Controversy Surrounds Clinical Data of Blockbuster Drug, Kangfang Biotech's Stock Price Plummets

Author | Huang Yida

Editor | Zhang Fan

Recently, Kangfang Biotech (hereinafter referred to as "Kangfang") announced a series of clinical data updates for its blockbuster drug, Ewoxi, which has caught the attention of the capital market.

The major data updates are mainly concentrated in the field of lung cancer. Among them, the updated data from the HARMONi - A study shows that the overall survival (OS), a more important clinical indicator, has also reached the clinical endpoint. To some extent, this means that the probability of the drug being approved for marketing overseas has increased. The data updates from the international multi - center HARMONi study of Ewoxi show a trend where the progression - free survival (PFS) has significantly improved, and the situation of OS benefit is also getting better.

A total of 8 registration/Phase III clinical studies have been carried out for Ewoxi targeting lung cancer. The reason why Kangfang focuses on the lung cancer field is mainly because the global demand for lung cancer drugs has been strong for a long time. Among common cancer types, lung cancer has the highest incidence and mortality rates. According to the research data of the World Health Organization in 2020, there are approximately 2.2 million new lung cancer cases globally each year, and about 1.8 million patients die from lung cancer. The incidence rate of lung cancer in China is much higher than the global average and is showing an increasing trend year by year.

As the most prevalent cancer type, lung cancer has a huge commercialization space. Public data shows that the global market size of non - small cell lung cancer (NSCLC) treatment drugs was $33.9 billion in 2024 and is expected to grow to $66 billion by 2032, with a compound annual growth rate (CAGR) of about 10% during this period. On the other hand, NSCLC is also the largest segment in the PD - (L)1 market currently.

For patients, the cost of medication is a heavy burden. Calculated based on the recommended dosage and the weight of a normal patient, the annual cost of Ewoxi at the national negotiation price is between 150,000 and 160,000 yuan (before medical insurance reimbursement), which is significantly more expensive than the annual cost of the "Four Little Dragons" of domestic PD - 1 drugs at the national negotiation price. Compared with the difficulty of increasing sales volume through low - price competition, the strategy of trading efficacy for price is more favored by the capital market.

While the overall performance outlook is positive and the clinical data is improving, Kangfang's stock price has experienced a significant correction. Especially after reaching a record high since its listing during intraday trading on August 27th, it then plunged. From August 27th to September 10th, within these 11 trading days, Kangfang's stock price dropped by 21%. The stock price trend of Summit, Kangfang's main partner, is similar, and its stock price decline during the same period even exceeded 30%.

Chart: Stock price trends of Kangfang Biotech and Summit; Source: Wind, 36Kr

So, why is there such an obvious divergence between the clinical data and Kangfang's stock price trend?

01 Beating Keytruda Head - to - Head Is of Great Significance

The market pays high attention to several Phase III clinical trials of Ewoxi because, as a second - generation IO drug, Ewoxi has defeated Keytruda in the HARMONi - 2 study (in China), demonstrating remarkable efficacy. As a result, it has been successfully approved for the first - line treatment of patients with PD - L1 - positive NSCLC. Moreover, it is the world's first and currently the only drug that has beaten Keytruda head - to - head in a Phase III clinical trial.

From an industry perspective, the PD - (L)1 market has broad prospects. IQVIA predicts that the global market size of PD - (L)1 inhibitors will exceed $90 billion in 2028. However, the PD - (L)1 market is also quite crowded with many competitors. As a benchmark in this field, Keytruda was the world's best - selling drug in 2023 and 2024, with sales reaching $29.5 billion in 2024, far ahead of other competitors.

Chart: Market size of the PD - (L)1 market; Source: IQVIA, 36Kr

Although Keytruda has achieved remarkable results, there is still much room for improvement in the efficacy and safety of first - generation IO drugs. Moreover, the core patent of Keytruda will expire in 2028. As Keytruda approaches the patent cliff, the competitive landscape of the PD - (L)1 market will undergo significant changes. Against this background, the fact that Ewoxi has beaten Keytruda head - to - head is of great significance. It not only proves its leading advantages in efficacy and safety but also will be a crucial step for it to gain an edge in the reshaping of the market landscape.

It is worth noting that the HARMONi - 2 study is a clinical trial with PFS as the sole endpoint. The specific data shows that the median PFS of Ewoxi and Keytruda is 11.14 months and 5.82 months respectively (HR = 0.51). The risk of disease progression/death in the Ewoxi treatment group is reduced by 49%. From a statistical perspective, Ewoxi has a significant advantage over Keytruda.

The study also compared the OS data. However, the benefit of Ewoxi in the OS indicator is significantly less than that in the PFS. The data shows that in the interim analysis of OS at 39% maturity (the α - allocation value for this analysis is only 0.0001), Ewoxi has a clinical survival benefit over Keytruda, with HR = 0.777, reducing the risk of death by 22.3%.

