Biotech Companies Endeavour To Innovate
Most Chinese biotech companies have shown significant R&D progress and
satisfactory results in their clinical trials at recent global conferences. Despite
intensifying competition and increasing regulatory requirements, Chinese biotech
companies continue to gain global exposure in R&D. Their endeavours for new
product innovation have yet to produce breakthrough therapeutics, but will
eventually bear fruit. Maintain MARKET WEIGHT.
WHAT’S NEW
• Chinese biotech companies presented their latest clinical data at recent global conferences
including 2022 American Society of Cancer Oncology (ASCO) Annual Meeting, European
Hematology Association (EHA) 2022 and Endocrine Society’s annual meeting (ENDO) 2022.
ESSENTIALS
• Chinese drug innovators see smooth R&D progress and continue to gain global
exposure. At 2022 ASCO Annual Meeting, the most exciting data came from DS8201
(Enhertu), Daiichi Sankyo’s anti-HER2 antibody-drug conjugate (ADC), which reduced the
risk of disease progression or death by 50% vs chemotherapy in HER2-low breast cancer
(BC) patients in a Phase l clinical trial. It could possibly transform treatment for HER2-low
BC. Meanwhile, more than 50 Chinese biotech companies presented encouraging clinical
data at 2022 ASCO Annual Meeting, showing smooth R&D progress. Chinese drug
innovators continue to gain global exposure in R&D at international conferences.
• Legend Biotech provided updates on CARVYKTI (cilta-cel, its BCMA-directed chimeric
antigen receptor T-cell (CAR-T) therapy co-developed with Janssen) in multiple myeloma
(MM). In the Phase Ib/II CARTITUDE-1 study, the high overall response rate (ORR) of 98%
and stringent complete response (sCR) rate of 83% was sustained at 28-month median
follow-up (28 MFU) from 22 MFU. In the Phase II CARTITUDE-2 study, the ORR and CR
rate were also deeper as treatment prolonged. CARVYKTI was the first China-developed
CAR-T therapy approved by the FDA, and has obtained marketing approval in both the US
and EU in 2022. At the recent Goldman Sachs Global Healthcare Conference, J&J also
indicated that CARVYKTI is among its five assets with US$5b-plus potential.
• JW Therapeutics also presented three latest clinical results on its anti-CD19 CAR-T cell
therapy Carteyva (relma-cel). In its two-year follow-up Phase II results in relapsed/refractory
large B-cell lymphoma (r/r LBCL) patients, the ORR was 77.6%, CR rate was 53.5% and
two-year overall survival (OS) rate was 69.0%. In its Phase I study in relapsed and refractory
B-cell non-Hodgkin lymphoma (r/r B-NHL), the two-year progression-free survival (PFS) rate
and OS rate were also sustained from the one-year follow-up data of 55.0% and 68.6%,
respectively. Carteyva demonstrated high rates of durable disease response with
manageable safety profile.
• RemeGen reported three clinical results on its anti-HER2 ADC RC48 (disitamab vedotin) in
urothelial carcinoma (UC). RC48 combined with Junshi’s anti-PD-1 mAb toripalimab showed
synergistic antitumor effect in UC, achieving an ORR of 71.8% in a Phase Ib/II trial. RC48
also showed an ORR of 26.3%, disease control rate (DCR) of 94.7%, median progressionfree survival (mPFS) of 5.5 months and mOS of 16.4 months in HER-negative UC, and
recorded an ORR of 50.5%, mPFS of 5.9 months and median overall survival (mOS) of 14.2
months in HER-positive UC in Phase II trials, showing continuously promising efficacy.
• Akeso reported multiple Phase I/II results of its PD-1/VEGF bispecific antibody (bsAb) AK112
(Ivonescimab) and PD-1/CTLA-4 bsAb AK104 (Cadonilimab). AK112 achieved an ORR of
50.0% and DCR of 96.3% in Phase Ib/II trial in advanced non-small-cell lung carcinoma
(NSCLC) patients, while AK112+chemo achieved an ORR of 77.8%, DCR of 100% and sixmonth PFS of 83.3% in squamous NSCLC (sqNSCLC). Showing encouraging preliminary
results compared with approved PD-1 therapies, AK112 is under Phase III head-to-head
study vs Keytruda in first-line (1L) NSCLC. AK104+chemo+bevacizumab also recorded high
ORR of 79.3% in recurrent or metastatic cervical cancer (R/M CC) patients in a Phase II trial.
