As the US CPI and other economic data are released one after another, the market's expectations for the Federal Reserve's interest rate cut in the middle of this year have heated up sharply, compounded by recent positive signs encouraging the development of the entire chain of innovative drugs in the country. This year is expected to be a critical period for the full recovery and development of the biomedical industry.

This is undoubtedly a huge benefit for Yasheng Pharmaceutical-B (06855), which has major commercial products and the ability to continuously develop hematopoiesis and global innovation.

According to the Zhitong Finance App, since the launch of the core product Nellick, Yasheng Pharmaceutical has achieved steady growth in performance with its advantage of filling clinical gaps domestically, while also relying on its strong global innovation capabilities to open up a broader application circuit; in terms of apoptosis pipelines, APG-2575 has been approved for 3 key global clinical registration phase III clinical trials, which indicates that commercialization of this product is imminent. In the future, Nellick and APG-2575 are expected to compete in the international market and rapidly increase Yasheng Pharmaceuticals' revenue and profits.

As can be seen, relying on systematic advantages formed in various aspects such as global R&D, overseas registration, and market commercialization, Yasheng Pharmaceutical is continuously fulfilling its hematopoietic potential while also pushing innovative research and development to a new level, further improving the “positive cycle” of its transition to Biopharma.

Global innovation and commercialization go hand in hand

In the global biomedical industry financing environment, commercialization capacity has undoubtedly become one of the important indicators for measuring the ability of innovative domestic pharmaceutical companies to differentiate and innovate. For Yasheng Pharmaceutical, behind the continuous expansion of the core product Nellick terminal market, it means that the company's strong innovative R&D strength and differentiated advantages of innovative products have been recognized by both the industry and the market.

The Zhitong Finance App learned that on March 27, Yasheng Pharmaceutical announced its 2023 annual results.

During the reporting period, Yasheng Pharmaceutical achieved revenue of RMB 222 million. Among them, product sales revenue reached 194 million yuan. During the reporting period, the number of Nellick boxes sold increased by 259% year on year, the number of admitted hospitals increased by 567% year on year, and the total number of patients increased by 123% year on year. Since approval for listing until the end of 2023, Nellick achieved cumulative sales revenue of 362 million yuan. It can be seen that its remarkable clinical value and product strength have been recognized by the terminal market.

It is worth mentioning that in the “full chain supports innovative drugs” policy document circulating in the market, in response to the “difficulties in entering the medical insurance reimbursement list” and “difficulties in purchasing in hospitals” that still exist in innovative domestic pharmaceutical companies, it is proposed to draw up a catalogue of encouraged applications on the hospital entry side and payment side, prioritize inclusion in the medical institutions' drug use catalogue, implement quick internet access, and establish medical insurance payment policy preferences to increase the scale of use of innovative drugs.

This certainly greatly benefits truly innovative drugs such as Nellik. And as Yasheng Pharmaceuticals opens up a wider field of indications for Nellick, its subsequent global innovation and R&D results are expected to be more efficiently transformed into the company's revenue and profit.

On November 17 of last year, Nellick was officially approved to treat adult patients with chronic myeloid leukemia (CML) chronic phase (-CP) who are resistant and/or intolerant to first-generation and second-generation tyrosine kinase inhibitors (TKI). According to the Zhitong Finance App, currently 20% to 40% of patients will still fail treatment due to drug resistance or intolerance during TKI treatment. Approval of this indication will further break the drug resistance dilemma in the field of slow drug therapy.

As far as Yasheng Pharmaceutical is concerned, compared to the previously approved indications for treatment with T315I mutant drug resistance CML, the group of patients with the newly approved indications is wider, further ensuring that Nellick's subsequent sales will continue to grow.

Outside of the CML field, Nellick's therapeutic and commercialization potential is also continuously being explored and verified. In the field of hematoma, Nellick's next growth point comes from Philly chromosome-positive (Ph+) acute lymphocytic leukemia (ALL).

In 2023, two recent clinical data from Nellick for adult Ph+ ALL patients were presented on the 2023 EHA Annual Meeting poster. Nellick's clinical data in children with recurrent Ph+ ALL was also published for the first time in an international journal. Clinical data shows that Nellick has significant therapeutic potential and good safety in the field of Ph+ ALL.

Judging from market competition, currently in the field of Ph+ ALL indications, Nellick is expected to become the first TKI drug approved for first-line treatment of Ph+ ALL in China, and there is strong market certainty. Referring to the relevant indication circuit, amgenbelintozumab has now climbed to over 1 billion US dollars in global sales. Therefore, it can be expected that the domestic Ph+ ALL first-line treatment market is also expected to bring considerable sales growth to Nellick in the future.

In addition to the in-depth layout of hematologic tumors, Nellick's clinical development for gastrointestinal stromal tumors (GIST) is also progressing rapidly. Nellick's clinical data on GIST patients was selected for the American ASCO Annual Meeting for 2 consecutive years, and was included by CDE as a breakthrough treatment variety during the reporting period, reflecting the high recognition of Yasheng Pharmaceutical's ability to differentiate and innovate by international academics and authorities.

