Category: BioTech

Goldman Sachs’ latest report on China’s biotechnology sector highlights Everest Medicines (HKG: 1952) as a company on track to achieve EBITDA break-even by the end of 2025. This outlook is driven by the accelerated commercialization of Nefecon®, which was recently included in China’s National Reimbursement Drug List (NRDL). The report underscores that expanded reimbursement coverage is expected to significantly boost market potential in treating IgA Nephropathy (IgAN) and address a substantial unmet medical need. Goldman Sachs notes, “Everest targeted EBITDA break-even by YE25, expecting the NRDL coverage to unleash the significant patient need in IgAN.”

Beyond Nefecon®, Everest’s BTK inhibitor EVER001 is emerging as a promising pipeline asset, with encouraging early clinical data in primary membranous nephropathy (pMN). According to Everest’s Phase 1b/2a trial results, EVER001 demonstrated quick disease remission in pMN patients, with 82% of low-dose and 86% of high-dose patients achieving clinical remission based on 24-hour proteinuria reduction, and 91% and 100% achieving immunological complete remission, respectively, based on anti-PLA2R autoantibody decrease. The data also showed clear dose-dependency across key biomarkers, reinforcing the drug’s mechanism of action. With no major safety concerns reported, EVER001 has the potential to be a best-in-class therapy for pMN.

Goldman Sachs also highlights EVER001’s global development potential, as Everest prepares for multinational clinical trials to evaluate its benefits across different ethnic populations. The report notes that while pMN is a smaller market than IgAN, it shares strong synergies in disease mechanism and treatment approaches, making it a strategically valuable addition to Everest’s renal disease franchise.

The report further emphasizes China’s evolving biotech landscape, where global licensing and partnerships are becoming key drivers of growth. Everest’s consistent execution of its renal and mRNA-focused strategy, combined with its emphasis on global expansion, positions the company well for sustained success.

Reflecting these positive developments, Goldman Sachs has raised its 12-month target price for Everest Medicines to HK$48.32, nearly doubling from the previous HK$24.50. The upgrade factors in stronger commercial visibility, EVER001’s potential in pMN, and an improved financial outlook as Everest advances toward profitability.

The trading of TCE (T Cell Engager) bispecific antibodies remains hot, and multinational pharmaceutical companies (MNCs) are still placing orders frantically.

Recently, Candid Therapeutics, an American pharmaceutical company focusing on the field of autoimmunity, announced three R&D cooperation transactions on TCE bispecific antibodies with a total potential transaction amount of over $1.32 billion, equivalent to nearly RMB 10 billion at one time. All the transaction parties are Chinese companies.

What is more noteworthy is that Candid just announced a round A financing of over $370 million three months ago,. The company’s two core products are TCE bispecific antibodies, both from China Biotech.

In fact, from Merck’s $1.3 billion deal to GSK’s $850 million investment, the “gold content” of Chinese companies’ self-developed TCE bispecific antibodies has already been well proven. The new moves by Candid Therapeutics indicate that the opportunities for TCE bispecific antibodies in the autoimmune field are far from over. The rush to register “Initial Seeds” by domestic and foreign companies and even capital is directly tied to the future competition landscape of “big drugs” in the autoimmune field. The rush by domestic and international companies, as well as capital, to secure early-stage “seedlings” is directly tied to the future competitive landscape for blockbuster drugs in the autoimmune sector.

According to incomplete statistics, from the perspective of clinical trial progress, YK012 (targeting CD19/CD3) of Excyte Biopharma Ltd. (Hereinafter referred to as Excyte), a Chinese company, is ahead of the same target drugs. Public information shows that the company focuses on the research and development of innovative new bispecific and multifunctional antibody new drugs including TCE. Its autoimmune indication was approved for clinical trials in China in December 2024, and the FIH (first in human) will be enrolled in early March this year. The US Pre-IND application was officially accepted by the FDA in November 2024, therefore clinical trial approval anticipated in April this year. Due to the adoption of international multi-center clinical research strategy, the clinical development speed is expected to accelerate significantly. Overall, the progress of autoimmune indication development is in the first echelon globally.

(1) Phase I clinical trial is in progress, showing the advantages of efficacy, safety, and long half-life, also low-cost CMC
Globally, the first TCE bispecific antibody that was successfully commercialized can be traced back to 10 years ago. To this day, TCE bispecific antibodies in the clinical stage of Chinese biotech are still frequently “raised” by MNCs. This is because the “blockbuster” era of this type of drug has arrived, with therapeutic potential far exceeding expectations. They are advancing from the last-line treatment to the first and second-line treatment breakthroughs. For example, AstraZeneca’s AZD0486, intended to be used for relapsed and refractory follicular non-Hodgkin’s lymphoma, is making strides from the last-line treatment to the first and second-line treatment impact, with an estimated annual sales peak of about $5 billion. Moreover, these drugs are expanding beyond the field of tumors into the field of autoimmune diseases, where there are significant unmet clinical needs across dozens of autoimmune conditions, representing a market potentially worth hundreds of billions of dollars.

