Recently, Wu Qing, Chairman of the China Securities Regulatory Commission, stated in a signed article entitled "Strive to Create a New Situation of High-Quality Development of the Capital Market" published in the magazine "Qiushi": "Support the development of new quality productivity, support the issuance and listing of high-quality non-profit technology-based enterprises, and develop diversified equity financing."

With the gradual implementation of this policy concept, the capital market has ushered in new development opportunities.

On February 7, Dizhe Pharmaceuticals issued an announcement stating that the targeted issuance plan of the Science and Technology Innovation Board has been registered by the China Securities Regulatory Commission, and it is expected to raise no more than 1.85 billion yuan. At the same time, this is also the first non-profit enterprise refinancing plan to be registered on the Shanghai Stock Exchange since the release of the "Eight Measures on Deepening the Reform of the Science and Technology Innovation Board to Serve Technological Innovation and the Development of New Quality Productivity" by the China Securities Regulatory Commission

in late June 2024. Previously, after the initial commercialization of suvotinib was a great success and broke the sales record of rare targets, Dizhe Pharmaceuticals also gave many concerned people a big surprise at the end of 2023: both suvotinib and golixitinib, two new products, have entered the medical insurance, which will greatly accelerate the progress of volume release. Dizhe Pharmaceuticals is "full of energy" and ready to do a big job.

The success of Suvotinib, the "first fire" of commercialization of Dizhe Pharmaceuticals, is obvious to all: it was launched in China in August 2023, and its sales in the same year exceeded 90 million yuan; and in the first half of 2024, its sales revenue reached an astonishing 204 million yuan, more than doubling the month-on-month growth in half a year. The great success of this drug not only depends on the company's efficient commercialization capabilities, but also fully reflects the value of Dizhe Pharmaceuticals' original innovation.

There is huge potential in the future. Suvotinib targets the globally recognized refractory target of non-small cell lung cancer: EGFR exon20ins (exon 20 insertion) mutation. The current advancement speed and recognition of this pipeline in the FDA can give us a glimpse of Dizhe Pharmaceuticals' ambitions. In this treatment field, Suvotinib is the only drug so far that has been recognized as a breakthrough therapy in both China and the United States. Just in January of this year, Suvotinib's new drug application for listing has been accepted by the US FDA and granted priority review qualification.

The approval of suvotinib in China comes from the "Wukong 6" Phase II registration clinical trial: when patients had received 1-3 lines of systemic treatment at baseline, the objective response rate (ORR) of suvotinib treatment reached 61%, breaking through the previous treatment bottleneck.

The pooled analysis of suvotinib in the first-line treatment of EGFR exon20ins NSCLC patients showed that the confirmed objective response rate (ORR) was as high as 78.6%, and the median PFS was as long as 12.4 months, breaking through the previous treatment ceiling. The safety profile is similar to that of traditional EGFR TKIs, and the overall tolerability is good. It is expected to provide a better treatment option for patients with EGFR ex20ins mutation-advanced NSCLC who are newly treated.

At present, the global multicenter Phase III confirmatory clinical trial "Wukong 28" of suvotinib for newly treated EGFR exon20ins NSCLC is being accelerated in 16 countries and regions around the world, in order to provide a breakthrough new treatment option for more patients around the world.

The Phase III clinical trial has begun at the end of 2022, covering 133 research sites in North America, South America, Australia, Europe, and Asia. It is a real international clinical trial.

But since it is an international clinical trial, it is naturally more expensive than domestic clinical trials. According to the journal JAMA Internal Medicine, after evaluating the details of 138 key trials of 59 new drugs approved by the FDA from 2015 to 2016, the median cost of a Phase III clinical trial was $19 million. Ten years ago, the cost of an international Phase III clinical trial was close to 140 million yuan. Given

that international clinical trials are so expensive, it is well known that a large number of start-up biotechs will license out the rights and interests of their pipelines overseas and allow overseas companies to promote the clinical and commercialization of the drug, but this will naturally only result in small profits. If you want to cut a big piece of the pie from the profits of a pipeline in the later stage, who is responsible for the Phase III clinical trial is a very important watershed. If you can complete the Phase III clinical trial on your own, even if the later commercialization is outsourced to the CSO, the percentage of commercial profits that can be shared is much higher than that of the early BD.

