Even the most prestigious "Oscars" in the pharmaceutical industry failed to rescue stock prices. Have innovative drugs been completely abandoned?
Text | Hu Xiangyun
Editor | Hai Ruojing
The upward fundamental and downward stock price are the true portrayal of the innovative drug sector recently.
Since June, the innovative drug sector in the stock market has continued its downward trend. Last week, at the American Society of Clinical Oncology (ASCO), the global authoritative "wind vane" for oncology clinical research, many Chinese innovative drug companies announced high - value clinical research results, but these failed to become the catalyst to reverse the market trend.
In the past, the progress of new drug clinical research announced at ASCO was a key variable affecting the stock prices of innovative drug companies. Currently, with the wave of BD going global, ASCO has been given the meaning of "collectively testing the quality of new drug assets" because "no one dares to fabricate data at ASCO".
In particular, the results brought by Chinese innovative drug companies to ASCO this year are the best in previous sessions. Among the 7,239 research abstracts included in this ASCO, as many as 488 abstracts involve Chinese institutions or new drugs, accounting for 6.7%. Hengrui Medicine alone has more than 80 abstracts. In terms of quality, Kangfang Biotech's PD - 1/VEGF Ivonescimab has been selected for the Plenary Session, which has the highest gold content and only 5 global studies are selected. Thirteen studies from 12 companies such as Baili Tianheng, BeiGene, Kelun Botai, and 3SBio have been selected as Late - Breaking Abstracts (LBA).
Surprisingly, the secondary market did not show the same enthusiasm. During the "ASCO week", the market fell for 5 consecutive days, presenting a sea of red. In particular, innovative drug companies such as Kangfang Biotech, Baili Tianheng, Dizal Pharma, and CStone Pharmaceuticals, which are recognized for disclosing higher - quality clinical research, saw their stock prices drop by more than 30% on a single day at most. The state of the missed positive news did not dissipate after the conference ended, and the slump continued until this week.
In the new stage of entering the global market, the capital market is also measuring the global investment value of Chinese innovative drug companies with stricter standards.
What is the market hesitating about?
Many interviewees in the innovative drug industry believe that the quality of the research disclosed by Chinese innovative drug companies at ASCO this year is good. "Although there are still few large - scale Phase III studies, it can cover studies at various stages and of various modalities, and the overall research is very rich," said Fan Xiaohu, the founder of Wandoo Biotech. This is very different from the situation in previous years when Chinese pharmaceutical companies were still labeled as "me - too" and there were very few high - profile studies.
At present, few people question the quality of Chinese innovative drugs. So, where is the problem?
Some practitioners believe that the factors affecting the short - term stock price fluctuations of individual stocks are complex. Recently, funds have generally flowed to the technology sector with clearer return expectations. At the same time, it is not uncommon for short - selling institutions to lie in wait before and after the data release. "The ASCO clinical data itself cannot predict short - term stock price fluctuations, and there is an element of finding reasons for positions."
Moreover, ASCO is essentially an academic exchange meeting for clinical doctors and is not linked to short - term commercial value. Even for companies like Kangfang Biotech that are selected for top - level presentations, in most cases, it is through slowly influencing clinical guidelines and doctors' drug - using choices to assist in the long - term realization of commercialization dividends, and it cannot affect short - term performance.
The pressure from the external policy environment also affects the performance of the capital market. A pharmaceutical company employee who went to the ASCO site mentioned that in the communication dominated by European and American people at the conference site, one could faintly feel a sense of "jealousy towards the Chinese innovative drug industry. The development speed of domestic companies has brought certain pressure to local European and American biotech companies, and it is also more difficult for doctoral students in Boston to find jobs than before".
Coupled with the news that Republican senators in the United States recently proposed to include biotechnology (especially drugs and biological products) in the prohibited investment scope of the COINS Act fermenting in China, geopolitics may further tighten, and the policy regulatory direction is unclear. Naturally, investors will re - evaluate the potential risks of domestic new drugs entering the global system through BD and other means.
In this regard, Liu Chen, the Managing Director of the China region of Locust Walk, a Boston - based investment bank, analyzed that in fact, "policy and legal issues such as the bill are not the core bottleneck restricting domestic pharmaceutical companies from realizing global value at this stage".
He explained that the US pharmaceutical market is balanced by three major interest groups: multinational pharmaceutical companies represented by Pfizer benefit from China's low - cost and high - efficiency R & D advantages and advocate for deepening cooperation with China, and "they have great influence in the political circle"; some local US VCs oppose cooperation because domestic innovative drugs going global squeeze the development space of local invested biotech companies and high interest rates impact their returns.
In addition, global capital represented by RA Capital is relatively neutral. They believe that the source of R & D technology "is not restricted by regions, and they are willing to invest in and incubate projects as long as they have commercialization potential". This can also be seen from the recent actions of their executives to visit China several times and cooperate frequently with pharmaceutical industrial parks such as Biobay.
"We believe that although the three forces are in continuous game, the US capital market is generally guided by interests and makes decisions highly based on the intellectual property attributes of projects. Currently, some early - stage Chinese research has the problem of relying on domestic regional advantages to avoid overseas patent licensing costs, which is often regarded as insufficient compliance by overseas institutions. However, for domestic innovative projects with independent and complete intellectual property rights, they are willing to follow the logic of market - oriented competition and provide equal cooperation opportunities," said Liu Chen.
