Recently, the biopharmaceutical sector seems to be reviving. Perhaps the BD departments of MNCs have returned from their summer breaks, reigniting the cross-ocean BD wave.
On October 17, Hansoh Pharmaceutical announced a licensing collaboration with global oncology giant Roche for its CDH17 ADC new drug HS-20110. Roche will pay 80 million USD as an upfront payment and up to 1.45 billion USD in milestone payments, plus sales royalties, to obtain global rights outside Greater China. The total transaction amount reaches 1.53 billion USD.
For Hansoh, the upfront payment of 80 million USD (approximately 580 million RMB) represents a significant portion of the company’s quarterly R&D expenditure, directly enhancing the company’s recent profits and cash flow.
This marks Hansoh’s third successful “overseas venture” in the ADC field—previously, its B7-H3 ADC and B7-H4 ADC were licensed to GlaxoSmithKline (GSK). These three major transactions, with partners being top global multinational pharmaceutical companies, strongly validate Hansoh’s platform capabilities in the cutting-edge technology of ADCs and the certainty of continuously producing high-quality drug candidates (BD assets).
Today, let’s discuss why CDH17 is the target and why Roche is making a move to acquire an early-stage clinical asset at this time.
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When ADC Awakens the Dormant CDH17
The protagonist of this transaction—the CDH17 target—has a research history that serves as a vivid case of “technology empowering targets”.
CDH17 (Cadherin 17), as a potential tumor target, has been discovered by the scientific community for nearly two decades. It possesses all the theoretical characteristics of an ideal target: it is highly and uniformly expressed in gastrointestinal tumors such as gastric cancer and colorectal cancer, while being almost undetectable in healthy adult tissues.
This specificity in expression provides a natural “safety window” for drug development.
For this reason, CDH17 is also referred to in the industry as the “next Claudin18.2”. The rise of these two targets is remarkably similar: both are high-expression targets in gastrointestinal tumors; both were first discovered for their development potential by keen Chinese innovative pharmaceutical companies, sparking a wave of research and development, quickly leading to an “involution” situation; ultimately, both completed their value “outreach” and global validation through significant transactions with MNCs.
For a long time, CDH17 was in the awkward position of being “well-received but not commercially viable”.
Early drug developers attempted the most classic path—monoclonal antibodies—hoping to inhibit tumors by directly blocking signaling pathways or triggering immune effects (such as ADCC). The results were unsatisfactory, as the inherent efficacy bottleneck of monoclonal antibodies in solid tumor treatment prevented CDH17’s potential from being realized. The target was promising, but the weapon lacked lethality, which was a common dilemma faced by all explorers at that time.
The real turning point came from the maturity of the ADC technology.
We know that the logic of ADCs is to use highly specific monoclonal antibodies as “biological missiles” to precisely target cancer cells, and then release their powerful “cytotoxic payload” through a clever linker inside the tumor cells, effectively eliminating cancer cells. Moreover, the new generation of ADC technology can also produce a “bystander effect”, meaning it can kill surrounding cancer cells that do not express the target, which is crucial for heterogeneous solid tumors.
This technological pathway is tailor-made for targets like CDH17. The antibody addresses the issue of precise “guidance”, while the highly active “payload” compensates for the shortcomings of monoclonal antibodies’ “insufficient lethality”. It can be said that it is not that the CDH17 target is ineffective, but rather that previous technological forms could not fully unleash its potential.
The emergence of ADCs has not only saved Claudin 18.2 from its involution but has also completed a “redemption” for the dormant CDH17 target.
In recent years, the flames surrounding CDH17 have been burning brighter. Just this year, Biontech and SOTIO Biotech, as well as Lepu Biopharma and ArriVent, have successively reached licensing collaborations on CDH17-related projects.
Although the scale of these transactions cannot be compared to the billion-dollar licensing deals, they serve more as a stepping stone, representing the market’s early validation and price discovery of the target’s value. These transactions clearly indicate the gradual recognition of this target’s value by the global pharmaceutical industry, paving the way for the subsequent significant entries by BMS and Roche.