This is also the reason why Digene Pharmaceuticals has to complete the international multi-center phase III clinical trial by itself even if it increases its capital. It is by no means a pharmaceutical company that is content with a domestic corner, but a pharma that has a long-term strategy to achieve in-depth internationalization. The success of Suvotinib is just the beginning. It is worth looking forward to how a high-quality pipeline that has been recognized as a breakthrough therapy by the US FDA will develop overseas. The

awakening of the lion

Digene Pharmaceuticals’ production is not outsourced. This ambitious pharmaceutical company chooses to build its own production base and produce it by itself. R&D can be carried out in several laboratories on one floor, but production requires the construction of a large-scale base. According to the announcement, its current production is still outsourced, which is of course normal for a biotech company, but if it wants to transform into a "lion", it needs to have its own ability to produce drugs on a large scale.
According to the "Revised Draft of the Explanation on the Investment of Funds Raised in the Field of Scientific and Technological Innovation" issued by Dizhe Pharmaceuticals, 1 billion yuan will be invested in the international standard innovative drug industrialization project, and the amount of funds raised this time is more than 600 million yuan. For this project, Dizhe Pharmaceuticals will build its own production base in Wuxi and create a full industrial chain that integrates preclinical research and development, clinical development, and commercial production, greatly expanding its own drug production capacity, helping itself to become an innovative drug company with modern research and development and production capabilities, and providing support for its own comprehensive competitiveness.
At present, the ownership certificate of the design land approved by Wuxi City has been obtained.

Dizhe Pharmaceuticals said: Through the self-built R&D and production integrated full industrial chain format, it will help further meet the requirements of Chinese and foreign regulatory agencies, accelerate the progress of drug research and development, and enhance the company's R&D results transformation and industrialization capabilities. The creation of an independent R&D and production base will help the company better meet the rapidly growing market demand at home and abroad, and lay a good foundation for the global commercialization of subsequent products.

According to the announcement, after the completion of the investment project of the raised funds, it will also become the company's Wuxi R&D center, which will meet the company's R&D needs in the preclinical and clinical stages of innovative drugs from the perspective of office space and hardware facilities, and provide a more complete and resource-rich work platform for R&D personnel.

From the perspective of an observer, this measure is a typical manifestation of integrating R&D resources, and one of the important purposes of integrating resources is to reduce costs and maximize the utilization rate of R&D resources. At the same time, it is also more conducive to attracting outstanding R&D talents, and plays a role in further enhancing the company's R&D capabilities and comprehensive competitiveness.

Dizhe's ambition will achieve a qualitative change in the process from outsourcing production to realizing its own production.

Subsequent high-quality pipelines

Many people only know that Dizhe's amazing volume of suvotinib in NSCLC, but they don't know that it is also one of the deep cultivators of subsequent small molecule drugs for hematological tumors.

Its most outstanding achievement at present is golixitinib, which targets JAK1. Like suvotinib's differentiated competition, the progress of this drug is also amazing to the world: it is the only JAK1 drug currently approved in the world for the treatment of T-cell lymphoma. Its hematological tumor indication has been launched in June 2024. The drug is currently in the international multicenter clinical stage and has reached the research endpoint. It is currently the longest median overall survival (mOS: 24.3 months) drug for the treatment of relapsed and refractory peripheral T-cell lymphoma (r/r PTCL) with a single drug, breaking through more than 2 years for the first time. Previously, the US FDA granted the drug a fast track designation.

According to relevant agencies' forecasts, the drug is expected to achieve a sales peak of 1 billion yuan in China (based on existing indications). If the drug can successfully go overseas, the ceiling that can be reached is even more unpredictable. But as mentioned above, the advancement of these clinical progress requires new funding "fresh forces" to support it, and this incremental increase is the best source of living water.

In addition, there is an even more surprising pipeline: DZD8586. The underlying logic of the drug in terms of mechanism is to solve the drug resistance of existing BTK drugs. It is the fastest-progressing dual-target inhibitor in the world in this field.

The development trend of BTK inhibitors is from covalent to non-covalent binding. The typical drug currently approved by the FDA is Pirtobrutinib. The drug had a small trial in 2023, with sales reaching US$75 million. Analysts predict sales of US$3 billion in 2030, which shows the potential of the new generation of BTK inhibitors.

DZD8586 goes a step further and adds an inhibitory effect on the LYN pathway on the basis of the current BTK inhibitors. It is expected to solve the classic BTK mutation resistance (C481X) while overcoming the BTK inhibitor resistance caused by BCR kinase inactivation.

At the 2024 ASH conference, DZD8586 came to the fore and demonstrated its excellent Phase I/II clinical data: encouraging preliminary efficacy was shown in patients with CLL (chronic lymphocytic leukemia) and other B-NHL (B-cell non-Hodgkin lymphoma) resistant to BTK inhibitors.

DZD8586 can be said to be the core asset in the next echelon pipeline. If it can be independently promoted to complete domestic and overseas commercialization, it will be possible to create the next BeiGene Zabutinib myth.

Digene Pharmaceuticals was established in 2017 and was independent from the AstraZeneca Asia R&D Center led by Dr. Zhang Xiaolin, the founder, chairman and CEO. The Advanced Manufacturing Industry Investment Fund and AstraZeneca Global are the company's largest shareholders as strategic investors, and the management team is the company's third largest shareholder and is independently responsible for the company's operations. This time, Digene Pharmaceuticals' fundraising to independently promote R&D and production is a microcosm of China's biotech transformation, and it is also another possibility besides borrowing a boat to go to sea. The goal of pharmaceutical companies making such a choice is not to sell the company at a high price, but to truly create an international giant. Their journey is the real sea of stars.

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