While some pharmaceutical companies are trapped in the red sea of internal volume and cannot extricate themselves, KeyMedhas completed the second breakthrough of external volume.

On November 17, KeyMedBio issued an announcement to license its autoimmune bispecific antibody pipeline CM336 to a foreign company. The transaction party is a startup company registered in the UK called Platina Medicines Ltd (PML). The form of this transaction is a NewCo form with cash and equity in parallel.

It is worth mentioning that this is the second NewCo overseas expansion of KeyMedBio in 2024 after the US$185 million transaction with Belenos Biosciences in July.

When KeyMedachieves a second breakthrough of external volume, what kind of surprise will it bring to the market? The BD of the second

breakthrough

targets the CM336 pipeline, targeting the BCMA×CD3 dual targets, which is the same target as the bispecific antibody of the BD of Epimed Bio two months ago, and the overseas expansion form is also similar, both of which are NewCo. In terms of authorized regions, all rights are outside Greater China.

Epimed Bio's down payment reached US$60 million and milestone payments reached US$575 million. As for the licensing amount of CM336 of Conoya, the down payment is US$16 million and the milestone payment of up to 610 million. Part of the payment received by both companies is paid in the form of equity.

The total payment of the two companies is similar, but the milestone down payment is quite different. The main reason is the different clinical progress. CM336 did not disclose preliminary clinical data until today (November 18) at the ASH conference, and the clinical data during the BD negotiation period was not mature; while EMB-06 of Enbogen Biotech has disclosed its first clinical data at the SITC annual meeting in 2023, with preliminary but relatively solid efficacy support.

The premium of the down payment is mainly aimed at the increase in the existing value of the pipeline due to preliminary clinical data, but from the total amount of milestone payments, the two foreign companies have similar valuations of the potential value of the pipeline.

An important aspect of disassembling BD transactions is to see which of the two parties is the stronger party. Judging from the previous BD transaction between Kangfang and SUMMIT, in the BD transaction process with foreign small and micro biotech, Chinese pharmaceutical companies are in a relatively strong position in many cases. Specifically in the transaction, Summit's CEO Dugan took the initiative to contact Kangfang Biopharma as the BD of AK112, and during the research conducted by Kangfang Biopharma CEO Dr. Xia Yu, he made a very good impression on Dr. Xia Yu, making Kangfang feel that the other party attached great importance to this BD.

Most of the emergence of small biotech abroad is a combination of capital organization + professional venture capitalists or expert enterprise managers. The purpose of BD domestic pipeline is also to buy pipelines at low prices, advance themselves to the progress of phase III clinical trials, and then sell the company as a whole. Although they are investors, small companies themselves have fewer bargaining chips. At present, China's pipeline is in a hot state. A target that has been stably verified, such as PD-(L)1×VEGF, is close to the situation where foreign pharmaceutical companies come to China for wholesale. In fact, Chinese R&D companies can be in a relatively strong position when facing small biotechs if the pipeline is expected to be stable enough.

This is the logic of supply and demand in BD transactions.

In addition, Conoya's current size is far from comparable to that of small domestic biotech companies. Its current market value in Hong Kong stocks has exceeded 10 billion, ranking around 10th among the 18A pharmaceutical companies in Hong Kong stocks. Although it is far less influential than Hengrui to do NewCo, it is far from being as cash-hungry as small biotech companies. It has the confidence to choose small biotech shares that have greater appreciation potential than the US dollar. The appreciation of this equity obtained at a lower price will be fully reflected in the changes in non-fair value assets in the financial report in the future.

Win-win situation

From the perspective of the counterparty of the transaction, PML is a wholly-owned subsidiary of Ouro Medicines. The company currently looks more like a "shell" used to hold pipeline assets to raise the valuation. According to the official website of the British government (Gov.UK), the company was established on October 29 this year, and it has been established for less than a month. Its appointed CEO is an American, a very young post-90s named Jaideep Dudani.

From the company's CEO, it can be seen how obvious the traces of the company's capital organization are. According to the information, Jaideep Dudani has served as the principal of a venture capital company called Monograph Capital since 2021. The pharmaceutical venture capital company called Monograph Capital holds a 42% stake in Ouro Medicines, the parent company of the new company PML. From an

overseas perspective, it is basically a capital operation led by the CEO alone. As for why the trader is an American, and Monograph Capital is in California, but the new shell company is to be registered in the UK, there are currently considerations to hedge against geopolitical risk factors after Trump's election.

