Global pharmaceutical giants are making significant investments in China. AstraZeneca announced a $2.5 billion investment in China, planning to establish its sixth global strategic R&D center in Beijing, and has reached cooperation agreements with HBM HOLDINGS-B (2142.HK), YuanSi ShengTai, and KangTai Biological (300601.SZ). This is not the first collaboration between HBM HOLDINGS-B and AstraZeneca—both parties previously engaged in licensing cooperation for antibody projects in 2022 and 2024. This collaboration is more in-depth. AstraZeneca will subscribe to 9.15% of HBM HOLDINGS-B's newly issued shares at a price of HKD 10.74 per share, which represents a premium of approximately 37.2% over the closing price on March 21. The premium issuance has drawn attention to how HBM HOLDINGS-B has gained favor with international giants due to its competitive strengths. Wall Street Journal's Xinfeng contacted HBM HOLDINGS-B immediately, hoping to unveil more details behind this transaction and the outlook for future innovative drug development through a dialogue with Dr. Wang Jinsong, the founder, chairman, and CEO of HBM HOLDINGS-B. Premium Subscription by Industry Leader The first collaboration between the two parties began three years ago. In April 2022, HBM HOLDINGS-B licensed the global rights for the development and commercialization of the CLDN18.2xCD3 bispecific antibody (HBM7022) to AstraZeneca, receiving a $25 million upfront payment and up to $325 million in milestone payments, along with future sales royalties. HBM7022 thus became the first bispecific antibody from a Chinese pharmaceutical company to go global. This transaction facilitated the cooperation between the two parties. Wang Jinsong revealed to Xinfeng that due to the pandemic during their first collaboration, both parties were unable to travel internationally, and all work was conducted online. Even so, the product quality and innovation of HBM HOLDINGS-B still met AstraZeneca's requirements, marking a good start for their collaboration. Less than two years later, HBM HOLDINGS-B's subsidiary, Nona Biotech, reached a licensing agreement with AstraZeneca for a preclinical monoclonal antibody project. Based on the previous two collaborations, AstraZeneca included HBM HOLDINGS-B in its considerations for investing in Chinese pharmaceutical companies, choosing to deepen their relationship through equity investment. According to the agreement, AstraZeneca will subscribe to 9.15% of HBM HOLDINGS-B's newly issued shares at a price of HKD 10.74 per share, representing a premium of approximately 37.2% over the closing price on March 21, with an investment amount of $105 million. "When we were negotiating the global strategic cooperation agreement with AstraZeneca, we clearly defined the terms related to the share subscription. The share subscription and subscription price were discussed in parallel. Ultimately, based on the recognition of HBM HOLDINGS-B's long-term growth potential and business development, as well as the positive expectations for our cooperation, AstraZeneca agreed to subscribe at this price," Wang Jinsong explained. In recent years, such collaborations with international pharmaceutical companies have indeed been rare in the relatively sluggish pharmaceutical sector. Looking back, the last time a Hong Kong pharmaceutical company received a premium subscription from a multinational pharmaceutical company was in August 2022. At that time, the globally renowned pharmaceutical company Sanofi subscribed to shares of Innovent Biologics (1801.HK) valued at €300 million at HKD 42.42 per share, representing a premium of approximately 20% over the average share price over the previous 30 trading days However, AstraZeneca's investment in HBM Holdings is still based on financial investment and does not participate in the latter's operational management. The two parties will also jointly develop a new generation of multi-specific antibody therapies targeting immune diseases, tumors, and various other diseases. HBM Holdings has granted AstraZeneca the option to license two preclinical immunology projects, with the latter set to pay a $175 million upfront payment, milestone payments, and additional fees for exercising options on new projects, as well as up to $4.4 billion in future R&D and commercial milestone payments. Regarding the "new generation of multi-specific antibody therapies," Wang Jinsong explained that it mainly involves the development of complex molecules, bispecific antibodies, and multi-specific antibodies, which are new generation biopharmaceuticals. Bispecific and multi-specific antibodies are currently one of the main directions for antibody innovation drug development, and their efficacy has been validated. In September 2024, Kangfang Biotech (9926.HK) won a head-to-head comparison against the drug king Keytruda in treating non-small cell lung cancer (NSCLC) with its bispecific antibody "Yivocumab" (PD-1/VEGF bispecific antibody). According to Xinfeng, AstraZeneca and HBM Holdings plan to jointly establish an innovation center in Beijing to recruit relevant talents and expand their R&D team. Focus on Drug Development As of the end of June 2024, HBM Holdings has more than 10 research pipelines involving tumors and immune diseases. The closest to the market launch target is the "Bartolizumab," co-developed with Shiyao. In July 2024, HBM Holdings submitted a marketing application for this drug for the treatment of generalized myasthenia gravis (gMG), which is expected to become its first approved drug. After Bartolizumab is launched in China, HBM Holdings will be entitled to a commission on sales. Among the research pipelines, HBM Holdings also plans to promote the global Phase II clinical trial of the immune disease drug HBM9378. Currently, HBM Holdings is not focusing on the sales phase after drug approval but continues to concentrate on advancing clinical