Recently, Ascletis announced that its independently developed small molecule GLP-1R agonist ASC30 is undergoing two Phase I clinical trials in the United States for the treatment of obesity with monthly subcutaneous injections and daily oral tablets.

With the launch of these two Phase I clinical trials, Ascletis has officially entered the field of weight loss drugs. This is another highlight of the pipeline after Ascletis announced in April this year that it would focus on the development of core non-alcoholic steatohepatitis (NASH) drugs.

Urgent need for a new engine

Like most biotechs, Ascletis has also been moving forward by trial and error.

However, Ascletis is luckier than most biotechs. It has become famous for its first local original hepatitis C drug Ganovo, which not only broke the monopoly of multinational companies such as Gilead, AbbVie, Bristol-Myers Squibb, and Merck in the domestic hepatitis C drug market, but also successfully landed on the Hong Kong Stock Exchange and became the first 18A stock.

Hepatitis C did make Ascletis the first pot of gold. Gonovo was launched in June 2018 and sold 70 million yuan in the first half of its launch. In 2019, Gonovo earned another 124 million yuan.

However, the good times did not last long. At that time, the competition in China's new hepatitis C drug market was extremely fierce. After entering China, major multinational companies flocked to China and aimed at medical insurance negotiations. Although Ascletis was also actively preparing for the battle, it lost to giants such as Merck in 2019 and was eliminated. Missing medical insurance, the market for Gonovo shrank sharply, and Ascletis' performance gradually came under pressure. By 2020, Ascletis took the initiative to terminate the Gonovo treatment plan (danoprevir plus long-acting interferon and ribavirin), and its product sales revenue in 2021 was only 33,000 yuan.

After Gonovo, Ravidasvir (Sinlilai), the second innovative Class 1 HCV drug developed by Ascletis, was successfully approved for marketing in July 2020, and in 2021, Sinlilai and Gonovo were included in the medical insurance together. However, since the HCV drug market is a shrinking market, and after the early "sweep" by multinational pharmaceutical companies such as Gilead and AbbVie, the number of HCV patients in China is not large, and the first-mover advantage was missed, the sales of Sinlilai and Gonovo were not good.

After that, Roche terminated the promotion service of the long-acting interferon Pegasys provided by Ascletis Pharmaceuticals. For Ascletis Pharmaceuticals, the "door of wealth" of hepatitis C, which was once a door to wealth, is basically closed.

The failure of hepatitis C did not make Ascletis Pharmaceuticals unable to recover, but quickly turned its attention to COVID-19 drugs.

In September 2021, Ascletis ritonavir was approved for marketing by the National Medical Products Administration. In the "New Coronavirus Pneumonia Diagnosis and Treatment Program (Trial Ninth Edition)" issued by the National Health Commission in 2022, PF-07321332/ritonavir tablets (Paxlovid) were included in the diagnosis and treatment program. In 2023, ritonavir contributed approximately 49.4 million yuan in revenue, accounting for more than 80% of total revenue. However, as the new crown receded, the market demand for ritonavir products shrank sharply in 2024. According to Ascletis's 2024 semi-annual report, the sales revenue of ritonavir products in the first half of 2024 was zero.

With the successive loss of several commercial products, Ascletis' current performance has returned to zero, and it is imperative to find new performance increments. Faced with the current predicament, Ascletis quickly restructured its pipeline and focused on NASH and weight loss drugs.

Do NASH and weight loss drugs have potential?

As the "first Hong Kong 18A stock", Ascletis's business performance has always attracted much attention from the market. Can Ascletis find a new engine for performance by shifting its R&D pipeline recently?

First of all, regarding the NASH field, Ascletis began to focus on its layout as early as when it lost ground in the hepatitis C field, but starting this year, its determination to find a breakthrough through NASH has become more resolute. In April this year, Ascletis terminated the clinical research of ASC42 for primary biliary cholangitis (PBC), combined treatment of NASH, and treatment of hepatitis B, and injected funds from pipeline cuts into the NASH track, mainly promoting two NASH candidates, ASC41 and ASC40.

As a widespread health problem worldwide, the treatment of NASH is still in the stage of combined drug treatment, and there are still serious unmet clinical needs. Except for the new drug Resmetirom approved in the United States, no other NASH new drugs have been launched at home and abroad. According to Frost & Sullivan data, the global NASH drug market size has reached US$1.9 billion in 2020, and will reach US$32.2 billion by 2030, with a compound annual growth rate of 24.6%.