In fact, as a model for the global development and international commercialization of Yasheng Pharmaceuticals, Nellick is also speeding up its overseas expansion process. For example, Yasheng Pharmaceutical previously discovered in clinical studies in the US that Nellick also has obvious curative effects on patients resistant to the third-generation BCR-ABL inhibitor Ponatinib.

In February of this year, Nellick's registered phase III trial for CML-CP (with and without T315I mutation) patients who have been treated in the past was approved by the US FDA. This is the first Nellick Global Registration Phase III trial approved by the US FDA. In addition, Nellick was also included in the latest edition of the US National Comprehensive Cancer Network (NCCN) CML treatment guidelines, showing great potential to compete in the international market.

Taking a critical step towards Biopharma

During the reporting period, the Bcl-2 inhibitor APG-2575, the core product of the apoptosis pipeline, was approved for global phase III clinical registration, which is a key step for Yasheng Pharmaceutical to move towards large-scale commercialization and Biopharma.

In August of last year, APG-2575 was approved by the US FDA to conduct a globally registered phase III clinical study to treat previously treated CLL/SLL patients. This is another important milestone following the CDE approval of the breed in December 2021 to conduct a critical registration phase II clinical study for the treatment of R/R CLL/SLL patients.

A number of previous clinical data have also verified that it has “best-in-class” (best-in-class) potential in the field of global hematologic oncology. This means that APG-2575 is expected to accelerate to become the second Bcl-2 inhibitor approved for marketing at the global level and join the international competition.

The approval for global Phase III clinical registration also means that APG-2575 is getting closer to the commercialization time point. Take Venetoclax, the only Bcl-2 inhibitor currently approved for marketing in the world. Its sales in 2022 reached US$2.01 billion, an increase of 10.4% over the previous year. Since APG-2575 has more outstanding safety advantages and greater BIC potential compared to VenetoCLAX, the market expects the peak sales value of APG-2575 to exceed 2 billion US dollars.

According to the latest financial information, APG-2575 is expected to submit an NDA in China this year, and the listing is imminent. With its potential huge commercial value, the successful listing and implementation of APG-2575 will be a key part of the company's ultimate profit.

Building a “positive cycle” of Biopharma development

In fact, Nellick and APG-2575 are not the end point of commercialization of the Yasheng Pharmaceutical pipeline. The company has always been committed to building a closed loop of integrated innovation in R&D, production and marketing, and continuously improving the positive development cycle of transformation to Biopharma.

Financial reports show that during the reporting period, Yasheng Pharmaceutical's R&D expenses were 710 million yuan. With the support of long-term stable R&D investment, promoting the continuous advancement and implementation of a high-value product pipeline with “first-in-class” and “best-in-class” potential has become the key to the future transformation of the company into Biopharma, the global leader.

In the “Full Chain Support for Innovative Drugs” document mentioned above, it is proposed that by 2027, more than 10 first-in-class drugs (First in Class) drugs will be marketed, and that more than 10 innovative drugs will be registered and marketed overseas. The emphasis is on policy support for new targets and mechanisms, as well as the selection and support of key R&D catalogues for innovative drugs that can address unmet clinical needs and have clear clinical value.

If this policy is finally implemented, Yasheng Pharmaceutical will be one of the largest beneficiary pharmaceutical companies in China. The company has always been committed to original innovation and global innovation. Currently, it is carrying out more than 40 clinical trials in China, the United States, Australia, Europe and Canada. Clinical progress related to research varieties such as APG-115, APG-2449, APG-1387 and APG-1252 has been published in several authoritative international academic conferences and journals. In addition, the company has built a strong global intellectual property layout through 498 authorized patents worldwide and 352 overseas patents.

In terms of production and quality management system construction, after being approved to issue a pharmaceutical production license (A certificate) in 2022, Yasheng Pharmaceutical successfully obtained a GMP compliance audit report issued by the EU Quality Authorized Person (QP) in April 2023, and the company's global industrial base passed the EU QP audit with zero defects. This progress indicates that Yasheng Pharmaceutical's global industrial base and quality management system have met EU GMP standards. In the future, the company will have solid endogenous strength in terms of the speed of product delivery and the progress of listing.

Currently, financing expectations for the global biomedical industry are falling rapidly as the Federal Reserve's interest rate cut expectations “drastically shrink,” and it is still unknown when the general financing environment will improve in the cold winter. However, relying on the continuous release of core varieties, Yasheng Pharmaceutical is also continuously improving its “hematopoietic capacity”, helping the rapid and smooth progress of key pipeline research and commercialization of core products simultaneously. The subsequent release of apoptosis pipelines, led by APG-2575, in terms of commercialization potential, is expected to help Yasheng Pharmaceutical ultimately achieve sales profits to feed back independent research and development, and steadily advance to global Biopharma.