Under the comprehensive influence of the general environment such as centralized procurement, homogenization competition and capital winter in recent years, the biomedical sector has gradually become differentiated. Coupled with the recent frequent introduction of domestic policies and measures, including the tightening of clinical and marketing approvals for biosimilars, how to develop steadily in the more challenging innovative drug market has become a common test that biopharmaceutical companies must face, and it also puts forward higher requirements for their innovation capabilities.
In this context, China Antibody-B (03681), a Chinese innovative pharmaceutical company focusing on the research and development of self-immune diseases, has withstood the "headwind" of the external environment in 2023, holding the blockbuster products that are about to be commercialized, laying a solid foundation for entering the "big year" of products.
On September 5, China Antibody-B announced that China's National Medical Products Administration has accepted the company's flagship product SM03 (Suciraslimab) for the treatment of rheumatoid arthritis (RA) for the biological product license application (BLA) with the acceptance number CXSS2300072. SM03 is the company's self-developed product and the world's first anti-CD22 monoclonal antibody for the treatment of RA and other autoimmune diseases, using a unique new mechanism of action that is completely different from the existing therapies on the market.
From this point of view, the acceptance of SM03's BLA marks that the new drug product is about to enter a full harvest period, and will also give the market a clearer understanding of the company's leapfrog development in recent years.
The blockbuster product SM03 has obvious differentiation advantages, and the commercialization process has entered the "countdown" stage
According to public information, SM03 is the world's first potential anti-CD22 monoclonal antibody drug for the treatment of rheumatoid arthritis (RA), and it is also the world's first anti-CD22 naemab that has completed phase III clinical trials and reached the primary endpoint. It is also potentially effective for other immune diseases such as SLE, SS, non-Hodgkin lymphoma (NHL) and other indications.
As the first innovative drug independently developed by Chinese antibodies, SM03 is different from the existing traditional treatment methods on the market and adopts a novel mechanism of action to target the unique B-cell target CD22, effectively making up for the shortcomings of long-term drug resistance in the existing treatment methods for mature targets of RA. Depending on the mechanism of action and clinical manifestations, SM03 will provide a new option for patients with RA to gain long-term treatment benefit.
In April 2023, SM03 in China in the phase III confirmatory clinical study for the treatment of rheumatoid arthritis (RA) (trial protocol number: SM03-RA-III) completed unblinding and preliminary statistical analysis, and the trial reached the main research endpoint, marking a step closer to commercial marketing of sulcilimab.
It is understood that this phase III clinical trial is a randomized, multicenter, double-blind, placebo-controlled clinical study to confirm the clinical efficacy and safety of SM03 sucillimab (Suciraslimab) combined with methotrexate (MTX) in the treatment of patients with moderate to severe and active rheumatoid arthritis. The primary endpoint of the phase III trial was the percentage of patients who achieved an ACR20 response at week 24.
The results of the phase III trial showed that SMO3 combined with methotrefly ridge was effective in reducing disease activity and alleviating RA disease symptoms in patients with active RA compared with placebo. What is more interesting is that the Chinese antibody announcement shows that in addition to excellent safety, the number of people with efficacy continues to increase during the 26-week open-label extension period, reflecting good long-term effectiveness. Among the innovative biological drugs under development for RA treatment in China, SM03 has advanced research and development progress, and its phase III clinical data has fully demonstrated that the drug has reliable safety and efficacy, competitive advantages and obvious differentiation.
According to Frost & Sullivan's report, the number of RA patients worldwide was about 39.8 million in 2020 (about 6 million in China), and it is expected that the number of RA patients worldwide will reach 45 million by 2030 (6.4 million in China), and there are unmet treatment needs and broad market space. In addition, at present, rheumatoid arthritis cannot be completely cured, but can only be relieved by treatment, and long-term treatment is required, and the related market will continue to grow.
On the other hand, due to the long survival time of patients with self-immune diseases and the large base of drug users, the global sales contribution of autoimmune and inflammatory drugs has long been in the forefront. Therefore, SM03, which has a unique treatment mechanism and innovation path, is expected to be rapidly increased after listing, fully benefiting from this "big fish out of the water" market, and effectively boosting the company's performance.
At present, the biological product license application (BLA) of SM03 submitted by China Antibody to the State Food and Drug Administration has been accepted, and it is expected to promote subsequent commercialization in the next 10-12 months, and will continue to accelerate the commercialization of sulcilimab in the future, as well as consolidate its first-mover advantage as the first drug of similar targets and similar first-in-class innovative drugs, and enter the "countdown" stage of the harvest period.