Among the TCE bispecific antibodies currently under development in China, YK012 from Excyte is a “seed player” that cannot be ignored. YK012 is the product with the greatest potential to become a BIC (best in class) product among competing products.

Currently, there are 6 indications for YK012 disclosed on the official website, among which the Phase I clinical trial for non-Hodgkin’s tumor (NHL) and the Phase Ib/II clinical trial for acute lymphoblastic leukemia (ALL) are progressing the fastest.

According to the latest news, the POC (Proof of Concept) on effectiveness of these two indications has been achieved, with multiple cases of sustained complete remission reported. Specifically, in the Phase I clinical trial of NHL, after a patient with transformed follicular lymphoma (FL) received a cycle of drug treatment for tumor evaluation, the PET-CT results showed that 5 tumors in the patient’s body had completely disappeared, and the disease was completely relieved. After the second cycle of drug treatment, the patient’s tumor evaluation was still in complete remission (CR), with remission sustained for two cycles.

In the Phase Ib/II clinical trial of YK012 for the treatment of ALL, several patients have been enrolled and treated, including relapsed and refractory high-load severe patients. The proportion of blasts in the bone marrow before drug administration was as high as 81.6%. After receiving a cycle of drug treatment, the proportion of blasts dropped to less than 5%, achieving complete remission, which was sustained into the second treatment cycle. Remarkably, the patient achieving complete remission received a dose of only 5 μg/kg, a significantly lower effective dose compared to competing products. Similarly, the first NHL patient who achieved complete remission after receiving YK012 treatment was administrated with a dose of 20μg/kg, which is also significantly lower than the effective dose of the competing product under development. These findings suggest that YK012 may have best effectiveness among competing products.

In addition, YK012 has demonstrated good clinical safety. In the two clinical trials mentioned above, patients exhibited excellent tolerability, with all adverse reactions fully resolving within 48 hours. The severity of cytokine release syndrome and neurotoxicity was controlled at level 2 or below. The long half-life of the drug has been confirmed and is expected to be developed into a low-frequency dosing drug. Furthermore, YK012 features an elegantly simple, symmetrical molecular structure, making its CMC process straightforward and offering significant low-cost advantages.

(2) Leading in autoimmune R&D progress, with two complementary TCE assets that are unique in the industry
Excyte is dedicated to developing drugs with global value and competitiveness. The company is based on a global layout, with its R&D headquarters in Beijing, a wholly-owned R&D subsidiary in the United States, and a commercial production facility in Changchun that meets Chinese and U.S. GMP standards. This setup provides a full-chain advantage in technology and manufacturing, from R&D to commercial production.

When co-founders Meng Qingwu and Yuan Qingan founded Excyte, they had a clear prediction that immunotherapy would become a critical option for future disease treatment, particularly for autoimmune diseases.

As early as 2022, Excyte’s research team developed B cell depletion therapy (BCDT) drugs with a focus on their advantages in treating autoimmune diseases. They began to deploy autoimmune diseases such as primary membranous nephropathy (PMN) and systemic lupus erythematosus (SLE), fully promoting global clinical trials and using this as entry points to expand into more autoimmune disease areas. According to the latest updates, the YK012 indication for membranous nephropathy has been approved for Phase I clinical trials in December last year, making it the world’s first CD3/CD19 bispecific antibody drug approved for the treatment of membranous nephropathy. Its SLE indication is approved in January this year in China, positioning it among the global frontrunners in this field.

In terms of therapeutic potential, in August this year, Excyte published a paper titled “Targeting CD19 for the Treatment of Autoimmune with a Novel T Cell Engager” in the British Biomedical Bulletin. The study revealed that YK012 can eliminate peripheral blood and spleen B cells in a dose-dependent manner and alleviate arthritis symptoms in a mouse CIA model. This demonstrates its potential to treat B cell-mediated human diseases, including autoimmune disorders, with expectations of better efficacy and fewer side effects in clinical practice.