The value verification of innovative drugs is an empirical scientific process, and it takes time to demonstrate the disease - treating effect in the human body. Due to the potential market space and economic value of innovative drugs, their global expansion is inevitably affected by factors such as geopolitics and the economic environment, and more communication work is needed. The effectiveness and safety of disease treatment are the core strength of innovative drugs. Only by proving this can there be capital to talk about higher - level concerns. Today's so - called 'doubts' are exactly the proof that Chinese new drugs have entered global competition," said Qu Zhican, the founder of Naan Biotech.
New stage, new standards
Currently, although there is a disenchantment sentiment in the outside world regarding the realization of milestone revenues from the BD of innovative drugs going global, under the realistic constraints of domestic medical insurance payment and the imperfect overseas commercialization capabilities of pharmaceutical companies, BD will still be the most core revenue - generating path for innovative drug companies for a long time.
The real test for innovative drug companies at this stage lies in who can explore more market - promising BD R & D directions and complete successful transactions. This trend has already emerged at ASCO.
Qu Zhican has been engaged in new drug research in the United States for nearly 30 years and has participated in ASCO many times. Her team has 3 studies involving ADC/RDC included this year. She explained that the underlying idea of new oncology drug R & D revolves around three core clinical challenges: overcoming tumor heterogeneity, drug resistance, and breaking the separation between diagnosis and treatment. Most of the innovations in various modalities such as ADC, bispecific antibodies, and nuclear drugs, or the exploration of different target combinations and combination drug regimens at previous ASCOs have been trying to seek breakthroughs from these three dimensions.
However, now she can feel the change that Chinese innovative drug companies participating in the conference are already leading some R & D directions. They are not satisfied with just being seen and having equal exchanges, but hope that their R & D directions will be recognized by international peers and truly participate in the evolution of the global oncology treatment paradigm.
One of the most representative potential directions at this ASCO is the combination therapy of ADC (antibody - drug conjugate) + IO (immunotherapy).
It originally originated from the "Keytruda + ADC" combination treatment system created by Merck for its "PD - 1 anti - cancer wonder drug" Keytruda. The core idea is that the efficacy of traditional immunotherapy monotherapy or combination chemotherapy has reached a bottleneck, while ADC drugs can activate the tumor's own immune response, turning the "cold tumors" that originally evaded immune attacks into "hot tumors" that are easily targeted by immune cells, enabling immunotherapy to work better.
Both the R & D of PD - 1 and ADC drugs involve engineering transformations that Chinese pharmaceutical companies are good at, and most of the leading companies are now from China. At ASCO, Kelun Botai first announced a Phase III clinical study of its self - developed ADC Lucanixetuzumab in combination with Keytruda for the first - line treatment of PD - L1 - positive advanced non - small cell lung cancer. Compared with Keytruda monotherapy, it significantly prolonged PFS and reduced the risk of progression/death. This is also the first time globally that an ADC + IO has defeated the "drug king" Keytruda in a Phase III study.
In addition, companies including Hengrui Medicine, Rongchang Biotech, Bio - Techne, and CSPC have all disclosed relevant studies, and they are all in the late Phase II/III clinical stage. It can be predicted that the prospect of ADC + IO being included in the oncology first - line treatment guidelines is promising. In the case of the saturation of the ADC monotherapy track represented by traditional HER2 ADCs, this is an iterative direction that the BD team should focus on.
Of course, only a few research directions can form an industrial trend. Liu Chen believes that domestic innovative drug teams are better at early - stage target and process R & D but lack global clinical development experience. After the clinical trials enter the Phase I dose - escalation and indication expansion stages, there are generally short - comings in how to select the diseases to be developed first and design clinical protocols. Using the ASCO platform to directly consult top overseas clinical experts on global market clinical development issues can save a lot of effort.
"ASCO is the place with the highest concentration of oncology R & D executives and KOLs from multinational pharmaceutical companies. In BD decision - making, not only the voices of the R & D department are crucial, but the internal project review of multinational pharmaceutical companies also highly depends on the opinions of external authoritative PIs. If top PIs recognize the clinical value of a certain drug or a certain research direction at ASCO, it will also be helpful when providing consultations to multinational pharmaceutical companies," said Liu Chen. In one of the projects he handled, after experts learned about the research at ASCO, they actively sent an email to recommend it to the R & D director of a multinational pharmaceutical company, and the negotiation was successfully promoted.
This indeed represents the original intention of some companies to participate in the conference. This year, the program of InnoCare's novel BCL2 inhibitor mesutoclax for the treatment of myelodysplastic syndromes (MDS) was selected for an oral presentation at ASCO. Currently, there is no BCL2 inhibitor approved for the treatment of MDS on the market. InnoCare told 36Kr that one of the core purposes of participating in ASCO this time is to consult international hematology - oncology experts for "more clinical development suggestions for pipelines such as mesutoclax to accelerate the product launch process".
Fan Xiaohu also mentioned this point. Wandoo Cell is targeting the non - gene - edited universal CAR - T path, aiming to achieve large - scale industrial production of off - the - shelf CAR - T. At a time when cell therapy companies are collectively turning to in - vivo CAR - T R & D, this direction is quite niche.
"We only showed some early - stage research results and did not expect to reach a cooperation based on a small amount of patient data. The core purpose is to introduce the new track to the industry, showcase the company's technology platform, and build awareness. The overall effect is good. We have received many communication requests recently, and some peers on - site recognized that this is a new direction with verification value."