Not only that, because self-immune disease drugs usually act on B cells and Th cells, which are more consistent with most pathogenic sources of self-immune diseases, they usually have a good broad spectrum, and the indications will continue to increase in the drug sales life cycle. Referring to the approval process of the indications of the leading drug Humira, it is expected that with the expansion of SM03 indications in the future, its drug application range is expected to continue to expand.
Currently, Suciraslimab's clinical research in other immune diseases is also progressing intensively, and the company is planning to apply for an IND for mild cognitive impairment (MCI) or Alzheimer's to further expand the potential use of SM03 to fill unmet medical needs. In addition, the company plans to initiate an IND application and proof-of-concept Phase II clinical study of SS in China.
Innovation has blossomed, and the research and development of SM17 and SN1011 have progressed in an orderly manner
In fact, the most important point of pharmaceutical investment is to find the value moat of the enterprise, which is the basis for all investors' decisions. So what is the moat of Chinese antibodies? In the view of Zhitong Financial App, innovation is the key.
Since its establishment, China Antibody has focused on innovative R&D and has established a pipeline of monoclonal antibody-based biologics and new chemical entities (NCEs) that can treat a variety of immune diseases. At this stage, the company focuses on autoimmune diseases, aiming to treat rheumatoid arthritis (RA), systemic lupus erythematosus (SLE), multiple sclerosis (MS), asthma, pemphigus and other autoimmune diseases.
As another major FIC product of the company, SM17 has a very satisfactory clinical research progress. Previously, SM17's IND application for asthma was approved by the US FDA in March 2022, and the first healthy subject was successfully administered to the first healthy subject in the Phase I first human (FIH) clinical trial conducted in the United States in June of the same year, and 77 subjects have been enrolled as of the first half of this year. It is understood that the FIH study consists of a single ascending dose (SAD) and multiple ascending doses (MAD), which is expected to be completed before the end of this year, and there have been no serious adverse reactions so far.
It is worth noting that SM17's IND applications for the treatment of asthma and AD were submitted to and accepted by the Center for Drug Evaluation of the State Food and Drug Administration in May 2023 and June 2023 respectively, and the IND application for the treatment of asthma was subsequently approved by the NMPA on August 11, 2023, indicating that its domestic clinical trials will accelerate.
SM17 is a humanized IgG4-κ monoclonal antibody targeting IL-17RB, and IL-17RB is a type I monotransmembrane glycoprotein belonging to the IL-17 receptor family. When SM17 binds to IL-17RB, it inhibits the Th2 cell-related immune response caused by a class of cytokines called "vigilantin." At present, "vigilin" has been shown to be associated with the pathological process of allergic diseases and the viral infection response of airway cells.
As a new pathway for asthma treatment, therapies targeting upstream mediators of the Th2 inflammatory cytokine pathway (e.g., "vigilin") are expected to have a broader spectrum of pathological changes associated with airway inflammation, leading to more effective asthma symptoms control and disease improvement than existing therapies. This property may give the drug potential to treat asthma, AD, idiopathic pulmonary fibrosis (IPF) and other immune diseases.
Currently, SM17 is a potential first target antibody that demonstrates possible efficacy for a variety of indications, including asthma, specific dermatitis, and IPF (idiopathic pulmonary fibrosis). It can be seen that the above unique mechanism makes the indications covered by SM17 more diverse, not only for asthma and other indications with a huge market volume, but also for the treatment of idiopathic pulmonary fibrosis and other diseases with high fatality rate, but also to continuously expand the coverage of indications, compared with other currently approved asthma therapeutic antibody drugs targeting the downstream pathway of ILC2s, SM17 has a differentiated advantage from the source.
With the deepening of follow-up clinical research, the characteristics of broad-spectrum treatment of pathological changes related to airway inflammation make SM17 expected to cooperate with the company's flagship products such as SM03 and SN1011, which are leading in research and development, to build a non-competitive and complementary treatment plan portfolio for patients.
At the same time as the research of SM03 and SM17, the company's innovative third-generation reversible covalent Bruton tyrosine kinase (BTK) inhibitor SN1011 also showed a broad imagination. At present, SN1011 has been approved by four INDs of the State Food and Drug Administration for the treatment of systemic lupus erythematosus, pemphigus, multiple sclerosis and neuromyelitis optica spectrum diseases, further opening up the growth space for SN1011's patient coverage and drug accessibility.
At present, SN1011 has demonstrated high targeted selectivity and long-lasting controllable efficacy in potential long-term treatment of patients with chronic immune disorders to achieve excellent efficacy and good safety, and has a differentiated advantage compared with existing BTK inhibitors (such as irutinib) in the market.
In the important period when the flagship product sulcilimab is about to land and SM17 and SN1011 are steadily advancing, Chinese antibodies have undoubtedly gone further on the road of self-immune disease research.
