It’s 2023, is PD-1 still worth paying attention to?

The huge indication group (effective against both hematological tumors and solid tumors) once made PD-1 the most popular anti-cancer target. What followed was an influx of many domestic pharmaceutical companies.

With the increasing number of PD-1 drugs on the market in China, competition in this field has become increasingly fierce. In order to successfully join the medical insurance, each company has significantly lowered its price, so PD-1 inhibitors have also become The most involute track of the past two years.

In the blink of an eye, 2023 is almost halfway through. Is the already extremely involved track of PD-1 inhibitors still worth paying attention to? It is said that this track is involution, so what exactly is the competitive landscape?

“Miracle drug”The expected difference after the halo 

Before fully analyzing China’s PD-1 inhibitor track, we must first clarify one thing. That is, although PD-1 inhibitors are called "broad-spectrum anti-cancer drugs," they actually have strict usage thresholds. It is not as simple and easy to give PD-1 inhibitors to patients as many investors imagine. .

It is undeniable that PD-1 inhibitors have indeed created many miracles. For example, many patients who have reached an advanced stage and are incurable have improved with the help of PD-1 inhibitors. However, most investors only see the miraculous side of PD-1 inhibitors, thus overestimating this drug as a "myth". Behind the halo of this "magic drug" lies a huge gap in expectations.

First of all, for patients with driver gene mutations, the therapeutic effect of targeted drugs is significantly stronger than PD-1 inhibitors, such as EGFR inhibitors, ALK inhibitors, etc. Only patients without driver gene mutations, or those who have developed resistance to targeted drugs, are more suitable for PD-1 drugs.

Secondly, the effect of PD-1 alone is not good, the patient response rate is very low, and only a small number of patients can have a good response. Therefore, in order to better improve the efficacy of PD-1 drugs, combination with other therapies has become a new strategic direction in the industry. For example, PD-1 inhibitor O drug combined with CTLA-4 inhibitor Y drug has successfully combined the treatment of melanoma with The response rate is doubled.

Figure: PD-(L)1 non-response ratio of major cancer types, source: Western Securities

Finally, PD-1 drugs can also produce drug resistance, side effects, and even It will cause hyper-progression (instead of benefiting the patient, the condition worsens rapidly). These situations once again prove that expectations for PD-1 inhibitors should not be too high. In more cases, doctors will make judgments based on the patient's actual situation and adjust the medication plan according to the patient's test results.

Of course, the emergence of PD-1 inhibitors is of great medical significance, because it provides patients with more possibilities and allows doctors to have more diverse treatment options, but too blind "reliance" ”PD-1 drugs are not advisable.

 02 China’s PD-1 War Situation 

As of the end of May 2023, a total of 15 domestic PD-(L)1 inhibitors have been approved for marketing, excluding 4 overseas ones. Among the products of pharmaceutical companies, a total of 12 domestic self-developed products are on the market. Based on the time of approval, these 11 approved PD-(L)1 inhibitors can be divided into two echelons: 4 products approved before 2020 are the first echelon, and 7 products approved after 2020 For the second echelon.

Looking at the four products in the first echelon, there is an obvious trend of differentiation. BeiGene later caught up, and the sales of the other three companies began to decline.

BeiGene’s Tislelizumab (BeiGene) is the latest product to be approved in the first tier, but it shows strong competitiveness, with product sales rising from 1.118 billion yuan gradually climbed to 2.859 billion yuan, demonstrating its strong competitive strength.

Hengrui Medicine’s Camrelizumab (Erica) is currently the best-selling PD-1 inhibitor in China. Relying on Hengrui’s huge sales network, it set a new record in the second year of its launch. Sales performance of approximately 4.8 billion yuan. However, as the involution of the PD-1 industry intensified, Erica’s sales clearly encountered challenges after entering into medical insurance and lowering its price, and no relevant data was even disclosed in 2022.

Innovent Biologics’ sintilimab (tyvyzumab) has also encountered industry insecurity, especially in 2022, when there was a major sales decline. It was originally the PD-1 product with the second highest sales volume in China, but now it has been surpassed by Baizean.

Although Junshi Biological's toripalimab (Tuoyi) is the first PD-1 product approved in China, it is also the first to lag behind. Its sales in 2021 will directly increase from 10.03 100 million yuan plummeted to 412 million yuan. We don’t want to discuss the reasons for this in this article, but obviously it is difficult to satisfy investors with only 736 million yuan in revenue in the fourth year of commercialization.

Figure: Domestic PD-1 inhibitor landscape, source: Brocade Research Institute

In the second echelon, Kangfang Biotech’s Pymplelimab (Aniko) Although Slulimab (Hans-like) of Henlius and Henlius were launched later, they both demonstrated excellent market competitiveness, achieving sales of 558 million yuan and 339 million yuan respectively in 2022. After all, What are the highlights of these two pD-1 inhibitors?

Kangfang Biology is a victory of differentiated technology. Aniko is the first new PD-1 monoclonal antibody in China that uses the Fc segment to modify the IgG1 subtype. It has better stability and can effectively avoid the problems of mutual aggregation of traditional PD-1 monoclonal antibodies IgG4 and inhibition of humoral immunity. At the same time, the modification of the Fc segment inhibits the secretion of IL-6 by macrophages, thereby reducing the occurrence of immune-related inflammation and enhancing the safety of the drug.

