Dialogue with Zhang Lianshan: Hengrui Pharmaceutical's long-term doctrine - R & D and innovation

Source: Financial community

When the tide recedes, you can find out which are real gold and which are hard stones.

After a full year of continuous adjustment in 2021, the innovative drug industry ushered in a wave of very large valuation returns, many people said that the innovative drug industry is squeezing out a bubble, with the emergence of the bubble, the domestic innovative drug ecology is maturing - in 2021, despite the cold capital market, the number of listed new drugs still hit a record high. Throughout the history of the development of the biomedical industry, there are always enterprises that adhere to long-termism that have made a splash after the tide recedes, and for innovative pharmaceutical companies, the most intuitive embodiment of long-termism is innovative research and development.

As a veteran pharmaceutical company, Hengrui Pharmaceutical has always been known for its rich R & D pipeline, in recent years, its R & D investment has continued to maintain a rapid growth of about 30%, R & D investment in sales revenue has been maintained at around 20%, comparable to many international leading pharmaceutical companies. Even if the capital market enters a cold period, the blood of Hengrui Pharmaceutical's innovation and research and development has never stopped flowing, as Zhang Lianshan, deputy general manager of Hengrui Pharmaceutical and president of global research and development, said in a dialogue with the financial community: "Innovation is a major strategy that Hengrui has always adhered to for many years, and it is also the source of power to promote the company's long-term development and sustainable development." ”

【The underlying logic of innovation and research and development: science-oriented, patient first】

As we all know, the innovative drug industry has the characteristics of large investment, long cycle and high risk, and it often takes more than 10 years for products to be developed from research and development to listing, and the average cost of developing a new drug requires about billions of yuan. Although the process of innovation and research and development is full of twists and turns, Hengrui Pharmaceutical has always adhered to independent innovation, because it has long been clearly realized that enterprises must have their own creativity in order to "take their fate into their own hands".

In recent years, Hengrui Pharmaceutical's R&D investment has increased year by year, from 2018 to 2020, Hengrui Pharmaceutical's R&D investment was 2.67 billion yuan, 3.896 billion yuan and 4.989 billion yuan, respectively, with a year-on-year growth rate of about 30%; in the first three quarters of 2021 alone, its R&D investment has reached 4.142 billion yuan, an increase of 23.9% year-on-year, accounting for 20.5% of operating income, a record high. In less than four years, Hengrui Pharmaceutical's cumulative R&D investment has exceeded 15 billion yuan.

Driven by huge R&D investment, Hengrui Pharmaceutical has achieved great results in research and development. In 2021, Hengrui Pharmaceutical's self-developed innovative drugs Haitropopa ethanolamine tablets, proline hepagliflozin tablets, and Dalcili isethione isethionate tablets have been approved for marketing, and the treatment of second-line and above nasopharyngeal carcinoma, first-line nasopharyngeal carcinoma, first-line squamous non-small cell lung cancer, and first-line squamous esophageal squamous cell carcinoma with four new indications have been approved, with a total of 8 approved indications; the second indication of fluzopali capsules has been approved for marketing for platinum-sensitive recurrent epithelial ovarian cancer. Maintenance therapy in adult patients with fallopian tube cancer or primary peritoneal cancer after full or partial remission with platinum-containing chemotherapy, and the third indication for remazolam tosylate for injection was approved for induction and maintenance of general anesthesia.

Up to now, Hengrui has increased the number of innovative drugs listed to 10, more than 60 innovative drugs are under clinical development, and more than 250 clinical trials have been carried out at home and abroad, which has basically formed a virtuous cycle of listing a batch, a clinical batch, and a batch of development, and built a strong independent research and development capability.

In the choice of R&D track, "innovation-oriented, patient first" is Hengrui's constant principle and purpose. The management of Hengrui Pharmaceutical unanimously believes that as a pharmaceutical company, while pursuing market demand, it is more important to consider the clinical needs of patients and effectively solve patients' health problems.

Take The oral, efficient and selective small molecule CDK4/6 inhibitor Darcily developed by Hengrui Pharmaceutical as an example. Zhang Lianshan told the financial community that Hengrui Pharmaceutical has long been keenly aware that the Asian population of several PREVIOUS SIMILAR TRIALS in the previous similar trials was represented by the Japanese population, and lacked efficacy and safety data for Chinese groups. In other words, CDK4/6 inhibitors lack a complete and thorough confirmation of the risks and benefits of use in Chinese patients.

