Over 80 billion, breaking records! The largest deal in the history of Chinese pharmaceuticals going overseas has arrived

$81.22 billion - The record amount for China's innovative drug overseas transactions has been refreshed.

The total amount of this transaction is expected to reach $11.4 billion, approximately RMB 81.22 billion, with an initial payment of $1.2 billion, about RMB 8.55 billion, which matches the total revenue of authorized pharmaceutical companies for the entire last year.

Foreign media commented that this transaction is a "turning point for China's innovative drug industry." However, the most important aspect of this transaction is not just the amount.

Over 80 billion, the largest deal in the history of China's innovative drug overseas transactions

This astronomical transaction is a global strategic cooperation between INNOVENT BIO and Takeda Pharmaceutical, with a total transaction amount of $11.4 billion and an initial payment of $1.2 billion (including a $100 million premium strategic equity investment).

Source: Reference Material 2

What kind of drug is so valuable? According to the currently disclosed details, the transaction includes three main components:

(1) INNOVENT BIO and Takeda Pharmaceutical will jointly develop the next-generation IO cornerstone therapy IBI363 (PD-1/IL-2α-bias) globally and commercialize it together in the United States, with Takeda Pharmaceutical leading the relevant work under a jointly governed and coordinated development plan; at the same time, INNOVENT BIO grants Takeda Pharmaceutical commercialization rights for IBI363 in regions outside Greater China and the United States.

(2) INNOVENT BIO grants Takeda Pharmaceutical exclusive rights for IBI343 (CLDN18.2 ADC) in regions outside Greater China.

(3) INNOVENT BIO grants Takeda Pharmaceutical exclusive option rights for IBI3001 (EGFR/B7H3 ADC) in regions outside Greater China.

What are these three therapies? Let's discuss them one by one:

IBI363

The world's first-in-class (FIC) PD-1/IL-2α-bias bispecific antibody fusion protein. This drug utilizes a unique PD1 monoclonal antibody and IL-2 fusion design to achieve dual activation of effector T cells.

Potential efficacy advantages: Phase Ib/II clinical data show excellent tumor response and preliminary survival benefits against immune-resistant lung cancer, acral/mucosal melanoma, and microsatellite stable (MSS) colorectal cancer.

Latest progress: It has entered multiple registration clinical developments, with a global Phase III registration clinical study for IO-resistant squamous non-small cell lung cancer (sqNSCLC) about to start, having received breakthrough therapy designation from China's NMPA and fast track qualification from the U.S. FDA.

IBI343

The ADC class of topoisomerase 1 (TOPO1) inhibitors targeting CLDN18.2 has high stability and strong killing effect.

Potential efficacy advantages: Significant improvement in safety compared to other CLDN18.2 similar products, allowing for exploration of combination therapy with chemotherapy; has shown unique differentiated advantages in first-line treatment.

Latest progress: A Phase III clinical study targeting gastric/gastroesophageal junction cancer (G-HOPE-001) has been initiated, receiving breakthrough therapy designation from China's NMPA; a global Phase I/II clinical study for previously treated pancreatic ductal adenocarcinoma (PDAC) has been completed, receiving breakthrough therapy designation from China's NMPA and fast track designation from the U.S. FDA.

IBI3001

The world's first dual antibody ADC targeting B7-H3 and EGFR.

Potential efficacy advantages: Multiple anti-tumor mechanisms, including enhanced EGFR blocking effect, receptor-mediated internalization, and potent ADC-mediated cytotoxicity, demonstrating a high safety therapeutic window in preclinical models.

Latest progress: Currently in Phase I clinical stage, the world's first EGFR/B7 H3 ADC to enter clinical trials.

$11.4 billion, a truly astronomical price in the context of domestic innovative drugs going overseas.

From a macro perspective on domestic innovative drugs going overseas, this transaction sets a new record for confirmed transaction amounts; for Innovent Biologics itself, the upfront payment alone is close to the total revenue for the entire last year—it's worth noting that Innovent Biologics' 2024 financial report is already very impressive, having achieved positive Non-IFRS net profit and EBITDA, with total annual revenue reaching 9.42 billion yuan.

