Ascendance Pharmaceuticals has achieved great success in 2024. The sales of the first commercialized product have been soaring, and the BD transaction with Takeda Pharmaceutical has enabled the company to turn losses into profits for the first time. The pipeline under development is progressing smoothly...

Under multiple favorable factors, Ascentage Pharmaceuticals' share price in 2024 has risen from HK$27 per share at the beginning of the year to HK$45.45 per share, an increase of 68%. If calculated from the low point in April, it has risen by 195%, becoming the "dark horse" among pharmaceutical stocks this year.

At the same time, Ascentage Pharmaceuticals has also started the IPO process in the US stock market. Recently, Ascentage Pharmaceuticals' listing filing for IPO in the US has been confirmed by the China Securities Regulatory Commission, and it plans to issue no more than 33,739,347 common shares and list on the Nasdaq Stock Exchange in the United States.

Turnaround tool
Founded in 2009, Ascentage Pharmaceuticals focuses on the research and development of original new drugs in the field of cancer and other diseases. Its founders include three overseas returnee scientists, Dr. Yang Dajun, Dr. Guo Ming and Dr. Wang Shaomeng. Before 2021, Ascentage Pharmaceuticals had no products on the market. In order to support the high R&D investment, after several rounds of financing, it was successfully listed on the main board of the Hong Kong Stock Exchange in October 2019.

Four years after its listing on the Hong Kong stock market, in the first half of 2024, Ascentage Pharmaceuticals achieved a major breakthrough, achieving revenue of 824 million yuan, a year-on-year increase of 477%; net profit of 163 million yuan, successfully turning losses into profits, and the key to this transformation lies in its first commercialized product-Olebatinib (Nerlik).

Olebatinib is a novel oral third-generation tyrosine kinase inhibitor (TKI), the first third-generation TKI to be marketed in China. It has good activity against multiple kinases including BCR-ABL, KIT, PDGFR, FGFR, b-RAF, DDR1, FLT3, etc., and has broad prospects in the treatment of solid tumors and blood tumors.

In 2016, Ascent Pharmaceuticals acquired Shunjian Bio, thereby acquiring Olebatinib, and was approved for its first indication in November 2021, becoming the first drug in China for the treatment of TKI-resistant chronic myeloid leukemia (CML) with T315I mutation, filling the gap in clinical treatment. In November 2023, its indications were further expanded to CML-CP patients with resistance and/or intolerance to first- and second-generation TKIs.

In terms of commercial promotion, in July 2021, Ascentage Pharma and Innovent Biologics reached an agreement that the two parties will jointly promote commercialization in the Chinese market and share the profits from the joint promotion at a ratio of 50%:50%. With the help of Innovent Biologics' commercialization channels and professional team, Olebatinib was able to quickly cover hospitals and pharmacies at all levels. In 2023 and 2025, Olebatinib's two major indications were successively included in the medical insurance catalog, greatly improving the accessibility of the drug.

In the first half of 2024, Olebatinib's sales revenue was 113 million yuan, a month-on-month increase of 120% and a year-on-year increase of 5%. It is predicted that sales in 2024 and 2025 are expected to reach 218 million and 478 million yuan.

However, sales revenue alone is not enough for Ascentage Pharma to turn losses around so quickly. On June 14, 2024, Ascentage Pharma and Takeda signed an exclusive option agreement for the global license of Olebatinib. Takeda paid $100 million in option payments, as well as up to approximately $1.2 billion in option exercise fees and additional potential milestone payments, to obtain the development and commercialization rights for orebatinin worldwide (excluding mainland China, Hong Kong, Macau and Taiwan).

This largest BD for small molecule oncology drugs in China not only enabled Ascentage Pharmaceuticals to achieve a significant turnaround in the first half of the year, but also paved the way for the global commercialization of its products. At present, orebatinin is in the global and US registration phase III clinical stage for drug-resistant chronic myeloid leukemia, Philadelphia chromosome-positive acute lymphoblastic leukemia, and SDH-deficient gastrointestinal stromal tumor indications. With the approval of new indications and the development of international markets, the commercial value of orebatinin will be fully released, laying a solid economic foundation for Ascentage Pharmaceuticals' subsequent research and development and sustainable development.

In addition to orebatinin, Ascentage Pharmaceuticals' pipeline under development is also very competitive. At present, a rich and diverse matrix of innovative drug products has been successfully built, including inhibitors of key proteins in the apoptosis pathway such as Bcl-2, IAP or MDM2-p53, and a new generation of inhibitors targeting kinase mutants that appear in cancer treatment.

From the perspective of the layout of the R&D pipeline, Ascentage Pharmaceuticals has formulated a clear global step-by-step listing strategy, among which APG-2575 and APG-2449 are very potential and are expected to follow Olebatinib and become the company's new commercial products.

APG-2575 (Lisaftoclax) is a new oral Bcl-2 selective inhibitor that selectively inhibits Bcl-2 protein and restores the normal apoptosis process of cancer cells, thereby achieving the purpose of treating tumors.

