① Tonight, Hengrui Pharmaceutical announced that it reached a BD deal with a special company set up by several capital institutions in the US in May; ② The deal not only involved huge down payments and subsequent milestone payments and sales shares, but also included nearly 20% of the US company's shares; ③ The industry believes that Hengrui Pharmaceutical is joining forces with capital to create a new model for innovative drugs to go overseas, which can achieve a win-win situation for all parties, which is very novel.
Financial Services Association, May 16 (Reporter Lu Afeng) Since last year, the BD strategy has begun to change markedly. Hengrui Pharmaceutical (600276.SH), with a total transaction amount of over 4 billion US dollars last year, made another major BD transaction tonight, and this deal doesn't seem to be the same as Hengrui Pharmaceutical's previous BD transactions. An industry insider told the Financial Federation reporter that the model design is exquisite and makes people feel refreshed.
Tonight, Hengrui Pharmaceutical announced that it will license the exclusive right to develop, manufacture and commercialize the GLP-1 product portfolio with independent intellectual property rights to Hercules of the United States on a paid basis, and that Hengrui Pharmaceutical will obtain 19.9% of the shares and license fees of Hercules of the United States on a global scale other than in Greater China.
In terms of down payment and subsequent payments, the announcement revealed that in this BD transaction, Hengrui Pharmaceutical received a total of 110 million US dollars in down payments and recent milestones, including a down payment of 100 million US dollars and a recent milestone payment of 10 million US dollars after completing the technology transfer. Based on the progress of the clinical development of HRS-7535 and its initial approval for listing by the FDA, Hercules of the United States will pay Hengrui a cumulative total of no more than US$200 million in clinical development and regulatory milestones. Based on the actual annual net sales of the GLP-1 product portfolio in the licensed region, Hercules of the United States will pay Hengrui a cumulative sales milestone of no more than US$5.725 billion.
By the time related products are sold in the US, Hercules in the US will also pay Hengrui Pharmaceutical a sales commission of a lower single digit to a lower double digit ratio of actual annual net sales. In addition, Hengrui Pharmaceutical will establish a joint management committee with Hercules of the United States to coordinate the development and commercialization of licensed products on a global scale. The two parties will each appoint 3 representatives to the joint management committee.
In response to the BD deal, Jiang Ningjun, director and chief strategic officer of Hengrui Pharmaceutical, said that this cooperation is another milestone in Hengrui Pharmaceutical's continued deepening internationalization, and also represents the international market's high recognition of Hengrui Pharmaceutical's innovative quality. Cooperation with top investment funds such as Bain Capital, Atlas Ventures, RTW Capital, and Lyra Capital is a new model exploration for Hengrui Pharmaceutical, which will help further broaden Hengrui Pharmaceutical's rich innovation pipeline's internationalization path and better serve the world's unmet medical needs.
According to public information, Hercules of the United States is an extremely young company. It was established in Delaware in May 2024. The Bain Capital Life Science Foundation jointly invested 400 million US dollars with AtlasVentures, RTW Capital, and Lyra Capital. The company's business scope and main business is biomedical development. The investor will be responsible for the preparation and operation of Hercules in the United States.
Qi Zhengwei, an expert from the Whale Platform think tank and general manager of Hebei Zeyun Biomedical Technology Co., Ltd., told the Financial Federation reporter that after the deal was reached, Hercules in the US can be said to have become a special company set up by Hengrui Pharmaceutical in collaboration with several investment institutions to carry Hengrui Pharmaceutical's three GLP-1 pipeline overseas business.
However, the GLP-1 product portfolio “packaged” as BD this time mainly involves three varieties under development, namely the small molecule GLP-1 receptor agonist HRS-7535, the polypeptide GLP-1/GIP double agonist injection, and the oral product HRS9531, and the next generation intestinal insulin product HRS-4729.
According to Hengrui Pharmaceutical's latest financial report, HRS-7535 and the polypeptide GLP-1/GIP dual agonist injection HRS9531 are in clinical phase II, HRS-4729 is in pre-clinical development, and the oral product HRS9531 has just been approved for clinical trials.
“Hengrui Pharmaceuticals is now packaging the GLP-1 product portfolio for BD, which means that Hengrui Pharmaceuticals' current internationalization strategy is increasingly based on prudence.” Wang Heng, general manager of Beijing Bestley Marketing Planning Co., Ltd., analyzed to the Financial Association reporter that there is still huge unmet market demand in the GLP-1 field, or diet medicine circuit. Big companies and MNC are rapidly advancing R&D and commercialization after scrambling. Time is money. Hengrui Pharmaceutical is probably also planning ahead for future R&D, marketing, and commercialization of the GLP-1 product portfolio in the international market. When overseas capital formed Hercules, it also raised hundreds of millions of dollars of “ammunition” for clinical trials in the US. Hengrui Pharmaceutical simply took everything into account.
“Combining these capital, the risks of Hengrui Pharmaceutical's clinical trials of the GLP-1 product portfolio in the US and the risks of future listing and commercialization have been diluted. Investors have also obtained rights in the GLP-1 variety with good potential. Hengrui Pharmaceuticals has also received significant current and future benefits, which has achieved a win-win situation. The design of Hengrui Pharmaceutical's innovative drug overseas model is very novel. It is an 'innovation' of an innovative drug going overseas model. Other companies interested in going overseas should learn from it.” Qi Zhengwei told the Financial Federation reporter.