China's new drug is crazy
Produced by | Tiger Sniff Medical Group
Author | Chen Guangjing
Edit | Wang Yipeng
Header | Visual China
China's new drug is crazy.
"11:0 unanimously passed!" The US FDA's Oncology Drug Advisory Committee (ODAC) unanimously recognized the safety and efficacy evaluation results of cilta-cel, and at 3:50 a.m. Beijing time on March 16, Legend Biotech shared the good news through its official WeChat public account.
The unanimous vote not only means that cilta-cel may soon be approved for the early treatment of adult patients with multiple myeloma, but also means that the safety doubts hanging over it are dissipating, which is doubly good for further market expansion.
As the second drug independently developed and successfully launched in China, and the first CAR-T product independently developed by a Chinese company, cilta-cel has shown amazing commercialization potential. In 2023, the annual sales revenue of cilta-cel has exceeded 500 million US dollars (about 3.6 billion yuan), which brings Legend Biotech's external revenue to 285 million US dollars, a year-on-year increase of 144.2%!
What's more, the drug has only been approved for marketing in the United States for two years. You must know that Novartis's Kymriah, the world's first CAR-T product, has only reached this level in its fourth year on the market.
According to the forecast of Johnson & Johnson, a multinational giant that cooperates in the development of the U.S. market, the drug's sales revenue will exceed US$1 billion this year, and its peak revenue can reach US$5 billion - this will be the second domestic new drug to sell more than US$1 billion a year after BeiGene's zanubrutinib.
Since 2018, the issue of commercialization has choked the throat of industrial development, and there is even a saying in the industry that "it is okay if China's innovative drugs are not listed, but once they are listed, there will be no drama to sing". The implication is that there is still room for a drug to be marketed before it is launched, and once it is listed, the naked financial data will completely expose their powerlessness in commercialization.
Therefore, the big sales of chidate-cel and zanubrutinib in the United States are a "booster" for Chinese innovative pharmaceutical companies that are still struggling on the verge of death, and even for the entire industry. Going to the United States has truly become a "quick-acting heart-saving pill" for Chinese pharmaceutical companies at this moment.
The new medicine and the old road to the sea have come to an end
The key to Legend's success lies in choosing the right partner. In fact, in 2017, when the clinical data of cilta-cel was released, it amazed the audience - 9 patients were 100% "cured", which made many BDs of large companies want to cooperate with it. In the end, Johnson & Johnson seized the opportunity. As it turned out, it was a win-win for both parties.
The relevant person in charge of Legend Biotech said that Johnson & Johnson has provided resource support to Legend Biotech in internationalization, product development, declaration, registration, and commercialization. A number of industry insiders have also emphasized to Tiger Sniff that the success of cilta-cel is that the trial design is excellent, which is very important for the development of more indications in the later stage of the product and the continuous extension of vitality, which is also one of Johnson & Johnson's strengths.
According to the relevant person in charge of Legend Biotech, one of the successful design points is to carefully consider the issue of race when enrolling patients in the United States. "The U.S. FDA requires that clinical trial data applied for marketing in the U.S. need to be applicable to the corresponding population, and it is difficult to submit the trial data for approval if it is 100% Asian or only done in China. ”
Don't underestimate this pit, many years later (early 2022), Innovent Biologics planted a heel here, and their sintilimab missed the opportunity to enter the U.S. market as a domestic PD-1.
Coincidentally, another classic case of trial design is also about PD-1 – talking about the two pioneers of PD-1 – Bristol-Myers Squibb's Opdivo (nivolumab) and Merck's K (Keytruda).
At that time, Drug O was the first PD-1 to be marketed, and it left Drug K far behind by virtue of its first-mover advantage, but it unexpectedly failed in the development of a very critical lung cancer indication, and as a result, Drug K came from behind, turning the tide of the battle in one fell swoop. Although the annual sales of O medicine are also among the top 10 in the world, K medicine has become a new generation of "medicine king".
Ms. Shen Huaqiong, who was vice president at Johnson & Johnson in 2017, analyzed the case at a public industry event, and she said that the key reason for Merck's success was to include the condition that "the PD-L1 positive level of the patient's tumor > 50%" in the trial design.
However, from the current situation, it is becoming more and more difficult to find a good partner.
In the boom of license-out of new drugs in China, there is an endless stream of news of "returns" by multinational pharmaceutical companies. According to incomplete statistics, since 2022, there have been at least 21 "returns". Hengrui Pharmaceutical, Junshi Biosciences, Innovent Biologics, and CStone Pharmaceuticals, which "borrowed the ship" earlier, have all become "victims".