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The Anxiety and Consensus of Giants
So, why is Roche willing to spend lavishly on a drug that is only in Phase I clinical trials? Behind this is the deep-seated anxiety and strategic necessity of this industry leader.
From Roche’s perspective, it is facing the pressure of a “turning elephant”.
The “three-horse carriage” (Herceptin, Avastin, and MabThera) that once created sales myths is now facing the impact of patent cliffs, and the company urgently needs to find new growth engines to fill the huge revenue gap. Although Roche has long been a core player in the ADC field with its pioneering Kadcyla and subsequent Polivy, it must continuously absorb external cutting-edge innovations to expand and upgrade its next-generation ADC pipeline in the face of increasingly fierce competition, especially from new-generation ADC technology platforms like Daiichi Sankyo.
Moreover, Roche has already fallen behind in the CDH17 race.
As early as the beginning of 2024, its main competitor BMS secured the global first overseas licensing of CDH17 ADC from Lepu Biopharma for a total price of 1.3 billion USD. In the “winner-takes-all” market of tumor drugs, especially in a new battlefield with immense potential, if a major competitor seizes the opportunity, the consequences are undesirable for Roche.
Therefore, after BMS’s bet, quickly locking in another CDH17 ADC asset with Best-in-Class potential has become a necessity for Roche.
So why Hansoh?
This stems from market consensus and recognition of strength. Firstly, Hansoh’s HS-20110 is currently one of the few candidates globally, aside from Lepu Biopharma’s product, that is in a leading position in clinical development, providing Roche with the possibility to catch up and surpass.
Secondly, Hansoh’s previous successful transactions with GSK have established an excellent industry reputation and collaborative goodwill. For MNCs, choosing a partner with proven successful collaboration experience, validated R&D quality, and execution capability can minimize technical and operational risks in the transaction.
This transaction is a key strategic layout for Roche to “insure” its future gastrointestinal tumor pipeline and a high recognition of Hansoh’s R&D strength and BD reputation.
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The Golden Age of China’s “Engineering Innovation”
Looking further, from Hansoh’s case, we can see the macro trend of the entire Chinese innovative drug industry.
A core judgment is: the window period for external licensing (BD) of Chinese innovative drugs has not only not closed but is still thriving. “Buying the best innovative drug assets from China” has been repeatedly validated in the past few years and may remain effective for a long time to come.
The fundamental reason lies in the essence of the ADC technology wave. Unlike new targets like PD-1 or CRISPR, it stems from disruptive discoveries of the underlying scientific principles of life.The innovation of ADCs is more of an “engineering” innovation.
Its core lies in how to optimally arrange and combine the three known components—Antibody, Linker, and Payload—to achieve the best balance of efficacy and safety.
This is akin to manufacturing a high-performance sports car; the principles of the engine, chassis, and transmission are known, but how to achieve perfect collaboration through exquisite design, excellent materials, and extreme tuning to extract the strongest performance tests top engineering capabilities. Which antibody has the best targeting? Which linker is both stable and can precisely break in tumor cells? Which payload is the most toxic with the least side effects? These questions test not the ability to discover from 0 to 1 but the engineering capability of optimizing processes, iterative innovation, and rapid execution from 1 to 100.
And “engineering” is precisely one of China’s core advantages that has been repeatedly proven in countless fields such as manufacturing and the internet over the past few decades.
Therefore, we have reason to believe that in fields relying on sophisticated “engineering design” technologies such as ADCs, bispecific antibodies, and even more complex bispecific ADCs, China will continue to produce globally competitive assets.
For the capital market, rather than worrying about the so-called “innovation bubble”, it is better to calm down and look for the next “engineered ADC” worth betting on along the path paved by Chinese engineers and scientists to the top of the global value chain.
Further Reading:Top Students, Hard Workers, and Ambitious Innovators: Who Will Win the Second Half of BD? Midfield Battles of ADCsInvestment | Industry Analysis | Stories | ObservationsFeel free to like and comment; the author will respond as seriously as possible.👇