As a rising star in the weight loss industry, glucosane-like peptide-1 receptor (“GLP-1”) drugs are stirring up the stock prices of pharmaceutical companies that have been dormant for a long time.

On September 26, Changshan Pharmaceutical (300255.SZ) issued the “Notice on Abnormal Stock Trading Fluctuations”, which emphasized that the clinical trial indications of the GLP-1 drug albenatide were type 2 diabetes and did not involve obesity indications.

“The company has not conducted clinical trials of abenatide for obesity or weight loss. The company has no revenue related to weight loss products.” Changshan Pharmaceutical pointed out.

This is the 3rd announcement made by Changshan Pharmaceutical since September regarding changes in stock prices caused by abenatide.

However, this does not affect the popularity of Changshan Pharmaceutical in the secondary market.

Since the official announcement on August 31 that the drug abenatide has completed phase 3 clinical trials, Changshan Pharmaceutical's stock price has gone wild — from September 1 to September 26, the cumulative increase was 99.95%, and the market value surged by 6.563 billion yuan during the same period.

The root cause of investors' fanaticism is that albenatide and smeglutide injection, which already garnered tens of billion yuan in sales in the first half of this year, are in the same category as long-acting GLP-1 drugs and have weight loss effects.

As a result, Changshan Pharmaceutical has become one of the few domestic pharmaceutical companies currently carrying out long-term GLP-1 drug trials to complete phase 3 trials.

Time is money, and as soon as it goes public, it is possible to take the lead in seizing the market. This is the key for pharmaceutical companies to build competitiveness.

But the question also remains.

Currently, not only has Changshan Pharmaceutical not carried out weight loss tests, but it has also not disclosed specific data from type 2 diabetes trials and trials comparing efficacy with other long-acting GLP-1 drugs. Whether subsequent commercialization will meet market expectations is probably still uncertain.

Stock price first

The drug was not released, and the first stock price is a true reflection of the battle between A-share pharmaceutical companies over the “magic medicine for weight loss” GLP-1.

The steady rise in Changshan Pharmaceutical's stock price began with the company's semi-annual report disclosed on August 31 this year.

According to the semi-annual report, as of the end of June, the phase 3 clinical trial of the GLP-1 drug “abenatide” independently developed by Changshan Kaijiejian Biopharmaceutical Research & Development (Hebei) Co., Ltd., a holding subsidiary of Changshan Pharmaceutical, was in the process of closing the center and writing a summary report.

On September 19, Changshan Pharmaceutical finally issued the “Announcement on the Holding Subsidiary Receiving the Abenatide Phase III Clinical Study Summary Report”.

According to the announcement, the indication for abenatide is type 2 diabetes, and the currently popular smeglutide is a long-acting GLP-1 long-term inhibitor.

On September 13, September 19, September 25, and September 26, Changshan Pharmaceutical emphasized in 4 announcements on abenatide that abenatide is only suitable for type 2 diabetes and does not involve weight loss.

“Abenatide is a long-acting glucagon-like peptide-1 receptor agonist (GLP-1RA). The indications for the albenatide clinical trial conducted by the company were to treat type 2 diabetes, and did not involve obesity indications. The company has yet to conduct clinical trials of abenatide for obesity or weight loss. Investors are kindly requested to make rational decisions.” Changshan Pharmaceutical emphasized it three or four times in its announcement.

But that doesn't stop the enthusiasm of the secondary market.

From September 1 to September 26, Changshan Pharmaceutical's cumulative increase had reached 99.95%, and its market capitalization surged by 6.563 billion yuan.

Albenazeptide does give investors a lot of room for imagination.

On the one hand, abenatide, or imagination, which has the function of weight loss, is related to the properties of GLP-1 drugs.

In principle, GLP-1 drugs stimulate insulin secretion and inhibit glucagon secretion in a glucose-dependent manner by activating the GLP-1 receptor. At the same time, they increase glucose uptake in muscle and adipose tissue, inhibit liver glucose production, and exert a hypoglycemic effect. It can also inhibit gastric emptying and suppress appetite. Ultimately, it is possible to achieve weight loss effects.

“GLP-1 receptor agonists have multiple hypoglycemic mechanisms. These include promoting insulin biogenesis and secretion; increasing insulin sensitivity; inhibiting glucagon secretion; inhibiting beta-cell apoptosis and promoting beta-cell proliferation; reducing hepatic sugar output; suppressing appetite and increasing satiety; and delaying gastric emptying and gastrointestinal peristalsis.” Wang Ban, chief pharmaceutical analyst at Minsheng Securities, pointed out.

It is commonly understood that abenatide has two major indications for “type 2 diabetes” and weight loss.

On the interactive platform of the Shenzhen Stock Exchange, investors have sought evidence from Changshan Pharmaceutical whether to plan a weight loss indication market, and the company has not directly denied this possibility.

“Currently, the company's main products are heparin series of APIs and injections. In the field of innovative drugs, the company is currently focusing on the development of abenatide.” Changshan Pharmaceutical pointed out.

