China Postal Securities: PROTAC achieves "0-1" breakthrough, optimistic about the potential of self-immunity oral breakthrough.

China Post Securities released a research report stating that PROTAC has excellent mechanism advantages, and the overall technology in the industry is still in the early stage. The development of target points in the field of oncology is clear, indicating increased competition, while the market for oral self-immune drugs is still in a blue ocean phase, especially in the dermatology drug market where oral molecules have explosive potential. The industry is not currently experiencing a "golden age" largely because companies with top development capabilities are still few. Technology barriers and execution efficiency are key factors to consider at present. The main points of China Post Securities are as follows: PROTAC has excellent mechanism advantages, but objectively speaking, its development is still in the early stages, with oncology still being the dominant therapy. PROTAC (Protein Degradation Targeting Chimeras) act by using a dual-function small molecule to bring the target protein that needs to be degraded close to the E3 ligase in the cell, thus utilizing the ubiquitin-proteasome system (UPS) to mark and degrade the target protein. It theoretically has differential advantages such as targeting "non-druggable" proteins, overcoming drug resistance, high selectivity, and low dosages. Currently, about 80% of clinical PROTACs are targeted at cancer. The industry is still in the early stages of PROTAC technology as the fastest progressing molecular structures are primarily focused on commercial efficiency (such as ARV-471), which means there is significant room for iteration, partially explaining why efficacy in late-stage trials may not be as expected. The difference of self-immune PROTAC from the oncology market lies in its potential to open up the oral drug market. The development of target points in the oncology field signifies increased competition, while the market for self-immune oral drugs is still in a blue ocean phase, especially in the dermatology drug market where oral molecules have explosive potential. According to Nature Reviews, the overall psoriasis market in 2023 is $27 billion, with oral medications accounting for $2.5 billion, only 9%. Referring to Takeda's estimate of the U.S. psoriasis market, by around 2034, oral medications are expected to increase to a 33% market share. PROTAC has the potential to address the core contradiction of supply and demand - biological-like efficacy and safety. Technology barriers and execution efficiency are key factors to consider at present. Technology barriers: The effective use of PROTAC's greatest advantages requires pathways that have undergone sufficient clinical and genetic validation, focusing on target points that have not been fully developed by any other technology or are fundamentally non-druggable. Finding ligands for proteins that are difficult to develop into drugs requires top-notch industry capabilities. The industry is not currently experiencing a "golden age" largely because companies with top development capabilities are still few. Execution efficiency: Limited target selection due to technology leads to fierce early competition, so the efficiency of clinical development by companies will play a significant role. Related stocks: BEONE MEDICINES (06160), Jiangsu Hengrui Pharmaceuticals (01276), Haisco Pharmaceutical Group (002653.SZ), CSPC PHARMA (01093), SIMCERE PHARMA (02096). Risk warnings: Risks of research and development failures, intensified industry competition, geopolitical risks, policy change risks.