research. For this reason, some global commercialization matters are entrusted to partners such as AstraZeneca. HBM Holdings' subsidiary, Nona Biotech, provides preclinical development services externally. Nona Biotech has the Harbour Mice® fully human antibody transgenic mouse platform (hereinafter referred to as "Harbour Mice®"), which can provide complete preclinical drug development services from discovery to clinical research approval for innovative pharmaceutical companies. In Wang Jinsong's view, Harbour Mice® is Nona Biotech's core advantage. On one hand, Harbour Mice® can efficiently generate classic fully human antibodies H2L2 and fully human heavy-chain antibodies HCAb, whose maturity, affinity, and immunogenicity have been validated, providing foundational technology for new drug development; On the other hand, the discovery and evaluation development technology of complex molecules can provide differentiated competitive advantages for pharmaceutical companies' R&D. Wang Jinsong revealed to Xinfeng that Harbour Mice® has provided technical support for the overseas R&D of drugs for innovative pharmaceutical companies such as Kelun Biotech and BeiGene. One of the financing purposes of HBM Holdings' current transaction is to strengthen the construction of Harbour Mice® Outlook on AI in Pharmaceuticals HBM HOLDINGS is exploring the application of AI in the innovative drug industry. On one hand, HBM HOLDINGS is collaborating with AI pharmaceutical companies Baidu Shengke and Insilico Medicine to develop antibody drugs. HBM HOLDINGS utilizes its own Harbour Mice® platform and related data, combined with Baidu Shengke's bio-computing engine, to develop macromolecular drugs; In February of this year, HBM HOLDINGS also partnered with Insilico Medicine to advance AI-enabled antibody discovery algorithms and application development, providing innovative solutions in the fields of immunology, oncology, and neuroscience. However, HBM HOLDINGS' pipeline is primarily focused on macromolecular drugs, and the complexity of macromolecules increases the difficulty of AI calculations. "For example, if we propose a target, and AI calculates 10 molecules, we still don't know which molecule is the best, and we have to validate it ourselves, so the help in developing macromolecular drugs is limited," said an employee from an innovative drug company in Shanghai to Xinfeng. Wang Jinsong believes that AI drug discovery is still in its early stages and requires the collection of a large amount of data. Macromolecular drugs indeed have greater limitations compared to small molecules. To address this pain point, HBM HOLDINGS has a proprietary database of fully human antibodies, which helps in developing macromolecular drugs through AI. On the other hand, Nona Biosciences has launched the AI-assisted drug discovery engine Hu-mAtrIx™, which, when combined with Harbour Mice®, can support the entire antibody discovery process from protein design, single-cell-based antibody screening to next-generation sequencing, antibody modeling, and antibody engineering. As no AI-designed drug has truly been launched globally, many industry professionals remain cautious about this. The founder of a pharmaceutical company in Beijing once told Xinfeng that although there are successful examples of improving the chemical structure of AI-generated drugs, there is still a significant gap between improvement and originality, and major progress is expected only in the next 10 to 20 years. In Wang Jinsong's view, the entire process of AI drug development may not require 10 years; the market is expected to witness actual successful cases in the near future. (Interview Transcript) "This year may be a turning point for our product development" Xinfeng: What was the opportunity for this third collaboration? Wang Jinsong: The first collaboration laid a solid foundation. In 2022, HBM HOLDINGS authorized the rights of the bispecific antibody HBM7022 to AstraZeneca, marking the first time a Chinese company has pushed a bispecific antibody drug to the overseas market. During this process, AstraZeneca's global R&D and executive teams gained a deep understanding of HBM HOLDINGS' technology platform, product quality, and differentiated advantages. Especially during the pandemic, both parties were unable to travel internationally. At that time, we collaborated for the first time entirely online, with extremely strict requirements for quality and innovation. But we successfully achieved these goals, which was a good start, and the project has progressed smoothly, initially validating AstraZeneca's recognition of our platform's innovative capabilities In 2024, our subsidiary Nona Bio and AstraZeneca reached a collaboration on preclinical research of monoclonal antibodies globally. In this collaboration, the teams from the United States and Europe gained a deeper understanding of HBM HOLDINGS's technology platform, innovation capabilities, and operational efficiency. As a result, AstraZeneca naturally considered how to more closely, broadly, and deeply integrate HBM HOLDINGS's core technology platform and innovation capabilities, leading to the collaborative strategic direction we see today. Xinfeng: Will AstraZeneca participate in the company's daily operations and management? Will it have priority rights in the company's subsequent candidate pipeline? Wang Jinsong: AstraZeneca will only act as a financial investor and will not participate in our business operations or strategic cooperation matters. Our strategic cooperation with AstraZeneca will not hinder our collaborations with other multinational companies and biopharmaceutical enterprises. Projects agreed upon by both parties will go through a series of agreements, but overall, it will not affect our external transactions. Xinfeng: Was the premium issuance a consensus from the beginning, or was it determined after subsequent