02 The Stock Price Decline Is Due to Controversies over the Data

Although in China, PFS can be used as the primary endpoint to evaluate whether an anti - tumor drug can be finally approved for marketing, overseas, OS is still the gold standard for determining clinical benefit. Therefore, in multiple international multi - center Phase III clinical trials of Ewoxi, Kangfang and Summit use both OS and PFS as the primary clinical endpoints to comply with overseas drug regulatory practices.

Looking at the recent data updates from the Ewoxi HARMONi study: PFS has achieved both clinical and statistical significance. This result is within investors' expectations, and the main controversy still centers around the OS data.

The preliminary analysis of the HARMONi study announced in May this year shows that the median OS (mOS) of the Ewoxi group and the control group is 16.8 months and 14 months respectively, with HR = 0.79 (95% CI: 0.62–1.01) and p = 0.057 (the threshold is 0.0448). The problem at that time was the p - value. The study set the p - value less than 0.0448 to indicate that the trial data has statistical significance. However, the p - value of 0.057 indicates that the OS data is close to the boundary of significance, which has led some investors to be bearish on the R & D prospects of the drug.

The updated data announced at the WCLC 2025 in September shows that with the extension of the follow - up time, the HR of OS in the Western patient group has decreased to 0.78 (95% CI: 0.62–0.98), and the p - value has also dropped to 0.0332. It is specifically mentioned that the survival benefit data of the North American population is outstanding. The p - value indicates that the updated trial data has shown statistical significance, and the trend of OS benefit has become more obvious with the extension of the follow - up time.

Chart: OS analysis of the Western patient group in the HARMONi study; Source: WCLC, 36Kr

While the data has improved, controversies have also emerged. The data updated in September is follow - up data, while the data submitted to the regulatory authorities for review and approval is usually from the interim analysis or endpoint analysis. The follow - up data is mainly for reference and has limited impact on the final result. Therefore, even though the updated follow - up data in September shows statistical significance and a positive trend, it cannot guarantee 100% that the results of the interim analysis and endpoint analysis will meet the requirements.

In addition, the updated data mainly shows the improvement of OS benefit in the Western patient group, while the review and approval mainly focus on the quality of the overall data. Sub - group data is usually only used as secondary evidence. In terms of the design of the HARMONi study, there are relatively large differences in both the number and treatment background between the Western patient group and the Chinese patient group, which is also one of the controversial points in the study design. Therefore, the final OS data of different regional sub - groups may vary greatly in the future, and the issue of data consistency will also affect the performance of the overall data.

In summary, considering the current data trends and existing problems, there are still many uncertainties as to whether Ewoxi can be approved for marketing overseas through the HARMONi study. This is also the main reason why the stock prices of Kangfang and Summit have not risen but fallen after the recent intensive release of relevant clinical data.

03 What Are the Differences in Kangfang's Logic in BD - Driven Overseas Expansion?

From a horizontal perspective, both Kangfang and Hengrui are benchmark enterprises in the wave of innovative drug overseas expansion. However, there are also significant differences in their investment logics in the capital market.

Let's first look at Hengrui. In recent years, several BD projects are still in the initial signing stage. Therefore, the upfront payments from BD transactions have become an important marginal force for its short - term revenue growth. Moreover, the quantity and quality of the pipelines accumulated by Hengrui in the early stage also support it to continuously create incremental performance through BD - driven overseas expansion.

Therefore, one of the key points for judging Hengrui's performance growth lies in the number of BD project signings in the short term and the scale of upfront payments and milestone revenues that these projects can bring. Of course, this logic also applies to many domestic pharmaceutical companies that are expanding overseas through pipeline BD.

The BD transaction between Kangfang and Summit started in 2022. At present, the market's focus has shifted to the clinical progress of Ewoxi. As a potential blockbuster drug with high expectations, the clinical research prospects of Ewoxi have a significant impact on the stock prices of both Kangfang and Summit.

It can be seen that Kangfang's current investment logic still belongs to the traditional Biotech category: On the one hand, Ewoxi has been approved for marketing in China. As a potential blockbuster drug, it has begun to gradually realize its performance. On the other hand, through cooperation with Summit, if the drug is successfully approved for marketing overseas, it will significantly raise the upper limit of Kangfang's valuation. However, the current clinical data is not sufficient to prove that Ewoxi will be approved for marketing overseas with 100% certainty.

It should also be noted that being able to develop a good drug does not necessarily mean being able to sell it well. As a second - generation IO drug, Ewoxi has been proven to be significantly superior to first - generation products represented by Keytruda in terms of efficacy and safety. However, the market sales performance of a drug is determined by multiple factors such as pricing, channels, and clinical efficacy.

Currently, although Ewoxi has been approved for marketing in China, affected by the payment structure of the domestic pharmaceutical market and still in the stage of sales volume growth, the strategy of trading efficacy for price needs further verification. At the same time, the clinical promotion effect of the drug highly depends on the company's channel coverage and academic promotion ability. In addition, the competition in the IO drug market has already reached a white - hot stage. Due to the interweaving of these multiple uncertain factors, it has directly affected investors' trading decisions regarding Kangfang Biotech.

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The content of this article only represents the author's views.

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