• Alphamab released multiple updates on KN046 (PDL1/CTLA-4 bsAb) and KN026 (HER2-
targeted bsAb). KN046 recorded an ORR of 11.1%, DCR of 44.4%, mPFS of 2.1 months and
mOS of 7.5 months in pancreatic ductal adenocarcinoma (PDAC), while KN046+lenvatinib
combo achieved an ORR of 51.9%, DCR of 86.5%, and mPFS of 9.3 months in
hepatocellular carcinoma (HCC) in phase II clinical trials. Alphamab plans to submit the first
biologic licence application for KN046 in China in mid-22. Meanwhile, KN026 achieved an
ORR of 56%, mPFS of 8.3 months and mOS of 16.3 months in HER2 high-level gastric
cancer or gastroesophageal junction cancer (GC/GEJ) in Phase II trials. CSPC previously inlicensed KN026’s R&D and commercial rights in GC in Mainland China.
• Innovent presented Phase I clinical data of IBI110 (anti-LAG-3 mAb) and IBI351 (KRASG12C
inhibitor) at ASCO 2022. IBI110 achieved an ORR of 80% in 1L sqNSCLC and an ORR of
60% and DCR of 100% in 1L GC/GEJ in PoC (proof of concept) studies, while IBI351
achieved an ORR of 42.9% and DCR of 81.0%, both showing promising anti-tumour activity.
IBI110 is among the four anti-LAG-3 mAbs with the fastest development progress in China.
Meanwhile, its BCMA-directed CAR-T therapy IBI326 showed deeper response as treatment
prolongs in r/r MM in a Phase I/II study as presented at EHA 2022, and is currently under
new drug application (NDA) review in China.
• BeiGene presented data from its broad solid tumour and hematology portfolios in eight
presentations, including new clinical data from its BTK-inhibitor zanubrutinib (BRUKINSA), its
early development pipeline and tislelizumab’s Phase III RATIONALE-309 trial. BRUKINSA
continuously demonstrate clinically meaningful efficacy in Waldenström macroglobulinemia
(WM) and superior efficacy to obinutuzumab in relapsed or refractory (R/R) follicular
lymphoma (FL) with tolerable safety profile. Tislelizumab also showed significant PFS benefit
over chemo in recurrent or metastatic nasopharyngeal cancer (RM-NPC).
• Henlius has presented Phase III clinical data for its serplulimab (anti-PD-1 mAb) plus chemo
in 1L extensive-stage small-cell lung cancer (ES-SCLC). Serplulimab achieved mOS of 15.4
months vs placebo’s 10.9 months, with a hazard ratio (HR) of 0.63 (meaning 37% decreased
risk of death), differentiating from global rivals’ (Tecentriq and Imfinzi) OS of 12.3-13.0
months and HR of over 0.70 in similar trials for SCLC. Serplulimab also achieved mPFS of
5.7 months vs placebo’s 4.3 months with a HR of 0.48, differentiating from global rivals’ PFS
of 5.1-5.2 months and HR of over 0.70. The study also involves over 30% of non-Asian
patients. Although data from different trials may not be comparable, the exciting results
showed great potential for serplulimab to become the world’s first an-PD-1 mAb in first-line
SCLC treatment.
• CSPC presented preliminary results for two Phase Ib studies of Duoenda (mitoxantrone
hydrochloride liposome), achieving an ORR of 42.1% and DCR of 78.9% in head and neck
squamous cell carcinoma (HNSCC) as well as an ORR of 28.6%, DCR of 61.9% and mPFS
in platinum-resistant ovarian cancer. This provides evidence of Duoenda’s efficacy in solid
tumours.
• Ascentage presented multiple clinical abstracts related to seven clinical studies of its five
novel drug candidates including olverembatinib (HQP1351, third-generation TKI), lisaftoclax
(APG-2575, Bcl-2 inhibitor), alrizomadlin (APG-115, MDM-p53 inhibitor); APG-2449 (ALK
inhibitor) and pelcitoclax (APG-1252, dual Bcl-2/ Bcl-xL inhibitor). Olverembatinib showed
antitumour activity in gastrointestinal stromal tumor (GIST) in Phase Ib/II study, while
lisaftoclax achieved an ORR of 68.3% in relapsed/refractory chronic lymphocytic
leukemia/small lymphocytic lymphoma (R/R CLL/SLL) in phase Ib/II study.