The future operation of the parent company, biotech Ouro Medicines, is key, after all, it owns all the shares of PML. The company added a board seat to Chen Bo, the chairman of Conoya, and KeyMedwill also have a large part of the say in the future biotech operations.

The new biotech established by the venture capital company has introduced new pipelines and allowed the original research party to participate in the company's governance. This situation is currently a win-win situation.

Why are the recent related bispecific antibody BD transactions so hot? Judging from the current development direction of the same target drug, this type of TCE bispecific antibody can be used for hematological tumors and has the potential to expand to autoimmune diseases. From the

underlying mechanism

, the ultimate goal of drugs for hematological diseases such as hematological tumors is to reduce the number of B cells in the body. Whether it is Amgen's Blinatumomab or Johnson & Johnson's Teclistamab, whether it targets CD19 or BCMA, the purpose is to block the effector pathway in B cells/plasma cells.

The first large-scale application of TCE bispecific antibodies is hematological tumors/leukemia. Amgen's TCE bispecific antibody-Blinatumomab has been on the market for nearly 10 years.

As mentioned above, the reason why EMB-06 of Enbion Biopharmaceuticals can be BD and has a high down payment is largely because it has shown initial solid efficacy in multiple myeloma.

According to the data disclosed at the 2023 SITC conference: At the patient baseline and dose escalation, 33 patients received 0.2~200 mg of EMB-06 treatment, with a median age of 66 years (46-82 years), and a median number of previous treatment lines of 3. In terms of efficacy, the dose-effect relationship currently appears to be more significant. Among the 5 evaluable patients who received ≥120 mg doses, the ORR reached 100% (1 CR, 2 VGPRs, and 2 PRs). The safety profile is also relatively good, with no grade 2 or higher CRS. Neurotoxicity was observed in one patient, and DLT was observed in one patient with a 60 mg dose.

The multiple myeloma data of CM336 are not bad either. According to the clinical data of CM336 for the treatment of relapsed/refractory multiple myeloma just disclosed at this year's ASH conference, the median number of previous treatment lines received by patients was 4. In terms of efficacy, in the 80 mg and 160 mg dose groups (n=8), the ORR also reached 100%.

In multiple myeloma, the drug's therapy has been verified and is relatively mature, and the current market needs better. But on the other hand, the drug is in a blue ocean state in the field of autoimmunity. The current clinical data is also limited to the stage of academic research.

According to the article "BCMA-Targeted T-Cell-Engager Therapy for Autoimmune Disease" published in the New England Journal, it is entirely possible for Johnson & Johnson's CD3×BCMA dual antibody Teclistamab to be used in autoimmune diseases.

The sample size of patients in this study was small, with only four patients, but the effect was significant. From the most intuitive visual analog scale (VAS) to assess the pain level of patients, the four patients all achieved a certain degree of reduction, including patient 1 from 90 to 50, patient 2 from 50 to 10, patient 3 from 50 to 20, and patient 4 from 60 to 40, and the reduction effect was very obvious.

Autoimmunity is called immortal cancer, and it is also the innovative drug market second only to cancer in the field of diseases. The expansion of this major category of indications has given TCE dual antibodies new vitality in new fields.

Innovent Biologics' EMB-06 has a clear intention to expand into the autoimmune indication of pemphigus. It is worth looking forward to what kind of layout Conoya's CM336 will have in the autoimmune field next.

Conclusion: Judging from the current global indication pattern of BCMA×CD3 bispecific antibodies, almost all of them are relapsed/refractory myeloma. In the blue ocean of autoimmune, which company can eat the first big crab and get the blue ocean market in developed countries for many diseases in autoimmune indications? The answer may be revealed in the next two years. What

can be seen at present is that a large number of BDs of bispecific antibodies and trispecific antibodies for hematological tumors have indeed brought valuable research and development funds to China's start-up biotech, and also brought equity with huge appreciation potential to quasi-giants such as Conoya. In the future, these pipeline assets will truly be transformed into commercial funds.

https://news.yaozh.com/archive/44555.html