Focusing on the development of innovation areas, the loss narrowed sharply in the medium term
With continuous innovation and commercialization, Chinese antibodies are gradually transforming the potential energy accumulated by innovation and research and development into commercial momentum, and the narrowing of medium-term losses may be a key signal.
In the first half of 2023, China Antibody achieved other revenue and income of 1.37 million yuan (RMB, the same below), and recorded research and development costs of about 66.75 million yuan during the period, as the company's R&D pipeline is about to enter the harvest period, its value is gradually being focused by the market.
It is worth mentioning that the company's loss in the interim period narrowed to 134 million yuan, mainly due to the completion of phase III clinical trials for the treatment of RA in China, resulting in a reduction in R&D costs of about 15.3 million yuan; Net foreign exchange loss decreased by approximately $9.5 million; and was offset by an increase in administrative expenses of approximately RMB16.4 million due to share-based non-cash expenses.
It is not difficult to see from the above that the most important event for Chinese antibodies in 2023 is the time when the flagship product SM03 sucilimab (Suciraslimab) will finally bear fruit and enter the key process before formal commercialization.
The scale change is now, and the commercialization of Chinese antibodies is accelerating again
Standing at the current point, Suciraslimab will undoubtedly become the first commercial core product developed by Chinese antibodies, and will soon enter the market stage, the huge market space of the RA track and the efficacy of FIT's products will allow the drug to quickly occupy share, which also represents that this flagship product is about to enter a full harvest period.
In terms of the most critical commercialization, the company chose to independently deploy production and commercialization to explore maximizing the value of the product. At present, Chinese antibodies have established a comprehensive commercialization system at the production end and sales end, and have in-depth layout in terms of stable production, sufficient supply and market promotion to accelerate its commercialization process, help SM03 quickly complete multi-level coverage in hospitals at all levels after it is launched, and benefit a wider range of Chinese patients as soon as possible.
According to the interim financial report, the company's two production sites will be used for the subsequent commercialization of products under development: one is the Chinese headquarters currently under construction in Suzhou's Dushu Lake Higher Education District, with a total floor area of about 75,000 square meters, which is under construction to provide large-scale commercial production capacity. The Suzhou production site will be put into operation in phases. The first phase of development has a capacity of 6,000 liters and is expected to be commissioned in early 2024. The production base in Haikou, Hainan Province also has a production capacity of 1,200 liters, and after the completion of the new Suzhou base, the maximum total capacity of the two production bases will exceed 36,000 liters (up to one million treatment courses per year), providing a strong guarantee for subsequent commercialization, production and marketing.
Returning to the investment perspective, due to the increase in uncertainties at the macro level recently, the pharmaceutical sector of Hong Kong stocks has seen a relatively large correction. At a time when the Hong Kong stock 18A bubble is cleared and the volatility of the sector is intensifying, only enterprises with core products that have or are close to landing, have innovative strength and have a higher margin of safety can smoothly cross the bull-bear cycle.
In November 2022, China Antibody completed the share placement financing and raised HK$51.05 million, which not only shows that the company has the ability to continue to consolidate capital at a time when the financing window of many Hong Kong 18A listed companies continues to tighten, but also shows that the company has a long-term vision and is fully prepared for subsequent product commercialization and R&D innovation.
From this point of view, whether it is the sustainability of research and development, or the certainty of future growth, Chinese antibodies, which have core hematopoietic products, constantly meet expectations, and hold nearly 300 million in cash, are relatively abundant in liquidity at present, and medium- and long-term development is also worth looking forward to.
What remains unchanged in the capital market is the consideration of the growth of a company. For Chinese antibodies, breaking the convention to explore new development paths and complete the breakthrough from 0 to 1 is bound to usher in excess benefits under first-mover innovation and differentiated competition.
Recently, the State Food and Drug Administration clarified the relationship between conditional approval and follow-up clinical research. The relevant specifications specifically state as: "After a drug is conditionally approved for marketing, in principle, it will no longer agree to other similar drugs with the same mechanism, target and indication to carry out similar clinical trial applications with the goal of conditional marketing." "Once this policy is implemented, it will inevitably have an impact on the clinical practice and marketing of biosimilars in the future." For biotechnology companies such as Chinese antibodies, which focus on the development of innovative targets and mechanism of action drugs, their development direction and future prospects have been further verified.
In summary, with the advantages of differentiated innovation and commercialization accumulated over the years, it is fully verified that Chinese antibodies have the ability to transform excellent research results into the commercial value of the world's first innovative drugs. With the sound of the commercialization horn of SM03, the company will enter the development stage of accelerated innovation and enter the harvest period in an all-round way. In the future, the landing of the product is expected to further promote the company's valuation to return to its due level, form a long-term sustainable upward market, and release huge business potential.