ACTION
• Innovent (1801 HK/BUY/Target: HK$35.00). Innovent recently obtained supplemental NDA
(sNDA) approval for it PD-1 inhibitor TYVYT in the first-line treatment of esophageal
squamous cell carcinoma (ESCC), which marks TYVYT’s fifth approved indication in China.
Being approved before 30 Jun 22, the 1L ESCC indication is able to join this year’s National
Reimbursement Drug List (NRDL) negotiation. It has also made on-track R&D achievement in
1H22, obtaining three regulatory approvals and two NDA acceptances, and planning to start
four pivotal clinical studies. Meanwhile, Innovent recently provided multiple R&D updates at
2022 ASCO Annual Meeting, European Hematology Association (EHA) 2022 and ENDO
2022 on its anti-LAG3 mAb, KRASG12C inhibitor, anti-CD47 mAb, BCMA-directed CAR-T
therapy etc. We believe these early-stage clinical data updates are encouraging, while the
efficacy of relevant pipeline assets still needs further evaluation in pivotal studies (Phase II/III)
with more patients enrolled. We also saw that these targeted therapies all face intensifying
competition in both China and globally, which indicates considerable commercialisation risks.
However, we continue to believe that Innovent can better withstand risks compared with most
non-revenue biotech firms, supported by its strong cash-generating capabilities, and will
eventually become a leading biopharmaceutical company in China.
• CSPC (1093 HK/BUY/Target: HK$12.50) announced its biologic license application (BLA)
for the innovative drug candidate JMT103 (Narlumosbart for Injection, IgG4 subtype fully
human monoclonal antibody against RANKL) for the treatment of unresectable or surgically
difficult giant cell tumor of bone, has been accepted by NMPA. The clinical study of JMT103
shows a better clinical efficacy with a tumor response rate of 93.5% and a trend higher than
that of the denosumab (the currently marketed IgG2 subtype mAb against RANKL), and a
good safety profile. In the 2022 ASCO annual meeting, CSPC presented preliminary results
for two phase Ib studies of Duoenda (mitoxantrone hydrochloride liposome), achieving ORR
of 42.1% and DCR of 78.9% in head and neck squamous cell carcinoma (HNSCC) and ORR
of 28.6%, DCR of 61.9% and mPFS in platinum-resistant ovarian cancer. This provides
evidence of Duoenda’s efficacy in solid tumours. The company is making very good progress
in innovation and new product launches.
• Henlius (2696 HK/SELL/Target: HK$13.50). The Phase III ASTRUM-005 study presented at
ASCO showed serplulimab’s potential in becoming the first anti-PD-1 mAb in 1L SCLC
treatment. Henlius filed the regulatory applications for serplulimab on 1L SCLC in China in
April and expects to complete the required bridging study and file BLA to the US FDA in mid23. The company also actively seeks business development opportunities in the global
market. It out-licensed the ex-Greater China commercial rights of HLX11 (pertuzumab
biosimilar) and HLX14 (denosumab biosimilar) to Organon and expects to bring in upfront
licensing revenue of up to US$70m in 2022. However, given the considerably weak cash
position and possible negative impact from the GPO tender on biosimilars, we remain
conservative on the growth outlook of the company in the next 1-2 years.
RISKS
• Key risks: a) Worse-than-expected impact from new COVID-19 outbreaks in China, b)
intensifying competition, c) geopolitical tensions and increasing overseas regulations on new
product approval, d) policy changes, such as GPO tenders and unexpected changes in
COVID-19 strategies, and e) failure in product innovation and market expansion activities.
VALUATION/RECOMMENDATION
• Maintain MARKET WEIGHT on China’s healthcare sector. We believe Chinese biotech
companies have made significant progress in their global R&D programmes. The
presentations at 2022 ASCO meeting and other recent global conferences may improve
the sentiment on China’s biotech sector in the short term. However, we are concerned
about the overcrowded clinical research landscape in the global market, and remain
cautious on biotech companies with tight cash flows or limited revenue generation
capabilities. We prefer companies with solid business operations and strong cash
generation capabilities. Our top picks are WuXi AppTec (2359 HK), WuXi Bio (2269 HK),
Mindray (300760 CH), Innovent (1801 HK) and CSPC (1093 HK).