negotiations? Wang Jinsong: When we were negotiating the global strategic cooperation agreement with AstraZeneca, we clearly defined the relevant terms for share subscription. The share subscription and subscription price were discussed in parallel. Ultimately, based on the recognition of HBM HOLDINGS's long-term growth capabilities and business development, as well as the positive expectations for our cooperation, AstraZeneca agreed to subscribe for shares at this price. Xinfeng: Why choose to jointly establish an innovation center with Beijing and AstraZeneca? Wang Jinsong: AstraZeneca's establishment of a research and development center in Beijing reflects their confidence in the innovation ecosystem of the Chinese market. By jointly establishing a center in Beijing, we can better integrate into this innovation system, share resources, and accelerate innovation. At the same time, we have noticed that the upcoming Beijing Pharmaceutical Innovation Park has already attracted several international pharmaceutical giants, forming a good industrial ecosystem and innovative atmosphere. Based on this innovation center, we will also further expand our R&D team. Xinfeng: The company has also reached a development cooperation for a new generation of therapeutic antibodies with AstraZeneca. Can you briefly introduce the specifics of this project? Wang Jinsong: It mainly involves "antibody+" complex macromolecular products. Over the past 30 years, the main technological platform in the biopharmaceutical industry for macromolecules has been monoclonal antibodies, which is the primary direction of our first-generation products. However, observing the development of the entire macromolecule industry in the past two to three years, it has entered the so-called "antibody+" era, where simple monoclonal antibodies are no longer mainstream. The focus has now shifted to bispecific antibodies, T cell immunity, and cell connectors, such as trispecific and multispecific antibodies, which are complex macromolecules. For example, in recent international transactions, the main subjects of macromolecule transactions have been complex molecules, including ADC and bispecific antibody transactions, marking the entry of the entire macromolecule industry into the "antibody+" stage, where complex molecules have replaced simple molecules as the mainstream. The core of the transformation is how to utilize underlying technologies to enter the "antibody+" era. HBM HOLDINGS's fully human antibodies have global intellectual property protection and validation from global partners, constituting the chip technology of the "antibody+" era In this context, our collaboration with AstraZeneca mainly focuses on new generation biopharmaceutical products such as dual antibodies and multi-antibodies. Xinfeng: How to plan future capital investments? Wang Jinsong: We will further consolidate NuoNa's leading position in the biotechnology platform and optimize the expansion of the platform. We will also focus on advancing major preclinical and clinical products, especially in the field of immune diseases. At the same time, we will invest in the development of a series of dual antibodies targeting pathogenic B cell clearance, which can be used for the treatment of autoimmune diseases; we are also advancing the development of targeted type II T cell monoclonal antibodies (such as HBM9378) and dual antibodies, involving the treatment of autoimmune diseases and inflammatory diseases. Xinfeng: Is the company considering independently moving drugs from R&D to the complete process of market sales in the future? Is there a possibility of establishing its own sales channels with the help of AstraZeneca? Wang Jinsong: In terms of market sales, we mainly rely on our partners. Under the strategic cooperation framework with AstraZeneca, AstraZeneca will be responsible for global clinical development and global marketing tasks. This aligns with our mission to leverage China's technology and R&D capabilities, combined with our partner's global development and market resources, to maximize our investment and project value. The potential effective period of this series of cooperation can reach ten years. This year may be a turning point for our product development, as we have already submitted the application for the marketing of Bartolizumab to the drug regulatory authority. (Note: In 2022, HBM Holdings licensed Bartolizumab to Shiyao for collaborative development.) Xinfeng: Similar to CROs, NuoNa Biotech can provide partners with services from Idea to IND application. Can you specifically share what NuoNa Biotech's unique competitive advantages are? Wang Jinsong: Our biggest difference is that most partners choose to work with us because they need NuoNa's unique technology platform (Harbour Mice®). First, we have the Harbour Mice® fully human transgenic mouse platform, which can efficiently generate classic fully human antibodies H2L2 and fully human heavy chain antibodies HCAb. These antibodies have been validated in terms of maturity, affinity, and immunogenicity, and have significant advantages; These underlying technologies support new drug development. Currently, Harbour Mice® is not limited to antibody discovery; it also plays a role in leading the development of new generation antibody technologies such as dual antibodies, multi-antibodies, ADC, and CAR-T. Currently, many multinational companies and leading enterprises located in places like Boston and San Francisco are utilizing our technology to develop their next-generation products. Secondly, from the preparation model of antigen-antibody, single B cell screening to antibody development and engineering, especially in the discovery and evaluation development of complex molecules, we have accumulated a complete set of valuable experience and resources; This not only helps partners quickly advance projects but also allows us to launch products