Caixin News on November 22 (Reporter Wu Chao) Due to the clinical results not meeting expectations and the increasingly fierce market competition, Tasly Pharmaceutical Group (600535.SH) announced the suspension of an anti-cancer drug that has undergone eight years of research and corresponding clinical trials. This R&D project also involves Celenys (688163.SH) as a shareholder, with both listed companies expected to book asset impairment losses of 0.162 billion yuan and 14.1448 million yuan respectively.

It is reported that the drug suspended from research and development this time is a recombinant fully human anti-EGFR monoclonal antibody injection (Anlimu). It is a type 1 biological product mainly used for the treatment of advanced solid tumors. Since obtaining clinical trial approval from the National Medical Products Administration in 2016, after progressing through multiple clinical stages, it has reached the Phase IIb clinical research stage.

Regarding the reason for suspending the research and development of Anlimu monoclonal antibody, Tasly Pharmaceutical Group stated in the announcement: Based on the mid-term analysis results of the Phase IIb clinical research, it did not show synergistic enhancing effects when combined with anti-PD-1 monoclonal antibodies, failing to meet the trial's pre-set endpoints. Considering that the combination of Anlimu monoclonal antibody with anti-PD-1 monoclonal antibodies did not meet expectations, further exploration with other drugs would not only be time-consuming and costly. Additionally, there is already another approved improved biological drug targeting the same site on the market domestically. Clinical progress of other similar EGFR monoclonal antibody biological drugs is fast, making the competition intense. There are significant uncertainties and risks in continuing the research and commercialization.

Tasly Pharmaceutical Group stated that after organizing internal and external experts for technical and market analysis, carefully considering various uncertainties such as the risks of subsequent research and development investment and commercial market prospects, the decision to suspend the clinical trial of Anlimu monoclonal antibody was deliberated and approved by the company's Board of Directors. The company will thoroughly analyze the trial data and the reasons behind various clues. After ensuring appropriate effective measures, further related work will be cautiously advanced.

Caixin News reporters noted that currently Tasly Pharmaceutical Group is facing certain pressure in terms of performance. In the first three quarters of this year, Tasly Pharmaceutical Group achieved revenue of 6.463 billion yuan, a 1.66% year-on-year decrease; net income attributable to the parent company was 0.842 billion yuan, a decrease of 18.41% year-on-year.

The suspension of the research and development of Anlimu monoclonal antibody this time is also a strategic adjustment for Tasly Pharmaceutical Group after announcing the transition to a new parent company. In August of this year, Tasly Pharmaceutical Group announced that through the transfer of agreements, Tasly Group and its concerted parties transferred 28% of the shares to China Resources Sanjiu Medical & Pharmaceutical. After the transaction, China Resources Sanjiu Medical & Pharmaceutical became the controlling shareholder of the company, with China Resources becoming the actual controller of Tasly Pharmaceutical Group. The total price of this acquisition reached 7.3 billion yuan.

As of now, the total R&D investment in the Anlimu monoclonal antibody project amounts to 0.189 billion yuan, with a remaining development expenditure balance of 0.162 billion yuan.

Based on the actual situation such as the expected impossibility of disposal and after tasly pharmaceutical group's board of directors' review, the remaining balance of development expenditure for the project is fully provided for asset impairment at 0.162 billion yuan. Calculated according to the company's stated shareholding ratio, the provision for asset impairment will correspondingly reduce the company's net income attributable to the parent in 2024 by 95.4517 million yuan.

It is understood that the research and development work of Xilonasep monoclonal antibody is led by tasly pharmaceutical group's controlling subsidiary Shanghai Saiyuan Biotechnology Co., Ltd. (referred to as 'Saiyuan Biotechnology'). Saiyuan Biotechnology was established as early as 2016 by Celerion Biologics, with tasly pharmaceutical group's capital increase and share acquisition in 2017, obtaining a 60% controlling stake. In 2018, Celerion Biologics sold 18% of its equity externally, reducing its stake to 22%.

According to Celerion Biologics' announcement, due to Saiyuan Biotechnology's decision to suspend the clinical research work of the 'Xilonasep monoclonal antibody' project, it is preliminarily estimated that the company will fully provide for impairment of long-term equity investment in Saiyuan Biotechnology and recognize the expected amount of investment loss on the corresponding balance sheet date as 14.1448 million yuan. After the provision, the balance of this long-term equity investment is zero.