To this end, Hengrui has carried out more Evidence-based clinical trials in China, in order to get data closer to the current clinical diagnosis and treatment situation in China, DAWNA-1 Clinical not only enrolled 100% of the Chinese group, but also carried out a more detailed design: 44% of the premenopausal population and 27% of the chemotherapy population were selected, which truly reflected the data of the Chinese people. In addition, in order to ensure that the trial has sufficient excellent statistical significance, Darsili is carrying out the largest tumor clinical study in China so far - Darsily combined standard endocrine therapy for the treatment of HR-positive and HER2-negative breast cancer auxiliary study, clinical enrollment of more than 4300 patients, all safety and efficacy studies are based on 100% Chinese swarm data.

Such a large-scale clinical research is also a challenge for Hengrui, and it also faces difficulties in enrollment and management caused by the new crown epidemic, but Hengrui still relies on a strong clinical team and the advantage of "competing in the form of a group army" to promote the clinical research. Under the clinical trial that is more in line with the clinical baseline of Chinese patients, Darsili provides a more powerful, more practical and more appropriate targeted treatment method for the clinical diagnosis and treatment of PATIENTS with HR+/HER2-advanced breast cancer in mainland China, which not only shows the strength of Hengrui, but also shows Hengrui's determination to truly solve the unmet needs of Chinese patients.

In addition to Darsili, hengrui pharmaceutical independent research and development and intellectual property rights of humanized PD-1 monoclonal antibody - carellizumab research and development also fully implement Hengrui's "human-oriented" concept. Carellizumab has been approved for listing in 8 of the five major cancers of lung cancer, liver cancer, esophageal cancer, nasopharyngeal cancer and Hodgkin lymphoma, and is currently one of the domestic PD-1 products with the largest number of approved indications and the widest coverage of tumor species, and has entered the national medical insurance directory, benefiting the majority of domestic patients. According to Zhang Lianshan, the follow-up development of carellizumab not only focuses on the combination of existing indications and cancer species, but also focuses on the expansion of indications for other cancer species.

Carellizumab is carrying out more than 10 single-drug or joint clinical studies, of which the first-line registered clinical trial of carrelizumab combined with apatinib international multicenter liver cancer is also progressing smoothly, at the same time, Hengrui also has PD-L1 monoclonal antibody SHR-1316 and other immunosuppressants are being studied, at the recently concluded 2022 American Association for Cancer Research (AACR) annual meeting, The latest results of the SHR-1316 combined chemotherapy first-line treatment of extensive stage small cell lung cancer (ES-SCLC) Phase III clinical CAPSTONE-1 research were featured in the oral report session, which attracted much attention from the academic community. At present, the market application for the drug combined with chemotherapy first-line treatment for the indications for extensive small cell lung cancer has been accepted, and it is expected to benefit more patients in the future.

[Breaking the "inner volume": accelerating the comprehensive and differentiated layout of R&D pipelines]

Hengrui Pharmaceutical's innovative R&D purpose is highly consistent with national requirements. In July last year, the Drug Evaluation Center (CDE) of the State Food and Drug Administration issued the "Guidelines for Clinical Value-Oriented Clinical Research and Development of Antineoplastic Drugs" (hereinafter referred to as the Guiding Principles), which emphasizes that "the fundamental purpose of drug listing is to solve the needs of patients, drug research and development should be based on patient needs as the core, and clinical value as the guide", which means that the research and development of innovative drugs can no longer blindly cater to capital, and the fundamental purpose of drug listing is to solve patient needs.

Behind the guiding principles of the Food and Drug Administration is the most realistic problem of the "inner volume" of pharmaceutical research and development - in recent years, in order to meet the needs of the people to use good drugs, the state has frequently issued a number of favorable policies to promote industrial development, trying to give a Chinese solution in the research and development track of innovative drugs. However, with the increase of players entering the game, the research and development track of innovative drugs has become more and more narrow, and problems such as repeated target selection, crowded research and development tracks, and waste of research and development resources have emerged in an endless stream.