Currently, there is only one Bcl-2 inhibitor approved in the world, which is AbbVie's blockbuster drug Venetoclax, with sales reaching US$2.3 billion in 2023. APG-2575 is currently undergoing five registration clinical studies, among which the NDA for the indication of relapsed/refractory (R/R) chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) has been submitted in China in November 2024 and recommended for priority review. It is expected to become the first domestically produced and the second Bcl-2 inhibitor to be marketed in the world.

Multiple clinical data show that APG-2575 performs well in key indicators such as safety, surpassing Venetoclax, which enables it to break the existing market structure and impact the monopoly of Venetoclax after it is launched.

APG-2449 is an oral small molecule FAK inhibitor and also a third-generation ALK/ROS1 TKI. Two registration phase III clinical studies are currently being conducted for patients with non-small cell lung cancer (NSCLC) resistant or intolerant to second-generation ALK TKI, or patients with newly treated ALK-positive advanced or locally advanced NSCLC, and are expected to become the world's first FAK/ALK/ROS1 triple inhibitor.

According to the latest data released by Ascentage Pharmaceuticals at the 2024 American Society of Clinical Oncology (ASCO) Annual Meeting, APG-2449 showed preliminary efficacy in patients who had not been treated with TKI or in patients who were resistant to the second-generation ALK TKI, and also had preliminary efficacy on brain metastases.

In addition, the MDM2-p53 inhibitor APG-115, Bcl-2/Bcl-xL inhibitor APG-1252, and EED inhibitor APG-5918 in Ascentage Pharmaceuticals' pipeline all have global "First-in-class" potential and are expected to occupy a place in the future global pharmaceutical market.

Listing in the United States
Currently, Ascentage Pharmaceuticals has conducted more than 40 clinical trials in China, the United States, Australia and Europe, including 13 registered clinical studies. From 2022 to the first half of 2024, Ascentage Pharmaceuticals' R&D expenditures reached 743 million yuan, 707 million yuan and 444 million yuan respectively.

In order to ensure the smooth progress of the pipeline under development, Ascentage Pharmaceuticals has taken a series of measures to ensure the stability and adequacy of the capital chain. On the one hand, accelerate the commercialization process of products to enhance its own hematopoietic ability; on the other hand, actively expand financing channels.

After listing on the Hong Kong stock market, Ascentage Pharmaceuticals raised funds through share placements in 2020, 2021 and 2023, raising approximately HK$700 million, HK$1.56 billion and HK$550 million respectively. In the BD transaction with Takeda Pharmaceutical, Takeda Pharmaceutical also invested US$75 million in Ascentage Pharmaceuticals and acquired 7.73% of Ascentage Pharmaceuticals' shares, further enriching its capital reserves. As of July 2024, Ascentage Pharmaceuticals held more than 1.8 billion yuan in cash, providing a stable cash flow for the continued advancement of R&D and commercialization.

On June 14, 2024, Ascentage Pharmaceuticals took a new strategic step and confidentially submitted a draft registration statement on Form F-1 to the U.S. Securities and Exchange Commission, planning to conduct an initial public offering of common stock in the form of American depositary shares.

On December 23, the website of the China Securities Regulatory Commission showed that Ascentage Pharmaceuticals received the China Securities Regulatory Commission's overseas issuance and listing registration notice, and plans to issue no more than 33.7393 million common shares and list on the Nasdaq Stock Exchange in the United States.

On December 27, Ascentage Pharmaceuticals publicly submitted an IPO to the U.S. Securities and Exchange Commission (SEC), intending to apply for listing on the Nasdaq Global Select Market with the stock code "AAPG". J.P.Morgan Securities LLC and Citigroup Global Markets Inc. will serve as joint bookrunners and underwriters for this offering. If all goes well, Ascentage Pharmaceuticals will be listed on the U.S. stock market in 2025, becoming the fourth innovative pharmaceutical company listed in Hong Kong and the United States after BeiGene, Hutchison MediPharma, and Zai Lab.

Compared with the financing pressure generally faced by domestic innovative pharmaceutical companies, the U.S. stock market is generally more optimistic about the valuation of innovative pharmaceutical companies, and gives higher value recognition to companies with real innovation potential. Ascentage Pharmaceuticals' choice to go public in the United States will not only broaden its financing channels and obtain more financial support, but also give it the opportunity to re-evaluate its corporate value in the U.S. stock market, attract more extensive capital attention and investment, and thus provide stronger financial support for its innovative research and development.

In addition, Ascentage Pharmaceuticals' multiple pipeline products under development are undergoing clinical trials worldwide, and it has 367 overseas authorized patents. After entering the U.S. stock market, it will help it to deeply integrate into the global biotechnology industry chain, better conduct international cooperation and exchanges, and enhance its influence and competitiveness in the global biopharmaceutical field.

2024 is a brilliant year for Ascentage Pharmaceuticals. The commercial value of Olebatinib is gradually realized, the pipeline under development has great potential, and the soaring stock price is the market's recognition of it. Now, the journey to go public in the United States has begun, and we look forward to Ascentage Pharmaceuticals shining on the international stage in 2025.

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