For Chinese innovative drugs to make money, "going overseas" remains an important topic.

Crossing the river by feeling the stones: Need money, but also need to learn "shipbuilding"

Today, Chinese pharmaceutical companies are exploring more and more new models. There are two common approaches.

The first is "building ships to go overseas": developing and selling independently, which requires local pharmaceutical companies to conduct clinical trials and apply for market approval overseas, and after approval, their own teams will handle sales abroad.

Although this model offers strong autonomy and all profits belong to the company, it requires a large amount of capital investment and faces direct competition from local pharmaceutical companies in Europe and the United States—entering another's territory with bare hands to carve out a space is evidently fraught with difficulty and risk.

The second is "borrowing ships to go overseas": pharmaceutical companies directly sell their pipelines, handing everything over to partners, leveraging their mature international development and commercialization channels, and simply waiting to collect money (milestone payments) This is also the "going abroad" method favored by the vast majority of Chinese pharmaceutical companies, namely License-out.

However, this time, the transaction between INNOVENT BIO and Takeda not only set a new record in terms of amount but also chose a third path.

On the day this transaction was announced, INNOVENT BIO held a conference call for interpretation, where the most mentioned keyword was not record-breaking or sky-high price, but "Co-Co" model.

The Co-Co model refers to the "co-development and commercialization model," with the core feature being that Takeda and INNOVENT BIO will jointly bear development costs and share commercialization revenues.

For example, in the case of IBI363 in this transaction, it is not the usual "authorization outside Greater China," but a complete collaboration:

After authorization, Takeda will lead the joint development and commercialization work under a "joint governance and coordinated development plan," with INNOVENT BIO and Takeda jointly developing globally, sharing development costs at a 40/60 ratio (INNOVENT BIO/Takeda), and also distributing profits or losses in the U.S. market at a 40/60 ratio.

Even for the subsequent clinical development plans, although led by Takeda, it will also require "consensus" with INNOVENT BIO before "joint advancement."

Why choose the Co-Co model? INNOVENT BIO stated in the conference call interpretation: "What INNOVENT BIO needs is not just cooperation at the commercialization level, but hopes to build its global capabilities through commercial cooperation."

In 2021, INNOVENT BIO announced its second decade development goal, hoping to become a company with global development capabilities, industrialization capabilities, and commercialization capabilities by 2030. By 2027, product revenue is expected to reach 20 billion RMB; by 2030, at least 5 pipelines will enter global multi-center Phase III clinical studies, with overseas sales accounting for 40%.

To achieve these ambitious goals, money alone is far from enough for INNOVENT BIO.

In this Co-Co collaboration with Takeda, how to leverage the existing resources and experience of an established global pharmaceutical company to build its own global development and commercialization capabilities is the key focus for INNOVENT BIO.

Of course, to forge iron, one must be strong oneself. INNOVENT BIO's choice of the Co-Co model and its successful achievement stem from the high value of the pipeline itself, as well as the reflection of INNOVENT BIO's global development potential.

As for whether this potential can be transformed into strength, let's set an alarm for five years from now and see if China's own pharmaceutical MNC has been forged.

Reference:

[1] https://mp.weixin.qq.com/s/Kjj4MwOTRJk_tT-gAesWfA [2] https://investor.innoventbio.com/media/1330/%E4%BF%A1%E8%BE%BE%E7%94%9F%E7%89%A9_%E4%B8%8E%E6%AD%A6%E7%94%B0%E5%88%B6%E8%8D%AF%E8%BE%BE%E6%88%90%E5%85%A8%E7%90%83%E6%88%98%E7%95%A5%E5%90%88%E4%BD%9C_20251022_final.pdf

Author of this article: Yu Yi, Source: Dingxiangyuan, Original title: "Over 80 billion, breaking records! The largest deal in the history of China's pharmaceutical overseas expansion has arrived"

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