indications and long-term large indications.
At the beginning of the establishment of many biopharmaceutical companies, due to valuation and financing considerations, they immediately made large indications with long-term major potential. The research and development of drugs with large indications is often high risk, long time, and often crowded, and the ability of enterprise clinical resources is more demanding, once the whole industry investment is cold, financing difficulties, or clinical trials are not smooth, enterprises are standing under the wall.
According to Zhirong Shen, Vice President and Global Head of Translational Research and Translational Medicine at BeiGene, half of BeiGene's R&D pipeline has the potential of Frist-in-class and Best-in-class, taking into account the differentiated layout of large and small indications, so that the projects under research can continue to be clinically and submitted for approval in the future.
R&D costs are more expensive
To date, BeiGene has conducted more than 110 clinical trials worldwide; Junshi Biologics has more than 50 research projects; Innovent has 30 innovative drug candidates in its pipeline.
The deep R&D pipeline is convenient for enterprises to optimize the layout, while startups with insufficient R&D pipeline depth have to use luck to fight risks.
Calithera Biosciences, founded in 2010, decided on January 9 this year to dissolve the company and liquidate its assets. Calithera experienced a failed clinical trial for renal cell carcinoma in early 2021 and has since purchased two new small molecule drugs from Takeda, but the company announced in November 2022 that the study data had been delayed and that initial data would not be available until mid-2023.
"The company's R&D pipeline is rich to a certain extent, and it is necessary to ensure that it can always have sufficient products out and maintain a good rhythm in order to maintain the confidence of investors in it." Otherwise, it will have an impact on the company's valuation and development. "Analysis of the directors of the above investment funds.
The disbanded Calithera, which once laid off one-third of its employees, did not save itself in the end, in the final analysis, because of the long-term, high-investment, and high-risk research and development of innovative drugs.
Shen Zhirong once made a statistic that for First-in-class drugs, it takes almost 20 to 30 years from the discovery of the target to the clinical trial and then to the final approval. Even from the time the candidate compound is received to the final approval for marketing, it takes an average of about 10 years. BeiGene's BTK inhibitor zebratinib, anti-PD-1 antibody tislelizumab, and PARP inhibitor pamiparib were all approved for their first indication between 2011 and 2021.
In fact, from the perspective of the cost of global innovative drug research and development, a new drug from 0 to 1, the amount of checks to be written by companies continues to rise.
Deloitte's 2021 Pharmaceutical Innovation Return Evaluation, after analyzing 15 of the world's leading biopharmaceutical companies, found that the average R&D cost of an innovative drug was US$2.006 billion, up from US$1.296 billion in 2013, and the average R&D cycle was 6.9 years. The improvement of the R&D cycle year by year is mainly affected by the complexity of clinical trials, the multi-target and complexity of drug development, and the increasing difficulty of tracking trial patients.
According to a 2020 study published in Nature by Lily Research Laboratories, the average time from discovery to market launch of new drugs is 11.4-13.5 years, requiring about US$1.8 billion in capitalized capital costs.
Clinical research is the big cost of money. "In the entire clinical stage, the cost of clinical research accounts for 90%, and if you want to do a global multi-center phase III clinical trial, it will cost tens of thousands of dollars per patient enrolled." Shen Zhirong said that this is not counting the intermediate operating costs and drug costs.
In China, according to the 2022 annual report data of each company, BeiGene, Hengrui, Zhongsheng Pharmaceutical, Fosun Pharma, CSPC and Innovent are the six pharmaceutical companies that have invested the most in R&D, of which BeiGene has US$1.6 billion, exceeding the sum of Hengrui, ranked second, and Zhongsheng Pharmaceutical, ranked third. BeiGene disclosed in its 2022 annual report that R&D expenses increased by $100 million from the prior year, driven by increased headcount and increased investment in drug discovery and clinical development, including continued investment in building in-house research and clinical development capabilities; The increase in R&D expenses was partially offset by a decrease in clinical trial-related expenses paid to clinical research institutions (CROs).
A study of 384 listed pharmaceutical companies in Shanghai and Shenzhen showed that from 2018 to 2021, 123 companies invested more than 100 million yuan in R&D per year. The 384 listed companies have invested a total of 88.6 billion yuan in R&D, which is less than the annual investment of multinational pharmaceutical company Roche (16 billion US dollars).
Although there is still a gap with the tens of billions of dollars of annual R&D investment of multinational pharmaceutical companies, the investment of Chinese companies has increased year by year. In 2018, there were only five companies in China, BeiGene, Hengrui Pharmaceutical, Fosun Pharma, Shanghai Pharma and Kelun Pharmaceutical, which invested more than 1 billion yuan in R&D. By 2022, that number grew to 18.
