The latest: Shanghai Henlius Biotech Inc. (2696.HK) said on Thursday its self-developed small cell lung cancer drug Hansizhuang has been granted orphan drug status by the European Commission (EC).

Looking up: The designation, given to drugs to treat relatively rare conditions, will allow the Hansizhuang to enjoy certain policy support in its subsequent development in the EU. Such support includes protocol assistance for clinical studies, access to the centralized authorization procedure and 10 years of market exclusivity after the drug is approved for marketing.

Take Note: Even if Hansizhuang is ultimately approved, it would have to compete with similar drugs already on the market, including Merck & Co.’s (MRK.US) Keytruda, Bristol-Myers Squibb’s (BMY.US) Opdivo and Regeneron Pharmaceuticals’ (REGN.US) Libtayo.

Digging Deeper: Founded in 2010, Henlius is a biopharmaceutical company owned by Fosun Pharma (2196.HK; 600196.SH). The company made a major breakthrough in 2019 when it attained approval for sale of China’s first biosimilar medicine, rituximab, for the treatment of Non-Hodgkin lymphoma and chronic lymphocytic leukemia. Henlius has commercialized five products as of the end of June, leading to significant revenue growth in the past two and a half years. But the company is still not profitable due to high R&D and sales expenses.

Market Reaction: After opening up 5.3% on Friday, Henlius shares moved downward and closed 2.4% lower at HK$12.82 at the midday break. The stock now trades close to its 52-week low.

Translation by Jony Ho

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