Although the reasons for "returns" are compound, the situation of overseas partners "difficult to protect themselves" obviously makes the problem more serious. For example, when BeiGene's tislelizumab was "returned" by partner Novartis last year, the reason given by both parties was "based on strategic and financial considerations". Translated, even the multinational bigwigs are short of money.
The global pharmaceutical market environment has changed dramatically. With the blockbuster (drugs with annual sales of more than $1 billion) losing patent protection one after another, the performance pressure of major multinational pharmaceutical companies is also increasing, in order to stabilize market performance and investment confidence, keep jobs, and do not reduce salaries, it has almost become the most headache for the chief executive officers (CEOs) of major pharmaceutical companies.
In such a situation, the multinational giants will inevitably move out of shape, and even be as disorganized as "headless flies". From the performance point of view, it is a crazy merger and acquisition, buying pipelines, and laying off employees, returning goods, and selling industries at the same time.
Even if there are no returns, there are too many pipelines under development in the hands of big pharmaceutical companies, and China's new drugs are in a weak position, and it is difficult to say whether they can be "reused". What's even more heart-wrenching is that many Chinese pipelines are still "green seedlings", so they are "sold cheaply", and they have accidentally become a pathfinder for multinational pharmaceutical companies.
The data of the "fighting" of O medicine and K medicine over the years comes from public information/tiger sniffing mapping
Unprecedented opportunities for domestic drugs
The lack of partners and the experience of WuXi companies in the United States have made many people lose confidence in innovative drugs, but from the actual actions of the US regulators, the United States still needs Chinese new drugs very much, and the most obvious sign is that Chinese new drugs are also knocking on the door of US drug regulation in batches.
Since March this year, Betta Pharmaceutical's ensartinib (small molecule targeted drug) and BeiGene's tislelizumab (PD-1 inhibitor) have been approved by the FDA. In addition to the four new drugs approved last year, the United States has approved six new Chinese drugs in more than a year, which is 50% higher than the total number of new Chinese drugs approved in the previous three or four years.
The reasons behind this are manifold.
First of all, compared with other industries, medicine is a matter of life and death, and it is one of the few industries that can transcend national borders and cross cycles.
Second, the industry believes that the recent series of operations in the United States are mainly to return to the industrial chain, which has little impact on the approval of innovative drug products.
Third, China's new drugs have also proved their strength under US rules.
For example, Junshi Biosciences' toripalimab, as the first domestic PD-1 approved in the United States, is the first nasopharyngeal cancer treatment drug in the United States;
BeiGene's tislelizumab solves the problem of drug availability after metastasis of esophageal squamous cell carcinoma;
Chi-Med's fruquintinib is "the first and only highly selective inhibitor of all three VEGF receptor kinases in the U.S. for the treatment of previously treated metastatic colorectal cancer."
In addition, there is another important reason, that is, the U.S. pharmaceutical market has also changed, and the cost-effective Chinese new drugs are "fragrant and sweet".
The cost of health care is a huge strain on payment systems in all countries, and even more so in the United States. The rules in the U.S. pharmaceutical field have always been to encourage first-in-class (first-in-class), and in the past, almost only the first three new drugs on the market could be richly rewarded. However, as biologics gradually dominate the market, such a system pushes medical costs higher and higher.
According to one data, in the six years from 2012 to 2018 alone, the size of the U.S. biopharmaceutical market has increased by about 1,700%, and has grown to $700 billion by 2023. Biologics already account for 51% of the overall sales of its pharmaceutical market, but the population it serves is still very limited.
This made the United States, which has always been "not bad for money", feel unbearable and began to seek to reduce the price of drugs. According to market logic, more new drugs join the competition, which will increase the choice of doctors and will also promote price competition. Therefore, since 2021, more and more attention has been paid to the "replacement" products of innovative drugs (generally biosimilars, that is, "generic drugs" in biological drugs). It was even covered in the Inflation Reduction Act (IRA) passed in 2022.
Since 2023, the pace at which the FDA has approved such drugs appears to have accelerated. According to a report released by Samsung Biologics in January this year, as of January this year, the FDA has approved a total of 45 biosimilars involving 14 varieties. Not to mention anything else, China PD-1 alone approved two.
Strictly speaking, China's new drugs are not biosimilars in the conventional sense, but due to the crazy involution in the past few years, they have been made into "generic drugs". At least for the time being, industry experts believe that it is very possible for China's new drugs to be commercialized by smoothly entering the U.S. market with the help of the explosive development of biosimilars. This is also an opportunity period for Chinese new drugs to enter the U.S. market in batches.