Investors hand over money to enterprises, hoping to give full play to the power of innovation and research and development, and rely on their product development capabilities, clinical trial organization capabilities and follow-up market expansion capabilities to bring the results from the laboratory to the clinic, and ultimately realize clinical and economic value.
According to BeiGene's 2022 annual report, zebratinib has global sales of more than $500 million, sales in the United States of nearly $390 million, sales in China of about $150 million, and PD-1 antibody tislelizumab sales in China exceed $420 million. As of late May, tislelizumab has been approved by China's National Medical Products Administration for 11 indications.
Junshi Biologics' core product, PD-1 teripulimab, achieved sales revenue of 736 million yuan in the domestic market in 2022 and was approved for 6 indications in China.
On December 13, 2022, BeiGene announced the final results of the head-to-head trial of zebratinib: in a global Phase III trial for the treatment of patients with relapsed/refractory (R/R) chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL), it demonstrated superior survival benefits and safety features related to cardiac function over ibrutinib, the world's first commercially available BTK inhibitor.
Thanks to the global multi-center clinical trial at the beginning of the clinical study, up to now, zebratinib has been approved for multiple indications in more than 65 markets around the world, and executives can receive happy emails in the mailbox of executives that the product has been approved for marketing in a certain country every once in a while. On January 20 this year, zebratinib won its fourth indication in the US market, and the FDA approved it for the treatment of adult patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL).
In addition, on April 6, AbbVie and Johnson & Johnson jointly announced plans to voluntarily withdraw approval for two indications to accelerate ibrutinib in the United States. In the following trading days, BeiGene's stock price rose in response.
"More than ten years ago, I thought that China could make its own innovative drugs and 'go overseas', but at that time, I did not expect to be able to harvest so quickly in the clinical and capital markets." A drug regulator deeply involved in China's drug administration reform lamented that facts have proved that even if the initial investment is huge and nine deaths, "as long as it is a real innovation, it can meet the clinical needs in terms of effectiveness and safety, and the benefits of innovation investment are expected to be considerable, and the risks are worth taking."
"Mainland pharmaceutical companies, in terms of operating income and R&D investment, still have a big gap compared with global leading enterprises." Liu Yaqin, director of the Drug Price Monitoring Division of the Price and Cost Investigation Center of the National Development and Reform Commission, believes that "it is urgent to further mobilize the enthusiasm of enterprises for R&D and innovation and cultivate large enterprises with international competitiveness." ”
Break the gap between Biotech and Biopharma
For enterprises, when innovation enters the deep water area, how to improve R&D efficiency, spend money on the cutting edge, and then improve the return on R&D investment? This tests the strategic layout, management and operational capabilities of corporate decision-makers, and also determines the future position and opportunities of an innovative pharmaceutical company in the global market.
A decade ago, almost all biotech companies wanted to grow into big pharma.
In that wave of overseas talents returning to China, investment and entrepreneurship, BeiGene, Junshi and Innovent seized the window period, from dozens of biopharmaceutical companies, all the way to financing, doing clinical trials, through product listing to obtain revenue, so that their innovation ecology can continue to turn.
Nowadays, with the division of labor in the pharmaceutical market ecosystem becoming more and more detailed, and all kinds of CXO companies provide more professional and detailed services, biotechnology companies have fewer and fewer opportunities to become a large pharmaceutical company.
In the European and American markets, small and beautiful biotechnology companies are a link in the innovation industry chain: they do early research and development, and after seeing the efficacy of phase I/II clinical trials, they continue phase III clinical trials after being acquired by large pharmaceutical companies with stronger clinical operation capabilities.
For biotech companies that have grown in size, the question in front of them is: what kind of company will they develop next? How to design some special management models so that the team can maintain the flexibility and innovation of their original biotech, so that everyone dares to take the risk of innovation, while maintaining the scale effect?
The development model of traditional pharmaceutical companies such as Hengrui, Zhongsheng Pharmaceutical, and Petrochemical is not suitable for them, these enterprises are mostly developed from generic drugs and API manufacturers, and then transformed into innovative drug research and development, relying on some independent innovation and license-in introduction projects to enrich the pipeline.
Multinational pharmaceutical companies with a century-old history are completely different from their growth environment. Pfizer, who was born in chemical industry, Johnson & Johnson, who was born as a raw material for clinical consumables, and Takeda Pharmaceutical, which started as a Chinese herbal medicine, has achieved today's pharmaceutical empire through a series of mergers and acquisitions for more than 100 years.
For M&A projects, multinational pharmaceutical companies usually weigh R&D time and efficiency, prefer the indications with good prospects and high development success rate for research, and then further expand the indications after obtaining marketing authorization. In the clinical trial phase, usually starting with a phase II clinical trial, it is conducted simultaneously in multiple countries.
