"US$2.015 billion is, according to our statistics, the largest overseas licensing collaboration for small molecule anticancer drugs in the clinical stage in China."

On the morning of December 22, Jacobio (HK01167) held an online communication meeting regarding its newly announced business development (BD) efforts surrounding the pan-KRAS inhibitor JAB-23E73. Simultaneously, the company's stock price fell by over 10%, closing down 13.58%.

Both the transaction amount and AstraZeneca's position in the oncology drug field have generated considerable excitement among investors who saw the news of the collaboration the night before. Moreover, this is Jacobio's first business development (BD) deal announced this year.

Was the secondary market's reaction unexpected? At the communication meeting, Wang Yinxiang, Chairman of Jacobio, responded to this question from a reporter from the Daily Economic News. He said that as a biotech company, Jacobio pays attention to the secondary market, but it cannot be "led by the crowd" and must focus on doing a good job in research and development.

The total amount is US$2.015 billion, and the partner AstraZeneca has previously failed in several attempts to expand its business in this area.

JAB-23E73, the drug involved in this business development collaboration, is an innovative pan-KRAS inhibitor developed by Jacobio, designed to target multiple KRAS mutation subtypes. Currently, Phase I clinical trials of this drug in patients with advanced solid tumors carrying KRAS gene mutations are underway in China and the United States. In the future, its indications will be gradually expanded to include KRAS mutation-related solid tumors such as pancreatic cancer (PDAC), non-small cell lung cancer (NSCLC), and colorectal cancer (CRC).

Data shows that KRAS is the most common mutated oncogene in humans, accounting for approximately 23% of all patients. At the communication meeting, the company provided more detailed data: broken down by cancer type, 32% of lung cancer patients have the related mutation, 50% of colorectal cancer patients have the related mutation, and among pancreatic cancer patients, the proportion with KRAS mutations is as high as 88%. Globally, approximately 2.7 million new cancer cases with KRAS mutations are diagnosed annually.

Jacobio's partner in this collaboration, AstraZeneca, is a representative of multinational pharmaceutical companies that have been continuously betting on the KRAS target. However, it is worth noting that KRAS has long been considered an "undrugable" target, and AstraZeneca's previous three attempts to enter the market have all ended in failure.

Specifically, in 2012, the company acquired the KRAS inhibitor AZD4785 from Ionis, but it was halted in Phase I trials in 2019; subsequently, it internally developed the KRAS G12C inhibitors AZD4625/AZD4747, but there has been no further progress; in 2023, it signed a global exclusive licensing agreement with the Chinese company Usynova for the KRAS G12D project UA022, with an upfront payment of US$24 million and a total amount of US$400 million, but enrollment has now stopped.

Jacobio is AstraZeneca's fourth partner in this collaboration. Under the terms of the agreement, Jacobio will receive an upfront payment of $100 million and is eligible for up to $1.915 billion in additional development and commercialization milestone payments, as well as tiered royalties on net sales realized in markets outside of China. AstraZeneca will be responsible for all clinical development, regulatory submissions, and commercialization activities of JAB-23E73 in markets outside of China.

Wang Yinxiang stated that the funds obtained by the company through this collaboration will be incorporated into the company's unified budget, with over 90% allocated to research and development, distributed according to the progress of each project, to support the development of next-generation drugs. Previously, Jacobio struggled to fully roll out multi-indication and first-line combination clinical trials. The collaboration with AstraZeneca is expected to accelerate its global development pace and simultaneously advance first-line and second-line monotherapy and combination clinical trials for multiple indications.

In response to the stock price decline: The factors influencing the secondary market are very complex, and the company focuses on long-term value.

Where does Jacos stand on the KRAS track? The answer to this question is important for investors who see good news about the company's business development while being surprised by the drop in its share price.

According to Jacobio, pan-KRAS inhibitors that have entered the clinical stage can be divided into two main categories based on their technical routes. One category is represented by Revolution Medicines in the United States, which develops molecular glue (H/N/KRAS inhibitor) drugs; the other category is represented by Jacobio, which develops small molecule (KRAS inhibitor) drugs.

Currently, more pharmaceutical companies have chosen the second technology route, including Jacobio and Eli Lilly, ranked by the timing of their entry into the market.BeiGene , Alterome, BridgeBio, PfizerIn terms of both the number and timing of patent applications for pan-KRAS entering clinical trials, Jacobio has the advantage.

However, compared to other targets, KRAS is still in the early stages of development. For example, the first-generation EGFR inhibitor was launched in 2002, and the industry is still iterating on third and fourth-generation drugs today, demonstrating that a single target requires 20 years of continuous development. The world's first small-molecule drug directly targeting the KRAS protein was approved in May 2021.

Furthermore, the KRAS G12C inhibitor market is highly competitive. To date, five KRAS inhibitors have been approved for marketing globally, all targeting the KRAS G12C mutation, with Amgen being the leading international manufacturer.Bristol - Myers SquibbThe domestic manufacturers are Jacobio, Jinfang Pharmaceutical, and Yifang Bio. None of the three domestic companies chose to sell the products independently, but instead authorized large domestic pharmaceutical companies to handle the commercialization.

In response to the company's stock price fluctuations at the communication meeting, Wang Yinxiang told reporters that the factors influencing the secondary market are very complex and not caused by a single factor. He listed several: the Hong Kong 18A market has only been established for 7 years and its understanding of biotechnology companies is still immature; since 2021, southbound funds have been the main force, focusing more on short-term operations, while previously dollar funds focused on long-term value; the company's stock price has rebounded 5-6 times since the beginning of the year, and investors have a need to "take profits"; the trading activity of dollar funds has decreased due to the Christmas holiday, etc.

"As a biotech company, we pay attention to the secondary market, but we can't be swayed by it. We still need to focus on doing a good job in R&D," said Wang Yinxiang. He added that the team is more focused on technological advancements and how to apply technology to product development. In his view, China's biopharmaceutical industry can no longer follow the old path of being "large and comprehensive," but must become the best in the world in a specific professional field. "This is the long-term value."

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