The over 900 million US dollars BD transaction demonstrates the global commercial potential, with potential for increased valuation for HEC CJ PHARM (01558).

On the evening of November 12th, a announcement released by HEC CJ PHARM(01558) has attracted widespread attention from the industry and the market. HEC CJ PHARM announced that they have signed an exclusive licensing agreement with Apollo Therapeutics for their independently developed FGF21/GLP-1 bispecific fusion protein HEC88473 (APL-18881) for a total milestone price of 938 million dollars. This collaboration has set a new record for the BD transaction amount of GLP-1/FGF21 dual-functional molecules in China. In response to this, Dr. Zhang Yingjun, Chairman of Guangdong Hec Technology Holding, stated: "Guangdong Hec Technology Holding, with its profound accumulation in the treatment of metabolic diseases, combined with Apollo's international vision and clinical expertise, will greatly accelerate the global R&D process of this new therapy and benefit patients as soon as possible." According to the agreement between the two parties, HEC CJ PHARM will retain the development, manufacturing, and commercialization rights of the product in China, and grant Apollo Therapeutics the development, manufacturing, and commercialization rights in other regions of the world for all current and future treatment indications. Guangdong Hec Technology Holding will receive a upfront payment of 12 million dollars, as well as up to 926 million dollars in development, regulatory, and commercialization milestone payments. It is worth mentioning that if HEC88473 is successfully commercialized outside of Greater China in the future, Guangdong Hec Technology Holding will receive royalties in the high single-digit to low double-digit percentage range over the next 10 years. This undoubtedly marks a key step in HEC CJ PHARM's international commercialization. Indeed, from a market perspective, the successful international commercialization of HEC88473 shows strong certainty. As is well known, GLP-1 has become the cornerstone of treatment for diabetes, obesity, and many other conditions, with the global weight loss market being particularly popular in recent years. According to Pfizer's expectations, GLP-1 drug sales are expected to reach 90 billion dollars by 2030, and Frost & Sullivan predicts that the global GLP-1 drug market will reach 115 billion dollars by 2030. With expanding indications, GLP-1 is no longer limited to the diabetes and weight loss markets, but is also entering the NASH field. The core value of GLP-1/FGF21 dual-functional molecules lies in their ability to act on multiple indications simultaneously. From a mechanistic perspective, GLP-1 is an incretin hormone that stimulates insulin secretion in response to glucose, reduces food intake, while FGF21 is an endogenous metabolic hormone mainly expressed in the liver, regulating energy expenditure and glucose and lipid metabolism, playing a crucial role in the regulation of sugar and fat metabolism. Therefore, GLP-1/FGF21 dual agonists are expected to produce synergistic effects in lowering blood sugar, losing weight, and improving NAFLD/NASH. Furthermore, FGF21 is also a potential target for NASH, with its biological mechanisms being relatively clear, making it a central target in the fiercely competitive field of NASH research. From a market perspective, Frost & Sullivan predicts that the global NASH drug market will reach 10.7 billion dollars by 2025 and 32.2 billion dollars by 2030, with a compound annual growth rate of 41.8% and 24.6% over the period. Back in July 2019, Bryn Mawr Pharmaceuticals acquired a GLP-1/FGF21 dual functional molecule developed by Yuhan for a total price of 870 million dollars, demonstrating the value of such dual functional molecules. As a Fc fusion protein FGF21/GLP1R dual agonist independently developed by Guangdong Hec Technology Holding, and also the first domestically approved clinically GLP-1/FGF21 dual agonist, the clinical value of HEC88473 is constantly being unleashed. It has been noted that HEC88473 cleverly combines GLP-1 and FGF21 molecules in the form of an Fc fusion protein to form a dual-target protein, which is more long-acting and has a new synergistic mechanism of action. Compared to single-target drugs, it can exert more powerful effects in blood sugar control, weight loss, and improving NAFLD/NASH, truly achieving multiple benefits. In terms of research and development progress, HEC88473 has successfully completed two Phase I clinical trials in healthy and obese subjects in Australia and China, as well as in patients with type 2 diabetes. The trial data showed acceptable safety and tolerability, as well as good efficacy at therapeutic doses. Currently, HEC88473 is undergoing a Phase II clinical trial in China for patients with type 2 diabetes in a double-blind, placebo and positive drug-controlled setting, with primary results expected in the first half of 2025. After reaching an agreement with HEC CJ PHARM, HEC88473 (APL-18881) will become a key member of the large and diversified new candidate drug pipeline being developed by Apollo Therapeutics, its fifth project to advance to clinical development. HEC88473 (APL-18881) has now submitted an Investigational New Drug application (IND) in the United States, and Apollo Therapeutics will continue to explore the therapeutic potential of this drug in a range of potential indications in the fields of cardiac metabolism, liver, and related diseases during clinical trials. As Dr. Zhang Yingjun said, "This cooperation marks Guangdong Hec Technology Holding's further deepening of its global layout in research and development, production, and sales areas, and is also an important milestone in the company's commitment to high-quality and innovative research and development." For HEC CJ PHARM, which is about to enter the international market, this cooperation with Apollo clearly marks a significant.step.This is a huge positive.On the one hand, the collaboration with Apollo Therapeutics at the commercialization level can bring long-term benefits to the company in international BD transactions and global commercialization fields, while the huge milestone payments can effectively supplement the company's cash flow. On the other hand, with the Fed rate cut, the global biotech capital is entering a critical thawing period, and more and more benchmark pharmaceutical companies with "investment certainty" are gaining market favor. Leveraging the system advantages formed by gradually building a global innovative research and development, overseas registration, and international market commercialization, combined with the strong endorsement of Apollo company, HEC CJ PHARM is expected to receive more widespread investor recognition in the secondary market, and achieve higher valuation premium.