In addition, the two disclosed indications of YKST02 (targeting BCMA/CD3), Excyte’s second bispecific antibody product, includes an autoimmune disease – immunoglobulin A nephropathy (IgAN). The company has already initiated Chinese clinical applications for this indication. According to available information, in addition to IgAN, there is another tumor indication, relapsed/refractory multiple myeloma (MM), which is currently in Phase Ia clinical trials. At a 3 mg dose, partial response (PR) was observed in the first dosing cycle, and no adverse reactions occurred at doses of 6 mg or lower, indicating its potential as a “best-in-class” therapy.

Meanwhile, the combination of YK012 and YKST02 can be developed as more effective treatment involved in all stages of B-cell related disease. As two TCE bispecific antibodies with complementary effects, they hold the potential to achieve optimal clinical efficacy through combination or sequential therapy.

Specifically, CD19, a target of YK012, is a biomarker of B cells. It is expressed from the Pro-B cell stage to the late plasmablast stage but is low or not expressed at the plasma cell stage. On the other hand, BCMA, a target of YKST02, is primarily expressed in mature B lymphocytes and plasma cells, covering the plasma cell development stage. Therefore, the combination of YK012 and YKST02 can span the entire spectrum of B-cell and plasma cell development, leading to abnormal B cell and plasma cell depletion. This makes them a pair of highly rare and valuable TCE assets on a global scale.

Beyond these two drugs, Excyte is also advancing the development of multiple pipeline products, including bispecific and trispecific antibodies for solid tumors, all progressing in an orderly manner.

(3) B round financing and overseas BD are in progress, with multiple TS received from both domestic and international parties
Against the backdrop of a capital winter, Excyte’s financing is thriving, highlighting the company’s remarkable value and advantages. According to available information, following the completion of its A++ round of financing last year, the company is now in Round B and has already received several TS, far exceeding the anticipated funding target.

YK012 and YKST02 are the two drugs most favored by multinational pharmaceutical companies in the wave of Chinese Biotech going overseas. According to a research report by SPDB International, since 2022, there have been continuous cross-border licensed-out projects for Chinese bispecific drugs, with the annual number of transactions rising from 3 in 2022 to 14 in 2024 (the first nine months), with total annual transaction amounts of $14.825 billion, $13.280 billion and $5.072 billion, respectively.

This year’s most high-profile deal involved Merck as the buyer. Through its subsidiary, Merck acquired Curon’s bispecific antibody CN201 (targeting CD19/CD3) for the treatment of acute lymphoblastic leukemia (ALL). The deal included a $700 million upfront cash payment and up to $600 million in milestone payments, fully demonstrating MNCs’ strong confidence in the bispecific antibody track and their willingness to invest heavily in high-quality products.

Traditional licensing-out deals do not fully capture the financing landscape for bispecific antibody drugs. In recent years, as the financing of Chinese innovative drugs has continued to tighten, the overseas expansion models of pharmaceutical companies have gradually been enriched and upgraded. Some companies, represented by Hengrui Pharmaceuticals and Keymed Biosciences, have used new models such as NewCo (a strategy for local innovative pharmaceutical companies to establish new companies through cooperation with overseas capital to achieve product internationalization) to transfer product rights. For example, Keymed Biosciences has successfully promoted the overseas expansion of three bispecific antibody products twice in five months this year using the Newco model.

Regarding these two financing methods, Meng Qingwu, co-founder of Excyte, commented in an interview with the media that the traditional BD authorization and the currently popular NewCo overseas expansion have different “flexibility and risks”. Nowadays, many biotech companies prefer NewCo because the value of the project will increase as the pipeline research and development progress. NewCo companies can also be transferred to MNCs at any time.

This demonstrates that Excyte’s financing and business models are diversified, with significant growth potential in both the pharmaceutical market and capital gains. For example, through the transfer of overseas rights, the company can secure upfront payments, milestone payments, and a percentage of sales commissions, while the partner company takes responsibility for subsequent global clinical development and commercial sales. It is reported that the company is already in discussions with internationally renowned pharmaceutical companies regarding BD opportunities.

The second type is NewCo, that is, a new overseas company is established by a listed company or fund, and the products of Excyte are integrated into it. The returns received by the company include NewCo’s equity, upfront payment and profit sharing. It is reported that many companies have conducted multiple rounds of in-depth negotiations with Excyte. Excyte received TS in the early stage and is expected to receive more TS soon.

In addition, Excyte has adopted a strategy of advancing both domestically and internationally in terms of financing. Domestically, the company is advancing equity financing, with several well-known market-oriented private equity funds and government funds conducting due diligence. Meanwhile, Excyte’s founder and business team will participate in J.P. Morgan’s annual healthcare conference in January 2025, where they have scheduled face-to-face meetings with multiple pharmaceutical companies and investment institutions. This is expected to further expand the company’s influence overseas and potentially lead to significant deals in the near future.