On the other hand, sales of smeglutide weight loss injections (Wegovy), a star representative of GLP-1 drugs and owned by Novo Nordisk, have reached 12.081 billion Danish kroner (about RMB 12.532 billion) in the first half of 2023.

At the same time, Novo Nordisk also became the company with the largest market capitalization in Europe with the “magic medicine for weight loss” Wegovy. The total market capitalization reached 2.98 trillion yuan at the close of September 26.

Moreover, apart from Shanghai Yinnuo Pharmaceutical Technology Co., Ltd. (“Yinnuo Pharmaceutical”), which completed the GLP-1 long-acting drug and phase 3 clinical trial suitable for type 2 diabetes, currently the development progress of long-term GLP-1 drugs by domestic pharmaceutical companies is generally slower than Changshan Pharmaceutical, and is basically in the phase 2 or phase 3 clinical enrollment stage.

As a result, whether Changshan Pharmaceutical is expected to turn albenazide into the Chinese version of Wegovy has undoubtedly attracted much attention.

“One step ahead” may be likely to occupy the market, which is of great significance to Changshan Pharmaceutical.

Changshan Pharmaceutical's main revenue comes from heparin products, but due to declining industry demand and the impact of harvesting, this portion of revenue is shrinking.

“During the reporting period, due to competition in the domestic heparin preparation product market and the decline in demand in the foreign heparin API industry, both the company's low molecular weight heparin injection sales unit price and heparin API sales volume declined. These two factors combined led to a year-on-year decline in the company's revenue during the reporting period.” Changshan Pharmaceutical stated in its semi-annual report.

In the first half of 2023, Changshan Pharmaceutical's revenue and net profit were 820 million yuan and 156 million yuan respectively, a year-on-year decline of 28.45% and 340.70%, respectively.

In this context, Changshan Pharmaceutical really urgently needs to expand its pharmaceutical “save” performance.

The prospects are yet to be realized

There is still much uncertainty about whether or not albenazeptide can deliver on investors' expectations.

On the one hand, Changshan Pharmaceutical has yet to conduct experiments on the application of abenatide to weight loss, but at present, many domestic pharmaceutical companies have made some progress in developing long-term drugs with dual target and three targets GLP-1 with the same indications, leaving a limited commercialization window for albenazepide.

Among them, Hengrui Pharmaceutical (600276.SH)'s GIP/GLP-1 dual-target long-acting drug and HRS9531 injection suitable for weight loss has already entered phase 2 clinical trials. The target of this drug is Tirzeptide (tizeptide), which “can lose 48 kg in 72 weeks.”

On the other hand, Changshan Pharmaceutical did not disclose data on the specific efficacy of abenatide for type 2 diabetes.

According to the phase 3 clinical trial report issued by Changshan Pharmaceutical, after 24 weeks of double blind treatment with the test group and placebo, the efficacy of the abenatide trial group compared to the placebo group was established; secondary efficacy analysis results showed that abenatide can improve the HbA1c compliance rate of type 2 diabetes subjects with poor blood sugar control after receiving metformin alone or metformin combined with insulin stimulant treatment, maintaining HbA1c at the target level.

TradeWind01 (ID: TradeWind01) sought evidence from Changshan Pharmaceutical whether it would be possible to disclose more detailed data in the future. It denied this possibility.

“No, this is just according to the exchange's standards. He just needs these things, so we can just disclose it to this extent.” Changshan Pharmaceutical responded to TradeWind01 (ID: TradeWind01).

TradeWind01 (ID: TradeWind01) notes that pharmaceutical companies with similar R&D processes to Changshan Pharmaceutical have published relevant data.

In July of this year, Yinnuo Pharmaceutical announced data from phase 3 clinical trials of supaglutide for type 2 diabetes at the 83rd Annual Meeting of the American Diabetes Association (ADA).

The results of the study showed that at week 24 of supaglutide treatment, the HbA1c baseline decreased by 1.73% and 2.15%, respectively, compared to before treatment, using the 1 mg and 3 mg dose groups once a week.

At the same time, Changshan Pharmaceutical did not conduct tests comparing the efficacy with similar drugs; it only explained the safety comparison situation.

“The abenatide injection had good safety among type 2 diabetic subjects with poor blood sugar control after receiving metformin monotherapy or metformin combined with insulin stimulants. There were no additional unanticipated safety risks, and the safety characteristics of other GLP-1 receptor agonists were basically consistent.” Changshan Pharmaceutical pointed out.

In comparison, although Huadong Pharmaceutical (000963.SZ)'s smeglutide injection trial lags behind Changshan Pharmaceutical — the former has only completed the first phase 3 clinical trial and was enrolled in the first case, it has already carried out equivalence tests on meglutide injections and similar products of Novorod.

“The main objective was to demonstrate the equivalence between the test drug simeglutide injection and the control drug simeglutide injection (Novartil) in blood sugar control after 32 weeks of treatment in type 2 diabetics with poor blood sugar control after metformin treatment.” Huadong Pharmaceutical explained.

Seen from this perspective, there is still uncertainty about whether Changshan Pharmaceutical can use abenatide to fight a turnaround battle.

Prospects for commercialization of albenazeptide are yet to be seen, and the market is waiting for the moment when the imagination is realized.