9966.HK
The Chinese pharmaceutical firm has suffered its second clinical setback in a matter of weeks, after its U.S. partner halted trials of a sarcoma drug.

The Chinese pharmaceutical firm has suffered its second clinical setback in a matter of weeks, after its U.S. partner halted trials of a sarcoma drug

Key Takeaways:

  • Alphamab Oncology could still succeed in developing its envafolimab drug outside of China after licensing some of the international rights to India’s Glenmark
  • The R&D woes could be related to staffing issues at Alphamab as the position of chief medical officer has been vacant for some time

 

By Molly Wen

The route to pharmaceutical profits must typically pass through global markets, and the path for Chinese drug developers is strewn with regulatory and clinical obstacles.

Cancer drug specialist Alphamab Oncology (9966.HK) has been finding the journey particularly arduous. In late May, one of its key products flunked a Phase Three clinical trial on pancreatic cancer patients. Then on July 1 came the news that the company’s U.S. partner had scrapped an overseas trial of another Alphamab drug,citing a failure to achieve the targeted results.

Investors took fright at a second piece of unwelcome news in less than five weeks. The stock lost nearly a third of its value on the day of the latest announcement, going on to plunge 53% over three trading sessions.

Hopes have been high that the immune checkpoint drug envafolimab could treat a range of cancers through a simple injection. The drug is the first PD-L1 monoclonal antibody that can be injected via the skin rather than having to be fed intravenously into a vein.  Since being approved for sale in China in 2021, envafolimab has been cleared for conditions such as advanced solid tumors, cholangiocarcinoma, soft tissue sarcoma and non-small cell lung cancer

But the firm’s U.S. partner, Tracon Pharmaceuticals (TTCon.US), has pulled the plug on a trial in which the drug was used in a combined therapy to treat two types of cancer affecting the body’s soft tissues, metastatic undifferentiated pleuromorphic sarcoma and myxfibrosarcoma.  

The drug attracted a lot of interest because of the benefits of being injectable. In December 2019 Alphamab and co-developer 3D Medicines (1244.HK) struck a deal with Tracon under which the U.S. firm would test and develop the drug in North America for treating soft tissue sarcoma.  U.S. clinical trials were launched in 2020 but after four years the results showed an objective response rate of just 5% in 82 cases, not even half the 11% required for a marketing application.

The setback in the United States does not spell the end for the drug overseas. In January this year Alphamab licensed other overseas development rights to India’s fourth-biggest pharmaceutical company, Glenmark.

For more than $700 million in upfront and milestone payments, Glenmark gained exclusive rights to develop and market the drug in multiple countries and regions. These include India, parts of the Asia Pacific, the Middle East, Africa, Russia, the Commonwealth of Independent States and Latin America. Under the deal, Glenmark has agreed to absorb the costs of developing and selling the drug in the targeted markets.

In China, the drug was developed and promoted in partnership with two other companies. As a result, Alphamab only owns a share of the Chinese drug rights. Under the arrangement, Alphamab took care of production and distribution while 3D Medicines handledclinical development, registration, marketing and sales. Simcere Pharmaceutical (2096.HK) also enjoys exclusive rights for commercial promotion of the drug, whose sales are divided among the partners. According to financial data from 3D Medicines, the drug generated 635 million yuan ($87.3 million) in sales in 2023, of which 196 million yuan went to Alphamab.

Successive stumbles

The company’s stock price has hovered around HK$2.5 over the past month, more than 70% below the 2019 IPO price of HK$10.2.

The stock took a beating on May 29 after another Alphamab drug, KN046, failed a Phase Three clinical trial. The drug is a bispecific antibody used against pancreatic cancer, which is a particularly malignant and fast-developing condition with few effective treatments. The abortive trial dampened hopes for a breakthrough drug, sending the share price plummeting nearly 45% on the day of the announcement.

A year earlier the company had announced the failure of another trial in which KN046 was used with chemotherapy for patients with advanced squamous non-small cell lung cancer. The drug still has more than 10 clinical trials underway in China and elsewhere, covering multiple conditions such as thymus cancer, liver cancer and esophageal squamous cell cancer. The company could be further hit if any of those trials progress slowly or produce disappointing results.

The setbacks come after a period of staffing flux for Alphamab. The company announced in March 2021 that Johannes Nippgen, former head of Merck’s R&D center in China, had been appointed chief medical officer to lead the global development of its novel drug pipelines. Just a year later, Nippgen joined another drug company, Ionova Life Science, leaving the CMO role at Alphamab vacant.

At present, the company lacks any actively advancing pipelines. Its only drug on the market, envafolimab, is generating modest sales, while the hopes pinned on KN046 have dwindled and no other product launch is on the horizon. Nonetheless, the stock is trading at a price-to-sales (P/S) ratio of 10 times, a decent premium over the two times for 3D Medicines.

Investors will need to watch how Alphamab manages to pay its way in the future, in the absence of a powerful revenue engine.

To subscribe to Bamboo Works free weekly newsletter, click here

Recent Articles

Founded in 2008, RemeGen develops and sells novel drugs in the areas of autoimmunity, oncology, ophthalmology and other major diseases.

FAST NEWS: RemeGen scales back A-share fundraising plan

The Latest: Novel drug maker RemeGen Co. Ltd. (9995.HK; 688331.SH) announced Wednesday that it has reduced its fundraising target through a planned issue of new A-shares from a previous 2.55 billion yuan ($350…
Favorable policies have helped China’s property market to record two consecutive months of improvement.

Has China’s real estate market turned a corner?

Favorable policies have helped China’s property market to record two consecutive months of improvement   By CCB International The latest figures from China’s National Bureau of Statistics point to significant…