BeiGene continues the flexibility and efficiency of its early biopharmaceutical company days with the scale of Big Pharma. In terms of R&D pipeline, BeiGene's preclinical, clinical and commercial pipeline covers more than 80% of the world's most common cancer types. According to the Insight database, BeiGene's early pipeline is structured around ADCs, targeted protein degradation technologies, bifunctional antibodies, cell therapies, and mRNA therapies, targeting CEA, BTK, and more.
In terms of the number of multicenter clinical trials worldwide, BeiGene is the number one domestic company. According to BeiGene's public information, the company has carried out 110 clinical trials around the world, of which more than 60% are international multi-center trials, which is fundamentally different from the development path of most other domestic pharmaceutical companies that only carry out clinical trials in China.
These global multicenter clinical trials, led by a large in-house clinical development team and independent of external CROs, are intended to ensure the quality, efficiency and operational costs of clinical trials. BeiGene said that as of early 2023, it has built a clinical development team of more than 2,300 people covering 45 countries and regions, including more than 1,100 clinical operations teams. BeiGene also continues to iterate on clinical research concepts, introducing innovative designs represented by "basket" and "umbrella" research, so that clinical trials can further explore cost reduction and efficiency improvement under the premise of high quality.
The self-built clinical team is really unique. "Cutting down all clinical trial service providers and building its own clinical trial teams in major countries, except BeiGene, no company dares to do this." The founder of the above-mentioned capital said bluntly, "Compared with the model of traditional pharmaceutical companies such as CSPC, BeiGene is more active in innovation. ”
No matter what kind of path it develops, improving R&D efficiency and ensuring the continuous launch of marketed products is king. In addition to building its own clinical team and expanding its global multi-center clinical presence, BeiGene places particular emphasis on translational research, which is currently undertaken by a research team of more than 200 people engaged in new drug discovery, translational research, clinical translation, and companion diagnostic development.
Translational medicine research between preclinical research and clinical trials, focusing on the discovery and research of biomarkers, and exploring the distribution of targets in the population, the adaptation population and disease of drug candidates, dosages, and combination drugs in advance. Data show that biomarker screening in translational medicine can increase the success rate of phase II clinical trials from 28.3% to 46.3%.
According to Shen Zhirong, during the development of zebratinib, the translational medicine team explored the dose and administration mode before clinical practice, and found that the twice-daily dosing regimen of 160 mg had the best effect on the inhibition of BTK in tumors. Subsequent clinical trials specially designed studies for verification and were finally confirmed, which greatly shortened the overall trial time and improved the success rate of the study.
In addition, digital innovation is reshaping BeiGene's new drug discovery ecosystem. The company is creating a digital technology platform that combines software and hardware to help clinical research of new drugs and more accurately evaluate the efficacy and safety of drugs; At the same time, it realizes seamless docking between data and decision-makers, assists decision-makers in quickly screening and processing information, and improves decision-making quality. In addition, automated systems and integrated digital R&D platforms will significantly improve operational efficiency and lay a critical foundation for machine learning and artificial intelligence through data accumulation and user feedback, facilitating greater modernization of drug discovery.
In the "head-to-head" clinical trial of zebratinib, the data science team applied statistical method innovation to assist clinical research to better grasp the P value and efficacy estimation, and assisted the clinical trial team to reasonably set the trial endpoint and trial hypothesis before the trial start.
All the investment of innovative pharmaceutical companies is only to improve the efficiency of R&D, so that the research and development of innovative drugs of "nine dead lives" can be clinically launched and approved for use one day earlier. The three-year pandemic has shown the public the clinical value of innovation; Antiviral new crown drugs and a variety of vaccines based on new technologies have made pharmaceutical companies realize the need for investment in platform technology, global multi-center clinical trials, and digital innovation.
The 15 pharmaceutical companies observed in Deloitte's research report invested US$126.9 billion in R&D in 2021, an average of US$8.46 billion each, most of which were used for the development of platform-based technologies and global multi-center clinical trial layout.
The investment of funds and manpower in the research and development of innovative drugs is far from being described by the word "burning money". In this high-tech, high-risk, high-input, long-cycle industry, enterprises must demand correspondingly high returns. "Fully recognizing R&D expenses and giving reasonable profit returns through price policies is a key part of better encouraging R&D innovation and promoting the high-quality development of the pharmaceutical industry." Liu Yaqin analysis.
Liu Yaqin suggested that the method of approving drug R&D expenses should be further improved, especially the R&D expenses incurred before the product was marketed and the "sunk cost" of the failed R&D product should be fully reflected in an appropriate way to ensure that the R&D investment of enterprises is recoverable and innovation is sustainable.
"The road is long and the road is long, and the road is coming." As Song Ruilin said during the Expo last year, China's pharmaceutical innovation, which has entered the 2.0 stage, "from staring at medicine to staring at diseases, truly achieving first-in-class, there is still a long way to go."