In terms of commercialization, Kangfang Biotech did not choose to build independent channels. Instead, it granted domestic commercialization rights to Zhengda Tianqing, which has strong sales capabilities, while retaining overseas rights and interests. This is a win-win cooperation model. Speeded up the sales pace of Aniko.

Fuhong Henlius’s success is based on its differentiated layout of indications. The first approved indication for Hansen's syndrome is a highly microsatellite unstable solid tumor that is rarely touched by players. Previously, only BeiGene's BeiGene was approved for this indication among domestically produced PD-1 drugs. Market competition Not too intense.

In the past six months, Hansi has successively won two lung cancer indications: squamous non-small cell lung cancer and extensive-stage small cell lung cancer. Especially in the field of small cell lung cancer where the treatment options are "desert", many PD-1 monoclonal antibody products have failed, but Hansi has made breakthrough progress and became the first PD approved in the world for the first-line treatment of small cell lung cancer. -1 inhibitor, the median overall survival of 15.8 months also set a new global immunotherapy record for small cell lung cancer.

However, Hengrui Medicine’s PD-L1 inhibitor adebelimab was also approved for small cell lung cancer indications in March this year, and competition in this blue ocean indication may gradually intensify.

It can be seen from the performance of these two products that PD-(L)1 inhibitors have not lost their vitality as many investors thought. Although involution does exist, among them However, there are still many opportunities. The key lies in how companies formulate differentiated competitive strategies.

03PD-1 is no longer a profitable business 

Once upon a time, PD-1 inhibitors were regarded as a "non-losing business". As long as the products developed can be put on the market, they can earn considerable income based on sales volume. Involution will only make the company make less money.

But in 2023, the impression of PD-1 as a "guaranteed profit" has been broken, and the market has begun to see large losses because PD-1 inhibitors did not meet expectations. company.

In April this year, A-share listed company Yuheng Pharmaceutical disclosed its results. Because the development project of its joint-stock company Yuheng Biotech did not meet expectations, it made an impairment provision of 423 million yuan, resulting in a net loss of Profits decreased by 178 million yuan. Yuheng Biotech is an innovative drug company invested by Yuheng Pharmaceutical, holding 42.12% of the shares. The core drug PD-1 inhibitor cepalizumab was approved for listing in China in August 2021.

Yuheng Biotech was originally full of expectations for PD-1 inhibitors, and expected sales to reach 140,000 units in the second year when it is launched at the end of 2021. However, the plan did not change quickly. In the end, Yuheng Biotech only successfully sold 53,400 PD-1 inhibitors in 2022, which was 38% of the planned sales volume.

Figure: Yuheng Biological’s sales of PD-1 inhibitors in 2022, source: company announcement

At the same time, the advancement of the second indication of cepalizumab did not meet expectations. Coupled with the extreme involution of the PD-1 inhibitor track, the actual operating situation of Yuheng Biotech is hugely different from before, which ultimately led to a total profit reduction of Yuheng Pharmaceutical by 270 million yuan in 2022. If the impact of Yuheng Biology is excluded, Yuheng Pharmaceutical's actual operating performance actually increased year-on-year.

Coincidentally, Jiahe Biotech's PD-1 inhibitor Gerolizumab Injection recently appeared on the list of "Drug Notifications Pending Information Release". Since there is no drug approval number, Jiahe Biotech's A drug failed to launch. When it was launched in 2020, Gerolizumab was the core product of Jiahe Biotech. Now with the failure of this drug to be launched, Jiahe Biotech's market value has fallen below HK$1 billion.

I believe that as the involution of the PD-1 track intensifies, the "death list" of products under development may also further increase, and the negative feedback from the excessive R&D layout that year is emerging. Although investors don't want to see this happen, it is the natural law of the development of the biopharmaceutical industry.

Just imagine, without the excessive R&D investment at that time, there would naturally not be so many PD-1 inhibitor products in China, and patients would not enjoy the benefits caused by "involution" The emergence of low prices, so R&D failures are cruel, but inevitable.

03PD-1 market is not saturated 

It is an indisputable fact that the domestic PD-1 inhibitor track is extremely involved, but investors should stay awake because of this track China is far from reaching the so-called saturation situation.

Take K drug as an example. It has been commercialized for 9 years since it was launched in 2014, but even so, it will still hit a new revenue high of US$20.937 billion in 2022. As Merck's layout for K-drugs continues to deepen, it has been approved for more than 40 indications. In contrast, the leading domestic PD-1 inhibitor has only been approved for 10 indications.

It is not difficult to see from this that the market for PD-1 inhibitors in China still has huge market space, but if pharmaceutical companies want to gain access to these markets, they must work hard on new indications and strive to promote themselves. Product drug combinations.

In a nutshell, the involution of incentive competition is only one aspect of domestic PD-1 inhibitors. There is still a huge market behind it. The competition in this track has evolved from PD-1 inhibitors. The speed of drug development has switched to how to refine and seize cutting-edge indications. It’s not that the PD-1 track has no chance, but that the efforts of pharmaceutical companies are not enough, and investors should be more patient about this.