“Science and Technology Innovation Board Daily”, September 12 (Reporter Zheng Bingxun) With the opening of trading today, BeiGene Shenzhou (688235.SH, 6160.HK) stock prices plummeted. By the close of the day, BeiGene A shares fell 10.61% to 144.01 yuan/share, while Hong Kong stocks fell 5.76% to HK$117.80 per share.

According to the news, overseas media reported that pharmaceutical giant AbbVie (AbbVie) filed a lawsuit against BeiGene in Chicago federal court last Friday, accusing BeiGene of hiring Huaqing Liu, a former senior scientist who left AbbVie, stealing trade secrets and developing an anti-cancer treatment that can compete with it.

The “Science and Technology Innovation Board Daily” reporter immediately learned from BaiGe Shenzhou that AbbVie did file this lawsuit against BeiGene. However, the company also stated that it denies this accusation and will resolutely defend the accusations initiated by AbbVie.

Prior to that, AbbVie's company PharmacyCycles also filed a lawsuit against BeiGene USA and its subsidiary BeiGene USA, alleging patent infringement of Zebutinib (BTK inhibitor), the core product of BeiGene. The case has not yet come to an end.

▌BeiGene denies the charges and will launch a defense

According to information, the focus of this lawsuit between AbbVie and BeiGene is a cancer treatment drug “BTK degrading agent.”

However, BeiGene denied AbbVie's accusations on Monday, saying that AbbVie's lawsuit was filed to hinder the development of BeiGene's competitive BTK degrading agent “BGB-16673.” It also said that before AbbVie applied for a patent for its BTK degradant, a patent application for BeiGene BGB-16673 had already been submitted, and it also obtained “fast track” status from the US FDA.

AbbVie said that after leaving AbbVie, Huaqing Liu began working in BeiGene in September 2019. Previously, Huaqing Liu had been working on AbbVie's BTK degradant project for at least a year.

In response to this incident, attorney You Congrui of Hubei Minben Law Firm told the “Science and Technology Innovation Board Daily” reporter that information that can be recognized as a trade secret must have the three characteristics of confidentiality, commercial value, and secrecy measures. In addition to requiring accurate evidence to support the determination of trade secret theft, the pharmaceutical field is also more difficult than in other fields.

“To determine that trade secret infringement has been established, in addition to satisfying that the information involved in the case constitutes a trade secret, it is also required to satisfy factors such as the infringement and the result of the infringement, that is, whether it was obtained by improper means, or that it was still used knowing that improper means was obtained, and actually caused the damaging consequences.” Yu Congrui said.

In this regard, the “Science and Technology Innovation Board Daily” reporter asked Baiji Shenzhou what countermeasures it will take and whether to set up a team of lawyers to respond to the lawsuit. BeiGene replied, “BeiGene denies AbbVie's accusation and will resolutely defend this accusation. The focus on advancing the BGB-16673 development project will not be interrupted by this lawsuit.”

BeiGene further stated, “We are currently carefully reviewing AbbVie's complaint and will respond appropriately through legal procedures. BeiGene values intellectual property rights and respects the effective intellectual property rights of others. Furthermore, the lawsuit will not affect our ability to serve patients or operate operations. We are confident in the products, services, and innovations that drive our business forward.”

According to data, BGB-16673 is a chimeric degradation activating compound (CDAC) targeting BTK, and has shown anti-tumor activity in pre-clinical wild-type BTK models and BTK inhibitor resistance mutation models. Research indications for BGB-16673 include chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL), and mantle cell lymphoma (MCL).

Currently, BeiGene has initiated two potentially registrable extended cohort studies for BGB-16673 for the treatment of R/R (relapse/refractory) MCL and R/R CLL. More than 300 subjects have been enrolled. It is expected that phase III clinical trials of R/R CLL/SLL will be initiated in the fourth quarter of 2024 or the first quarter of 2025.

In the first half of 2024, BGB-16673 invested 40.71 million yuan in R&D. By the end of the reporting period, the total amount invested in R&D was 74.25 million yuan.

According to Frost & Sullivan's report, the global BTK inhibitor resistance market will reach $2.32 billion in 2026 and grow to $3.2 billion by 2030. Among them, the post-drug resistance market size of BTK inhibitors in China will reach 0.32 billion yuan in 2026, and will grow to 1.32 billion yuan by 2030.

▌The zebutinib lawsuit did not adversely affect US sales

It can be found that as a treatment drug after resistance to BTK inhibitors develops, if BGB-16673 can be marketed, it will form a close synergy effect with the BTK inhibitor zebutinib (Baiyuze), a core product already marketed by BeiGene.

In the first half of 2024, BeiGene achieved product revenue of 11.908 billion yuan, of which global sales of zebutinib were 8.018 billion yuan, an increase of 122.0% over the previous year, accounting for 67.33% of product revenue. Of zebutinib's sales, an additional 5.903 billion yuan was contributed by the US market.

Thanks to the increase in product revenue, BeiGene's net loss is gradually narrowing. In fact, based on adjusted data, BeiGene achieved profit in the second quarter of 2024, with adjusted operating profit of 48 million US dollars.

However, the “sword of Damocles” still hangs “above” BeiGene. In June 2023, AbbVie's company PharmacyCycles filed a lawsuit against BeiGene USA and its subsidiary BeiGene USA, alleging patent infringement of zebutinib against Imbruvica (ibutinib).

At the recent investor conference, BeiGene once again responded to the latest developments in the zebutinib infringement case. On May 1, 2024, the US Patent and Trademark Office (USPTO) approved BeiGene's application to review the patent that Pharmacyclics alleges has infringed by BeiGene in the patent infringement lawsuit. The USPTO is expected to make a final ruling on the validity of the patent within 12 months of approving the application.

BeiGene also revealed that such lawsuits have not had an adverse impact on Baiyuze's R&D and sales in the US.