Merck & Co. and GSK are vying to buy new drugs for chronic diseases. Which companies still have BD opportunities? | Focus Analysis

Text | Hu Xiangyun

Editor | Hai Ruojing

After the oncology field, large - scale BD deals in the chronic disease sector are gradually emerging.

This week, Hengrui Medicine announced that it would "package" the overseas rights of its PDE3/4 inhibitor HRS - 9821 and the exclusive options for 11 innovative projects to GlaxoSmithKline (GSK) in a one - time BD deal, with a down payment of $500 million and milestone payments of up to $12 billion.

In this deal, the 11 innovative projects cover fields such as oncology and autoimmunity, but they are all pre - clinical pipelines. Among them, HRS - 9821 stands out. It is a new drug for the treatment of chronic obstructive pulmonary disease (COPD) and was just approved for clinical trials at the beginning of July. Hengrui Medicine spent only 38.43 million yuan in total on developing this product, and the entire $500 million down payment of this BD deal is for it, which can be regarded as a small investment yielding great returns.

The success of HRS - 9821 is largely related to the booming R & D of new COPD drugs.

COPD is a typical large - scale chronic disease indication. The global market exceeded $20 billion in 2024. However, there has been no new iterative drug in this field for more than a decade. It was not until last June that the US FDA finally approved the first new - mechanism COPD treatment drug, the PDE3/4 inhibitor Ensifentrine, from the British pharmaceutical company Verona. Earlier this month, Merck & Co. preemptively acquired Verona for $10 billion.

As a traditional "respiratory" giant, GSK's blockbuster product "Trelegy Ellipta" for treating COPD is about to expire in terms of patent rights. It is quite reasonable for it to spend a large amount of money on a new drug pipeline through BD.

It is also this deal that makes Chinese pharmaceutical companies start to realize that beyond the star fields such as oncology and autoimmunity, there may still be huge value hidden in the next - generation therapies for common and chronic diseases, and drugs in the "slow - burning" respiratory field are one of them.

So, why PDE3/4? After Hengrui Medicine, who else has a chance?

The Butterfly Effect Triggered by a "Certainty Product"

Just like Novartis' long - acting PCSK9 lipid - lowering drug Inclisiran injection, which only needs to be injected once every six months, and Eisai's new gout drug Dorzolamide tablets developed based on the star target URAT1, once a certain target emerges, it is bound to attract other pharmaceutical companies to compete for layout, either through self - R & D or purchasing pipelines in the same track. Now, the protagonist of this story has become PDE3/4.

COPD is a respiratory disease caused by irreversible damage to lung tissue. It is manifested as shortness of breath, cough, etc. The main risk factors are lampblack, dust, and chemical fumes. Especially after humans started to develop a smoking habit, COPD has become a common disease in the respiratory department and the "fourth leading cause of death" globally. China has the highest COPD mortality rate in the world. However, due to its relatively low public awareness, when many patients realize they are ill and go to the doctor, their health and quality of life have already been seriously affected.

From an industrial perspective, the COPD treatment market has long been dominated by multinational pharmaceutical companies such as AstraZeneca, GSK, and Boehringer Ingelheim, with long - acting β2 - receptor agonists (LABA), long - acting anticholinergic drugs (LAMA), and inhaled corticosteroids (ICS) as the mainstays.

Source: Caitong Securities

Most of these drugs can only relieve symptoms, and there are limited treatment measures targeting potential inflammation or delaying disease progression. Previously, the "triple therapy" of LABA + LAMA + ICS was once regarded as the end - point of COPD treatment. The representative product in this regard is GSK's Trelegy Ellipta, whose sales reached £675 million in the first quarter of this year, a year - on - year increase of 15%.

This hormone - centered approach of improving efficacy through combination therapy obviously cannot meet everyone's needs, especially for those patients who continuously experience acute exacerbation events, accounting for about 50% of the total.

However, with the continuous in - depth research on the pathogenesis of COPD in the scientific community, more drugs for treating the root cause of COPD are expected to emerge. Take the PDE3/4 inhibitor, the protagonist of this deal, for example. Its "popularity" is essentially due to the approval of Ensifentrine.

Reducing the acute exacerbation problems of patients is a very important indicator for evaluating the efficacy of COPD drugs. Clinical results show that Ensifentrine can reduce the rate and risk of moderate - to - severe acute exacerbations by 36% - 43%.

Benefiting from this, its sales reached $42 million in the six months after its launch in 2024 and increased to $71.3 million in the first quarter of this year. Market forecasts suggest that the peak sales of Ensifentrine may reach $4 billion by 2035.

"The explosion in the demand for PDE3/4 inhibitors is due to two reasons. On the one hand, there has been no broad - spectrum new - mechanism drug launched in the COPD field for a long time. On the other hand, it is due to the uniqueness of its mechanism," said a person from a company engaged in COPD drug R & D.

PDE is distributed in various inflammatory cells in the human body, and there are up to 11 members in its family. Among them, inhibiting PDE3 can dilate the trachea, while inhibiting PDE4 has an anti - inflammatory effect.

