The $11.4 billion BD transaction validates the global innovation and commercialization potential, with promising valuation growth potential for INNOVENT BIO (01801).

On October 22, the opening price of INNOVENT BIO (01801) rose nearly 10% and reached a high of 95.5 Hong Kong dollars. The trading volume in the morning exceeded 40 million shares, with a turnover of over 4 billion Hong Kong dollars. The high market sentiment behind the trading was due to a significant announcement made by the company before the market opened: INNOVENT BIO announced a BD transaction with Takeda Pharmaceutical worth a total of $11.4 billion, featuring "high upfront payments, high milestones, and high royalties." In this strategic partnership, INNOVENT BIO and Takeda Pharmaceutical will jointly develop the new generation IO cornerstone therapy IBI363 (PD-1/IL-2-bias) globally and commercialize it in the United States. In addition, INNOVENT BIO will also grant Takeda Pharmaceutical the commercialization rights for IBI363 and IBI343, two late-stage investigational therapies, in specific global regions, as well as an exclusive option for a global early-stage project IBI3001 in specific regions. According to the agreement, INNOVENT BIO will receive a $1.2 billion upfront payment (including a $100 million premium strategic equity investment) and potential milestone payments. INNOVENT BIO will also receive a high percentage of sales royalties, potentially reaching tens of percents, with the profit from the joint commercialization of IBI363 in the United States being split in a 40/60 ratio. It is worth noting that for the focus product of this strategic partnership, IBI363, both parties will adopt a model of joint development and profit sharing in the U.S. market. This cooperation not only sets a new record for domestic pharmaceutical companies' collaborations with foreign partners but also marks the first time that a local pipeline is making a global impact with a "global co-development" approach alongside multinational giants in the multi-billion-dollar oncology market. Powerful alliance, global collaboration Different from previous BD transactions, the cooperation between INNOVENT BIO and Takeda in terms of transaction content and collaboration format represents a new form of partnership between domestic innovative pharmaceutical companies and multinational pharmaceutical companies. Firstly, in terms of transaction content, the collaboration focuses not on a single blockbuster product but on a "basket-style packaged authorization" around the two global hot topics of IO and ADC, showing Takeda Pharmaceutical's high recognition and long-term investment in INNOVENT BIO's overall technology platform. Secondly, in terms of the collaboration model, according to the agreement, for the core product IBI363, both parties will adopt a model of joint development and profit sharing in the U.S. market. Generally, while this model involves relatively complex transaction structuring, the parties involved often derive more "supplementary agreements" due to the complexity after the initial contract. These agreements serve to delineate the roles and actual decisions of the two parties in product development, production, and commercialization, evolving into a layered and progressive "configurable, evolvable" collaboration system, which is actually a more practical and successful model of cooperation. Finally, according to the agreement, Takeda Pharmaceutical will also invest $100 million, premium 20% to subscribe to the company's equity, becoming an important strategic shareholder of INNOVENT BIO. By bundling "capital + business," the strategic relationship between the two parties is expected to evolve further towards a "global shared business interests community," conducive to the long-term stability of their cooperation. Opening a new era of international commercialization For the cooperation between INNOVENT BIO and Takeda Pharmaceutical, the global development and commercialization of the focus product IBI363 is undoubtedly the "highlight." Its potential value has already been validated by significant clinical results, and its treatment and global commercialization potential have continuous significant value to unearth. As a global top 15 pharmaceutical company, Takeda has been struggling in the oncology field in recent years with "strategic layouts but lacking blockbusters." Its solid tumor pipeline had to be adjusted due to multiple projects' data not meeting expectations. As the focus of this cooperation, IBI363 hits precisely the "upgrade track" of Takeda's oncology layout. IBI363 is a globally pioneering bispecific antibody fusion protein developed independently by INNOVENT BIO. Its core innovation lies in its ability to simultaneously block the PD-1/PD-L1 pathway and activate the IL-2 pathway, achieving dual immune activation. What's even more unique is that its PD-1 binding arm can not only block the PD-1 checkpoint but also selectively deliver IL-2 to tumor-specific T cells co-expressing PD-1 and IL-2, achieving precise activation and expansion of the anticancer "elite forces." Data presented at the ASCO annual meeting this year showed that IBI363 demonstrated good clinical activity in immunotherapy-resistant lung cancer, metastatic melanoma, mucosal melanoma, and microsatellite-stable colorectal cancer. This indicates that it can not only cover the $50 billion market of PD-1-based lung and colon cancer but also address the core pain point of the resistance to current PD-1 therapy. Furthermore, the antitumor activity of IBI363 is not affected by the level of PD-L1 expression. This means it may be effective in "cold tumors" such as pancreatic cancer and liver cancer with low or no PD-L1 expression, potentially addressing a major challenge in current immunotherapy. For Takeda Pharmaceutical, these highlights are undoubtedly "bonuses" for IBI363. From the details of this "high upfront payments, high milestones, high royalties" BD transaction, investors can also see Takeda Pharmaceutical's determined attitude and confidence in the overseas formulation and future sales of this product. For INNOVENT BIO, the potential injection of up to $11.4 billion in this cooperation will undoubtedly provide significant financial support for the company's large-scale global clinical trials in the future. Collaborating in research and development with Takeda will also help flagship products like IBI363 smoothly pass through the clinical stage, reduce pipeline development risks, and shorten development cycles. At the same time, leveraging Takeda's global registration, clinical development, and commercialization network can help INNOVENT's innovative products quickly reach mainstream markets in Europe and America, paving the way for the successful landing of future pipelines. In addition, this cooperation with Takeda also demonstrates the international peers' high recognition of INNOVENT's innovative technology platform. With Takeda Pharmaceutical's investment endorsement, it may boost the company's stock price, shorten investors' capital turnover cycles, enhance investors' investment willingness and confidence, and lay a solid foundation for continued long-term holding of INNOVENT BIO.