In the face of the current competitive environment of "inner volume", Zhang Lianshan believes that it is still necessary to take precautions. "The human, material and financial resources of any enterprise are limited, if others have done a lot in one field, its value and demand will inevitably decrease, there is no need to 'join in the fun', or should use limited resources for projects that can solve problems for patients and can be rewarded, rather than just focusing on highly repetitive hot areas, such as oncology or immunology." In fact, in addition to these two areas, China has many diseases worth investing in, such as viral infections, liver and kidney diseases, etc., there are still many unmet needs and diseases that cannot be treated, if the resources and research forces are used in this regard, it may solve the clinical urgent needs of many patients, and it is more conducive to improving the health level of the entire nation. ”

Based on this, Hengrui Pharmaceutical, as always, adheres to the innovative research and development strategy of clinical demand-oriented, adheres to the innovative research and development strategy of differentiated research and development, and at the beginning of the early layout, that is, starting from the clinical needs of patients, using the advantageous technology platform to form differentiated innovations for important target design and existing therapies, through basic innovation and product portfolio innovation, forming an all-round and diversified pipeline coverage, and expanding the application value of molecules through translational medicine research, and continuing to provide patients with effective treatment solutions.

From the perspective of R&D pipeline, Hengrui Pharmaceutical's innovative research and development in the field of tumors covers a wide range of research areas such as kinase inhibitors, antibody drug conjugates (ADCs), tumor immunity, hormone receptor regulation, DNA repair and epigenetics, supportive therapy, etc. For multi-target, deeply cultivate combination sequential therapy, and strive for high response and long efficacy; in the fields of autoimmune diseases, pain management, cardiovascular diseases, metabolic diseases, infectious diseases, respiratory diseases, blood diseases, nervous system diseases, etc., according to the disease process, all-round, Multi-organ coverage to create a strategic pillar of diversification for long-term development. At the same time, Hengrui's R&D pipeline is also rapidly expanding to other fields such as ophthalmology and nuclear drugs, and it is also continuing to explore in depth in the fields of antiviral and mRNA technology to continuously enhance the company's comprehensive competitiveness.

In Zhang Lianshan's view, the production of heavy products in a short period of time is indeed the successful model of many foreign pharmaceutical companies, but the Chinese market is relatively large, and it also has its particularity, and it is unlikely to pursue the so-called single heavy variety to hit the world. "We focus on driving sales growth through multiple portfolio innovations, such as R&D portfolio innovation in chronic diseases with a large population base, which can help companies achieve leadership in the therapeutic field."

[Firmly "going to sea": the innovation pursued by Hengrui is innovation for the world]

Internally, Hengrui Pharmaceutical actively breaks the phenomenon of "internal volume" in the domestic pharmaceutical industry, and externally, it is also constantly seeking to "go to sea" to strengthen its international competitiveness. Sun Piaoyang, chairman of Hengrui Pharmaceutical, once stressed, "Hengrui Pharmaceutical has two strategies that will never change: one is scientific and technological innovation, and the other is internationalization. ”

In Zhang Lianshan's view, this is the inevitable trend after the development of domestic pharmaceutical enterprises to a certain extent - "independent innovation can not be made behind closed doors, we must use an open mind, integrate domestic and foreign innovation resources, and do our own thing." Only by deeply integrating with the world can China's independent innovation be better recognized internationally. ”

Under the guidance of the internationalization strategy, in 2021, Hengrui Pharmaceutical further increased its efforts to go overseas, and the financial community found that in terms of overseas team building, in early October last year, Dr. Joseph E. Eid, an expert in the medical field, joined the Hengrui overseas team as the chief medical officer of Hengrui IN the United States/Europe, mainly responsible for hengrui's drug development and medical affairs in Europe and the United States. At present, Hengrui has established a professional clinical research and development team in the United States, Europe, Australia and Japan, and fully launched the working mode of Hengrui Clinical Research and Development Global Product Team (GPT), and more than 100 overseas clinical research and development talents have joined, which has significantly improved the efficiency and quality of Hengrui International Clinical Research.

