In September 2015, Jiangsu Hengrui Medicine made history by out-licensing global rights (not including China) to its PD-1 cancer immunotherapy. Incyte, a US oncology pharma, acquired the rights in a deal worth up to USD 795 million if Hengrui collects all the milestones, the largest amount ever paid for a single China pharma asset. The deal underscores the tremendous progress the China biopharma industry, and Hengrui in particular, has made in transforming into a global developer of novel drugs. Traditionally a maker of generic drugs—including many cancer treatments—Hengrui is now at the forefront of innovative cancer drugs for the global market.
Lianshan Zhang, President of Global R&D, Hengrui
Lianshan Zhang, PhD, President of Global R&D at Hengrui and a bona fide sea turtle or hai gui, has had a significant role in this transformation. He told ChinaBio® Today, in an exclusive interview reprinted here by partneringNEWS™, that Incyte is a very good fit for Hengrui’s PD-1 molecule. “This is a very unique collaboration between the two companies. Incyte is one of the most innovative companies in cancer and has a strong immuno-oncology pipeline,” he said. Incyte has nine molecules in clinical trials for various cancer indications, including its own PD-1 candidate.
PD-1 drugs work by inhibiting the signaling that turns off a patient’s immune system. In effect, the drugs mobilize the immune system to fight the cancer. “PD-1 molecules are wonderful drugs that are promising treatments for all kinds of cancer,” declared Dr. Zhang. But PD-1 drugs are expected attain much higher response rates when paired with other cancer treatments, he explained. “If you want to attack cancer in terms of immuno-oncology, you need to use combinations with PD-1.”
Although the Hengrui-Incyte deal significantly raised the bar for China pharma out-licensing deals, Dr. Zhang characterized the transaction as “not that high.” He pointed out that the deal is heavily back-loaded, with “only” a USD 25 million upfront payment. Hengrui places “a lot of emphasis on the down the road” success, he declared, and Incyte was happy with that kind of deal. Because Hengrui is not in a great need for cash, Dr. Zhang believes it has the resources to fund development of its novel oncology pipeline in China. Nevertheless, the valuation of the overall deal “made us very happy,” he admitted.
One major milestone of the Hengrui-Incyte agreement is a USD 150 million payment if the drug can prove it is best-in-class, an unusual provision. Hengrui had promising preclinical data, said Dr. Zhang, which occasioned the milestone. Hengrui will compare the drug to competing PD-1 antibodies from Bristol-Myers Squibb and Pfizer to trigger the milestone, though details of the comparison are not known.
Hengrui’s shift toward innovation
While Hengrui’s PD-1 program did not begin until 2012, the company is now “dedicated to innovation and to transforming into a world class company,” said Dr. Zhang. He attributes the change in philosophy from generics to innovation to the company’s Chairman, Mr. Piaoyang Sun. “The Chairman had the guts and started [to develop innovative drugs] much earlier than anyone else in China.”
Because of Hengrui’s success at innovation and globalization, Dr. Zhang believes that other China pharmas are now attempting to mimic the company. “Everyone wants to copy Hengrui,” he said. That forces Hengrui to keep moving to stay ahead, he added.
In the next 15 to 20 years, Hengrui expects to undertake more advanced research. Now, it seeks to achieve incremental progress, working on PD-1 drugs to find a best-in-class candidate. Over time, it will progress to de novo research, presumably first-in-class molecules. “We can pick and choose what we want to develop, especially in oncology. Drawing from our toolbox allows us to be more flexible,” said Dr. Zhang. “We will emphasize combinations [of drugs] to benefit patients.”
As the effort grows, Hengrui plans to place even more emphasis on collaborative research, including international collaborations in areas such as cell-based therapies and cancer vaccines. “We put a lot of emphasis on collaborative research,” said Dr. Zhang, “and have already done a lot of deals with small biotechs in China and the US, as well as with top-tier academic research institutions in the US including Albert Einstein [College of Medicine].” He added that these relationships will help Hengrui expand its knowledge and build a larger community of resources.
In addition, Hengrui is open to partnering with companies in China, but like all of its collaborations, Dr. Zhang believes the deals will be focused on success. “We are not a multinational, but a small company with limited funding. For us, USD 100 million is a lot of money,” he said. “We put a lot of emphasis down the road, if the collaboration is successful.”
One of the ways that Hengrui keeps abreast of partnering is by attending the annual ChinaBio® Partnering Forum. “As a leading developer of novel cancer drugs in China, Hengrui is always looking for innovative ideas that bring better treatments for patients,” said Dr. Zhang. “At ChinaBio Partnering Forum, we meet many companies from here in China as well as from the US and Europe, and we can discuss possible collaborations to help bring new medicines to the market.”
Meanwhile, external to the world of China drug discovery, China’s economic outlook has lost some of its optimism with GDP growth expected to continue to slow. Its stock market, which was rising strongly until recently, has given back a large share of its gains. But Dr. Zhang says Hengrui is not concerned with the market. “Our Chairman is very conservative, and—no doubt about it—we will continue to invest in the biomedical market. There is a huge unmet medical need in cancer and we have to work very hard,” he said simply.