In 2023, among various negative news, WuXi AppTec's performance exceeded 40 billion yuan for the first time, of which 65% came from the United States. According to the company's forecast, their revenue from the United States will be more than 21.1 billion yuan next year. Whether they are overly optimistic or not, an objective fact is that American innovative pharmaceutical companies need China's "engineer dividend", and the American medical system needs Chinese new drugs.
On the other side of the coin, Chinese companies should not abandon the big market of the United States.
Wei Lijun, founder of Beijing Yaoyan/Huiyao Consulting, once revealed in an article that the next few years will be a golden period for the development of biosimilars, and its market size will reach $130 billion by 2030. Thirty to 40 percent of them will still be in the United States. At that time, it will still be "the one who wins the American market wins the world".
In order to reduce the production cost of prescription drugs and alleviate the shortage of drugs, medical centers in the United States have set up generic drug factories.
From: Visual China
Going out to sea in a group is perhaps the best option
"For domestic pharmaceutical companies, it's time to let go of estrangement, change their strategy, and stay together. As early as 2023, when there will be more overseas returns, Dr. Zheng Weiyi, chairman of Nanjing Yingnuo Pharmaceutical Technology Co., Ltd., once said this to Tiger Sniff.
The relevant person in charge of Legend Biotech told Tiger Sniff that it is not a short-term behavior for pharmaceutical companies to go overseas, from finding partners to carry out global clinical trials, to entering the registration stage, and then to GMP production, etc., it is a multi-year process that requires a lot of money, so companies need to formulate long-term financing plans to meet the needs of new drug development with a long cycle, high risk and large investment.
It can be seen that the process is difficult. In such a difficult process, in addition to funds, there must also be strong support from partners.
Historically, legendary creatures didn't pop out of a crack, they were incubated on the GenScript platform, a well-known CRO company. At the beginning of its establishment, there was no start-up capital, no intellectual property rights, and even the experimental equipment and office production were provided by GenScript, and the start-up team was only 9 people.
Such a team dared to challenge the most difficult track at that time, and in addition to the strength of the team members, GenScript also gave a lot of support. According to media reports such as the Economic Observer, Legend Biotech has been accompanied by GenScript's business development (BD) during the process of applying for the international market, and the North American BD colleagues have been receiving the visit to the United States.
Because of this, cilta-cel was able to apply for clinical trials in the United States as early as possible, which was also the basis for the successful cooperation with Johnson & Johnson.
For the rising stars in new drugs, multinational pharmaceutical companies are unreliable, and local pharmaceutical companies are also a good choice.
In fact, in the past few years, in order to go overseas, many old traditional pharmaceutical companies and relatively mature domestic innovative pharmaceutical companies have also made a lot of preparations in "hardware".
For example, BeiGene, according to the company's president Wu Xiaobin said in an interview with the media, they have established a commercial team of more than 3,700 people around the world, of which about 300 are in North America and 200 are in Europe. In the cooperation with Johnson & Johnson, Legend Biotech does not rely entirely on partners for product sales, and also has its own team.
The domestic veteran giants Hengrui Pharmaceutical, Fosun Pharma and China Biopharma have also developed their businesses overseas, and have certain R&D or commercialization capabilities through self-construction and acquisition.
Moreover, many companies have also shown their willingness to become a bridge and link for China's innovative drugs to go overseas.
On March 5, BeiGene announced that it would spin off its wholly-owned subsidiary, Pi Health, Ltd., and bring in external investors to jointly promote its software development, analysis and research solutions in the healthcare industry.
The company, valued at US$41,798,400 (about 300 million yuan), was originally established by BeiGene in 2021 to strengthen the company's data analysis and clinical research capabilities. These businesses are inherently CRO, and as such, the spin-off is considered a divestiture of a CRO company from BeiGene.
Objectively speaking, these institutions and personnel already exist, and the addition of more products can not only share the cost but also help to open up the market. BeiGene needs more new indications and products to unleash its full commercialization potential.
Because of this, BeiGene is also investing heavily in new pipelines. The $1.33 billion transaction, which was completed in 2023, directly boosted the total size of domestic license-ins that year.
The reality that has to be faced is that as the pharmaceutical industry enters the capital winter, the evaluation criteria of capital for enterprises have changed from the original perspective on the potential of pipelines to the ability to make money. Similar to BeiGene, Legend Biotech is still in a state of loss, although its performance has grown rapidly. It is becoming more and more important to turn around losses through various channels and continue to reduce losses.
In the past cooperation between domestic pharmaceutical companies, there have indeed been some unpleasant occurrences, and which companies can take the lead in putting down the estrangement may have taken the lead.