There are about 400 million liver disease patients in my country, of which the NASH patient base is huge, about 50 million. At present, the domestic NASH drug market is in bud and has huge market potential. According to Frost & Sullivan data, China's NASH drug market reached RMB 700 million in 2020 and is expected to reach RMB 35.5 billion by 2030, with a compound annual growth rate of 61.4%.

As for the two NASH candidates promoted by Ascletis, ASC41 has relatively excellent data and has certain global competitive advantages. Its 52-week Phase II clinical interim data showed that after taking ASC41 tablets for 12 weeks, the average relative decrease in liver fat content compared with the baseline in NASH patients confirmed by liver biopsy was as high as 68.2%, which is not inferior to Resmetirom, the first new drug for the treatment of NASH that was approved by the FDA in March this year. Ascletis said it will complete the enrollment of patients for the Phase II clinical study of ASC41 in 2024.

In addition, ASC40 is a potential first-in-class FASN inhibitor. Its 52-week Phase IIb clinical trial for the treatment of patients with NASH with stage II or III fibrosis confirmed by liver biopsy showed that ASC40 achieved statistically significant results in both NASH relief and fibrosis improvement.

Although Ascletis' two NASH candidates are still in Phase II clinical trials, overall, Ascletis' NASH pipeline has the leading R&D progress among domestic candidates with the same target, and its existing clinical data has performed well, winning valuable priority for entering the NASH market. At present, Ascletis is focusing on promoting the R&D of its core NASH pipeline, which has indeed supported a certain imagination space for Ascletis' future development.

Secondly, regarding the weight loss drug (ASC30) that has just been put on the agenda by Ascletis, although there are certain doubts about its entry into the weight loss track at this point when the weight loss drug market is relatively mature and the competition is fierce, Ascletis' candidate is not without advantages.

ASC30 is the world's first and only small molecule GLP-1 receptor agonist that can be injected subcutaneously once a month or taken orally once a day for the treatment of obesity. ASC30 tablets and ASC30 injections were approved by the U.S. Food and Drug Administration (FDA) for new drug clinical trials (IND) in July 2024 and September 2024, respectively, and the top-line data of these two U.S. Phase I clinical trials are expected to be obtained in Q1 2025.

In terms of market prospects, in the obesity and diabetes markets, monthly injections and daily oral medications improve patient compliance and are very attractive to patients. Most of the GLP-1 receptor agonists currently on the market are weekly injection preparations. ASC30 may make it possible for the same small molecule to be used for both subcutaneous injection and oral tablet administration, which has differentiation potential.

According to the experimental data, the half-life of ASC30 injection is up to 25 days, which supports monthly injection in humans. Compared with peptide GLP-1 drugs injected once a week and antibody-peptide conjugate candidate drugs injected once a month, ASC30 has a potential strong competitive advantage (lower injection frequency and/or lower cost).

In addition, the half-life of ASC30 tablets is up to 36 hours, which supports daily oral administration. In non-human primates (NHPs), oral administration of ASC30 once a day can significantly reduce body weight, and the steady-state relative bioavailability of ASC30 tablets reaches 99%.

At present, the fastest-growing small-molecule GLP-1 drug that supports daily oral administration is Eli Lilly's Orforglipron. Ascletis Pharmaceuticals said in the announcement that after head-to-head comparison, ASC30 is 2 to 3 times higher than Orforglipron; in the intravenous glucose tolerance test (IVGTT) conducted on NHPs, ASC30 (dose: 1.5 mg/kg) stimulates more insulin secretion compared with Orforglipron (dose: 6 mg/kg), with a statistically significant difference.

GLP-1 weight loss drugs have always been the favorite of the capital market, and Ascletis Pharmaceuticals obviously does not want to miss it. Although dozens of domestic companies have already laid out in the GLP-1 field, and research and development has become a red ocean, Ascletis Pharmaceuticals, which entered the market relatively late, may also win opportunities through differentiated drug design. Innovative drug research and development has always been a life-and-death struggle. Failure is the norm and success is accidental. Whether it is NASH or weight loss drugs, they are all Ascletis Pharmaceuticals' efforts to move forward when it is at a low point. At present, Ascletis' cash reserves are still sufficient. According to the financial report, as of the first half of this year, Ascletis Pharmaceuticals had cash reserves of 2.117 billion yuan, which can basically guarantee R&D and operations for the next five years.