with differentiated characteristics using our technology platform. In recent years, many Chinese companies going overseas, such as Kelun-Biotech and BeiGene, have relied on the core technology platform services provided by NuoNa Biotech "Ten Years Not Necessary" Xinfeng: AI in pharmaceuticals has been one of the hot topics in the industry this year. Can you share the company's progress with us? Wang Jinsong: A few years ago, we discovered that artificial intelligence and big data can significantly improve the efficiency and success rate of drug development. Through algorithms such as deep learning and machine learning, we can accurately predict the activity, toxicity, and kinetics of drugs from millions of compounds, thereby shortening the development cycle and reducing costs. We are committed to building an integrated AI pharmaceutical research and development system, leveraging the strengths of all parties to jointly promote AI-enabled antibody discovery algorithms and application development, which is our overall industry chain layout. Therefore, HBM HOLDINGS has adopted a strategy of parallel self-development and external collaboration in AI. In terms of external collaboration, we are the first partner of Baidu Shengke in the field of biopolymers. We are also collaborating with Insilico Medicine to jointly advance AI-enabled antibody discovery algorithms and application development. In terms of self-development, NuoNa Biotechnology launched the innovative AI biopolymer-assisted drug discovery engine Hu-mAtrIx™ this month, which has achieved seamless integration with the company's proprietary Harbour Mice® technology platform. Among these, we also have a proprietary database of fully human antibodies, which has unique advantages at both the industry and global levels. Xinfeng: Some industry insiders believe that the complexity of biopolymers limits AI's calculations, making it difficult to apply AI in this area. What is your view on this perspective? Wang Jinsong: First, we need to understand the impact of AI on the drug development process. The role of AI in drug development can be divided into three levels. First, it can precisely enhance existing processes and technologies, improving efficiency and thereby shortening development time; Second, AI can optimize existing modules, especially in the steps of antibody development, where significant results have already been achieved; Finally, AI can explore new directions that are currently unachievable or open up new avenues for drug generation, which is referred to as generative applications. Currently, the entire industry is mainly in the stage of optimizing existing antibody discovery modules through various means, and the next step may be to enter the phase of de novo generation. Due to the industry still being in a stage of extensive data collection and accumulation, biopolymers indeed have shortcomings in AI applications compared to small molecules. Therefore, having a precise and high-quality database is crucial for the integration of biopolymers and AI, which is also one of our important advantages. Xinfeng: When do you think AI can truly accelerate the research and development of innovative medicines? Wang Jinsong: Currently, AI has not fully achieved comprehensive end-to-end enhancement. However, it has already played its role to some extent in each step and stage of drug development, such as optimizing the selection of antibody molecules and screening and positioning specific functional antibody molecules. I believe that whether it is molecular screening that was previously unachievable or speed and time requirements that could not be met, there will be more and more successful cases to prove the possibilities of AI in the pharmaceutical industry For the entire process, I believe it does not require ten years; perhaps in the near future, we can witness actual successful cases in the industry. "Innovation Comes with Risks" Xinfeng: In recent years, the investment and financing activities in the innovative drug industry have generally faced challenges, and confidence seems to have wavered. Can you share your entrepreneurial experience? Wang Jinsong: I believe that engaging in the innovative pharmaceutical and biotechnology industry is an extremely challenging task. Although I have nearly twenty to thirty years of industry experience, one unchanging principle in both academia and large enterprises is that innovation is risky, and the industry itself also carries risks. From the very beginning, we should be market-oriented, which is a basic intuition for a clinical doctor. If doctors or patients' families do not have sufficient reasons to use your drug, then promotion will be fraught with difficulties, and efforts will become worthless; Enterprises must also have a core technology platform as a competitive advantage and delve deeply into it. For example, we established a globally leading technology platform at the beginning and used it as a foundation to drive business development. Especially recently, we have seen the key role that fully human antibodies play in leading the development of the next generation of products. Being at the forefront of the industry gives us the opportunity to collaborate comprehensively with many multinational corporations, thereby establishing a strong cooperative network. Xinfeng: Did your previous experience at Sanofi play an important role in establishing partnerships between HBM HOLDINGS-B and international giants like Astrazeneca? Wang Jinsong: This has indeed been very helpful; we have had the opportunity to engage in many significant decision-making processes through an international perspective. Globally, we have received extensive training and support in areas such as business, management, and communication skills. However, operating a company cannot solely rely on past experiences. 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