"Previously, the industry over - emphasized the anti - inflammatory effect of PDE4, and there were many single - target PDE4 inhibitors under development. In fact, the effect of PDE3 in dilating the trachea and improving ventilation is more obvious. Because after the patient's trachea is dilated, it can directly relieve shortness of breath, which is a very large demand. From the doctor's perspective, it usually takes two or three months or even longer to see the effect of COPD drugs, while the trachea - dilating effect of PDE3 means it takes effect faster and can obtain feedback on drug use within a few weeks, so as to determine whether long - term medication is feasible. Ensifentrine can both dilate the trachea and have an anti - inflammatory effect, and its affinity for PDE3 is thousands of times that of PDE4, which also contributes to its rapid sales growth," the aforementioned company person believes.

The R & D failure rate of COPD drugs is very high. Sanofi and Roche have both encountered setbacks. This is also the reason why the market has high BD expectations for PDE3/4 inhibitors after the launch of Ensifentrine and the acquisition of Verona. Otherwise, it would be difficult for HRS - 9821, which has just entered the clinical development stage, to get a "sky - high" down payment of $500 million.

After the licensing of HRS - 9821, the remaining BD opportunities for PDE3/4 in the COPD field are basically out in the open, and it is highly likely that they will be "monopolized" by Chinese pharmaceutical companies. Because the companies with the most advanced progress in global layout in this field are all Chinese companies.

Source: Insight Database

Actually, compared with Hengrui Medicine, the R & D progress of the PDE3/4 inhibitors of the other two players, Chia Tai Tianqing and Haisco, is faster. Chia Tai Tianqing's TQC3721 has entered the Phase 3 clinical stage and was just included in the breakthrough therapy variety by the CDE on July 29. Haisco's HSK39004 has entered the Phase 2 clinical stage.

From the buyer's perspective, Merck & Co. and GSK have just started their layout. Roche and Sanofi have other - mechanism COPD biological agents under development. Sanofi's core product Dupilumab was just approved for treating COPD not long ago. Pfizer, Johnson & Johnson, and Novartis have not had much layout in this field in the past, so it's hard to say whether they are interested. Besides GSK, whether the other two "respiratory giants", Boehringer Ingelheim and AstraZeneca, will buy a PDE3/4 inhibitor may be the focus in the future.

Who Else Has a Chance

Of course, although the certainty of PDE3/4 inhibitors has been verified, it does not mean that it will be the only participant in the "next - generation drugs" in the COPD field. In addition to small - molecule drugs, more and more biological agent products for COPD have been launched in the past two years.

The pathogenesis of COPD is very complex and has not been fully confirmed yet. However, the industry generally believes that chronic inflammatory response is one of the most important pathogenic factors. Among them, the increase in eosinophil levels mediated by the Th2 pathway has been studied more. Based on this pathway, many immunosuppressive targeted products have emerged in recent years, such as those targeting IL - 4Rα, IL - 5, IL - 33, TSLP, etc.

Moreover, there have already been some mature products with different mechanisms, and most of the participants are multinational pharmaceutical companies.

Taking IL - 4Rα as an example, its representative drug is Dupilumab mentioned above. In the fields of atopic dermatitis and asthma, it is already a classic "blockbuster drug", with sales exceeding $14 billion in 2024. Clinical results show that in the COPD indication, "Dupixent" can reduce the moderate - to - severe acute exacerbation rate of patients by 30% - 34%.

Another representative product is Mepolizumab (IL - 5), which is in direct competition with Dupilumab. It was developed by GSK and was just approved by the FDA for COPD treatment in May this year, but its efficacy data is slightly worse than that of Dupilumab.

The aforementioned company person mentioned that although there is no product targeting the COPD indication of TSLP approved yet, it is still worthy of attention. Because it "is at the top of multiple inflammatory cascade reactions", it can directly act on dendritic cells, promote the maturation of Th2 cells, and also act on a wide range of innate immune cells.

Currently, most of the COPD drugs targeting TSLP have entered the clinical stage. The fastest - progressing one is Tezepelumab jointly developed by AstraZeneca and Amgen. Phase 2 clinical trials show that Tezepelumab may cover more COPD patients than Dupilumab. This product has been granted breakthrough therapy designation by the FDA.

Source: Caitong Securities

In addition, more cutting - edge new drug R & D technologies such as cell therapy have also shown great interest in COPD. The company person mentioned that the core of COPD treatment products mainly based on macromolecular antibody drugs is to play a role by inhibiting fibrosis and inflammation, which can solve the patient's ventilation problem, but it is difficult to "address the decline in the patient's gas - exchange ability caused by irreversible structural damage", and "when COPD progresses to a certain extent, the patient's gas - exchange function will have problems".

Stem cell therapy can repair the alveolar structure through airway basal stem cells and reverse the process of pulmonary fibrosis, which may hopefully solve this problem at the root. This year, in the officially announced pricing of stem cell therapy in Hainan Boao, the price for a single stem cell transplantation treatment for COPD has been set at 150,000 yuan.

This is also a "common problem" of innovative COPD drugs. The prices of Ensifentrine and new biological agent drugs are also not cheap. For example, the monthly fee for Ensifentrine in the United States is set at $3,000. In contrast, the cost of traditional treatment drugs is generally a few hundred yuan per month.

It is foreseeable that the future COPD drug market may form a "stratified selection" pattern. Traditional drugs will continue to play the role of "basic guarantee", while innovative products can cover more difficult - to - treat patients, thus promoting the more efficient development of the COPD treatment market through differentiated competition.