In terms of the internationalization of innovative drugs, at present, Hengrui has nearly 20 clinical studies carried out overseas, 7 phase III international multi-center research projects, and a number of innovative products have achieved global synchronous development. In 2021, Hengrui has a total of 6 studies approved by the US FDA IND, including 5 tumor studies and 1 non-tumor study. Carellizulizumab, pirrolinib, fluzopali, haitropopa and other related overseas research are steadily advancing; a number of projects in Europe, Australia, South Korea and other countries and regions have been approved for clinical trial qualifications, to carry out clinical trial work; SHR-A1811, INS068, SHR-1819, SHR-1707 and other products have successfully achieved global synchronous development.

While connecting with the world, Hengrui Pharmaceutical's comprehensive strength of innovation and research and development has also been highly recognized internationally. In the 2021 Global Pharmaceutical Companies TOP50 list published by the American Pharmaceutical Manager Magazine, Hengrui has been on the list for 3 consecutive years, and the ranking has climbed to 38th year by year. At the 2021 Annual Meeting of the American Society of Clinical Oncology (ASCO), Hengrui was selected for a total of 64 studies, including 5 Oral, 23 Poster and 36 Online Abstracts, of which carrelizumab alone had 38 studies, spanning 11 cancer species. Its products such as carellizumab, pirrolinib, darcily and many other research have been listed in international top academic journals such as Lancet and Natural Medicine.

The road to internationalization is heavy and the road is long, but Hengrui Pharmaceutical has taken its own steps firmly and steadily, as Zhang Lianshan said: "Chinese enterprises can only form effective competition for multinational companies if they develop internationally recognized innovative drugs, otherwise the Chinese people can only spend high prices to buy imported drugs." For the development of enterprises themselves, as the innovation target moves forward, the innovation results need to be more internationally competitive in order to maximize the value of innovation. The innovation pursued by Hengrui is innovation facing the world. ”

【The core composition of the spirit of innovation and research and development: talent + technology platform】

From the "patient first" R & D concept, to the "differentiated" R & D strategy, and then to the "international" development strategy, it can be seen that innovation and research and development has become the spiritual core of Hengrui Pharmaceutical, and the actual composition behind this spiritual core is "talent + technology platform".

For a long time, Hengrui Pharmaceutical has always taken attracting and cultivating talents as an important talent strategy to promote the sustainable development of enterprises, continuously strengthening talent capacity building and talent reserve training plans, and comprehensively promoting the layout of innovative and international talents. According to past financial reports, the number of R&D personnel of Hengrui Pharmaceutical has increased from 2167 in 2017 to 4721 at the end of 2020, accounting for 14.58% of the total number of people from 14.58% to 16.33%, such a professional, comprehensive and well-structured innovative drug R & D team provides strong talent support for the continuous promotion of scientific and technological innovation and international development strategy.

Recently, Hengrui Pharmaceutical recently appointed Zhang Xiaojing and Wang Quanren, two R&D executives, mainly responsible for the leadership of the clinical R&D field, which is a further embodiment of the specialization of management talents in the field of Hengrui R&D - industry insiders believe that after the two new executives of Hengrui Pharmaceutical take office, or will continue to ensure and exert the continuity and stability of hengrui pharmaceutical clinical development under the guidance of innovation and international development strategy, including the development progress of various clinical development projects, clinical trial design, etc.

In addition to manpower, Hengrui Pharmaceutical has also produced a number of international first-class new technology platforms with independent intellectual property rights, such as proteolytic targeted chimeras (PROTAC), molecular glues, antibody drug conjugates (ADCs), bi/multi-specific antibodies, gene therapy, mRNA, bioinformatics, translational medicine, etc., and continuously optimized and developed, which provide a strong foundation for Hengrui's innovative research and development and internationalization.

The head of an industry association once commented on Hengrui - "At present, the emerging technology platform Hengrui basically has it, and there may be many others that we do not know." If Hengrui wants to do something with all its might, probably no one in China can do it. ”

Wind objects should be looked at for a long time. The so-called cold winter will not change the development trajectory of high-quality innovative pharmaceutical companies, they will only race against the clock to make themselves stronger and stronger. Driven by the combination of talents and emerging technology platforms, Hengrui Pharmaceutical's innovative R&D strength will continue to accelerate the release and gradually harvest more innovative achievements.

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