Original drugs address the needs of patients for which there are currently no treatments available. They are truly new drugs with immense clinical value, and domestic patients are the first to benefit. Original drugs represent the area in the biopharmaceutical industry that brings the greatest value to patients.

Recently, two poster presentations by the American Society of Clinical Oncology and a lecture by the American Society for Neuro-Oncology have left Professor Chen Yue, a professor at the School of Chemistry at Nankai University, with mixed feelings.

The encouraging news is that the results of 10 clinical trials conducted globally for ACT001, the original drug that Chen Yue has devoted 11 years of his life to, are promising. In one clinical trial for recurrent glioblastoma, one patient achieved long-term complete remission with ACT001 monotherapy. In another clinical trial for pediatric diffuse entropional glioma, good efficacy was observed. This marks a significant step closer to the successful market launch of ACT001.

The concern is that the upcoming multi-center clinical trials, both nationally and globally, will not only require the establishment of more subsidiaries and businesses in developed countries around the world, but also require substantial financial support. The company needs to go public as soon as possible to expand its international influence and provide sufficient financial support for global clinical trials.

The proportion of truly original drugs in my country is still very low; the majority are generic drugs.

Chen Yue is considered a 'god-level' figure by many. His remarkable achievement stemmed from the fact that in 2017, his team's ACT001 anti-glioma drug received the U.S. Food and Drug Administration (FDA) Orphan Drug Designation, making it one of the few drugs in my country to receive this designation.

Because rare diseases affect a small population, have limited market demand, and involve high research and development costs, few pharmaceutical companies have previously focused on developing treatments for these diseases. As a result, these drugs are figuratively called 'orphan drugs.'

'There is currently no specific treatment for gliomas. This malignant tumor has an incidence rate of less than 8 in 100,000, but a 5-year survival rate of only 5%, indicating a very high degree of malignancy. Recurrent glioblastomas, in particular, have a median survival of only 4-6 months,' lamented Professor Li Wenbin, Director of the Neuro-Oncology Ward at Beijing Tiantan Hospital, Capital Medical University. He explained that brain tumors are a 'forbidden zone' for targeted therapies because they are difficult to cross the blood-brain barrier and because the brain's immune microenvironment differs significantly from the body's tumor microenvironment. Even temozolomide, currently the best drug for treating gliomas, can only extend patients' survival by about two to three months.

Chen Yue ventured into such a 'forbidden zone' and even developed an original drug.

During his doctoral studies, Chen Yue conducted research on the total synthesis of anticancer natural products and medicinal chemistry. After graduating in 2003, he joined a US company that specializes in developing new drugs using natural drugs as templates. His research group has successively developed several new drugs, one of which, codenamed KOS2187, was approved by the FDA and other organizations to enter global clinical trials and was eventually acquired by Pfizer for $250 million.

Having spent a long time in the industry, Chen Yue understands what developing original drugs means for a country.

“For patients, original drugs address the needs of those who currently lack treatment options. These are truly new drugs with immense clinical value, and domestic patients will undoubtedly be the first to benefit,” Chen Yue said. On the other hand, even with good drugs, patients must be able to afford them. Otherwise, like Gleevec in the movie “Dying to Survive,” this “miracle drug” for treating chronic myeloid leukemia, when first introduced to China in 2001, cost 23,500 yuan per box, a one-month supply, costing patients 280,000 yuan per year.

As Brad Loncar, founder of the biopharmaceutical investment fund Loncar Investments, said, original drugs are the area in the biopharmaceutical industry that brings the greatest value to patients.

Developing our own original drugs also means that my country will have pricing power in the future, and exporting good original drugs to the world can generate foreign exchange for the country. For example, Humira, known as the 'world's king of drugs,' has annual sales of $20 billion. Conversely, importing large quantities of original drugs from abroad will greatly increase the burden on my country's medical insurance system and also carries the risk of being 'held hostage' by foreign countries at any time.

Chen Yue's industry experience aligns perfectly with the nation's needs. Since the 18th National Congress of the Communist Party of China, General Secretary Xi Jinping has been deeply concerned about the health and medication safety of the people, emphasizing that the health of the people must always be the top priority. He pointed out: 'We must closely monitor drug shortages and take effective measures to solve the supply problems of low-priced drugs, 'life-saving drugs,' 'orphan drugs,' and pediatric medications.'

In Chen Yue’s mind, a drug can only be called an original drug (FIC) if it has obvious novelty in terms of mechanism, use and structure, or at least a different mechanism of action.

Besides original drugs, there are also generic drugs whose patents have expired overseas. In my country, many so-called new drugs are essentially minor modifications or 'micro-innovations' with the same mechanism and target, but chemical structures that break through the patents of original drugs. Currently, the proportion of truly original drugs in China is still very low; the majority are generic drugs.

According to data from PharmData, as of April 2021, excluding compound drugs, there were 1,001 Class 1 chemical drugs in China, of which 990 were new molecular entities (NMEs) and only 4 were first-in-class (FIC) chemical drugs (accounting for 0.40%). There were 700 Class 1 biological drugs in China, of which 662 were NMEs and only 2 were FIC biological drugs (accounting for 0.29%).

From conception to original drug, it takes more than just courage.

In 2008, Chen Yue stumbled upon a compound called 'trifoliolide' in the journal Nature that could selectively kill cancer stem cells. She wondered if this compound could be chemically modified to develop drugs that target cancer stem cells.

Of course, he also knew how difficult it was to turn a small idea into an original drug.

Original drug development is characterized by long cycles, huge investments, low success rates, and high risks. From small molecule drug screening to lead compounds and then to the preclinical research stage, the success rate is less than one-third, and from the clinical stage to market launch, the success rate is only about one-tenth. Moreover, in Europe and the United States, the cost of successfully developing a drug often reaches several billion US dollars.

Chen Yue's choice to pursue original drug development was not a rash act.

'The combination of capital and original drugs, thereby facilitating the commercialization of research results, is commonplace abroad. This is also one of the key factors that has enabled the United States to maintain its leading position in global high-tech and high-profit new drug products,' said Chen Yue. She added that although my country has made significant progress in basic research in life sciences, medicine, and pharmacy, with a higher number of high-level papers than most developed countries, the output rate of original drugs still lags far behind that of developed countries. This is because the integration of research results and capital is insufficient, resulting in a disconnect between research and industry. On the one hand, there is insufficient connection between investment institutions and universities/research units; on the other hand, most research institutions and universities lack the capacity to conduct costly and standardized preclinical research.

To better integrate with capital, Chen Yue established a company in a standardized manner from the very beginning of the research and development process. Therefore, in addition to being a university professor, he is also the founder of Tianjin Accendatech Pharmaceutical Technology Co., Ltd. However, the team's research and development immediately faced a common challenge for biopharmaceutical startups—the preclinical early-stage financing dilemma.

'The experimental raw material, chrysanthemum lactone, is present in less than 0.1% of Hangzhou chrysanthemum, making extraction difficult and expensive. The cheapest company quoted as much as US$182,000 per kilogram. At the exchange rate at the time, the cost per kilogram exceeded RMB 1 million. We couldn't even afford it for experiments, let alone for pharmaceuticals,' Chen Yue recalled.

The initial funding came from relatives and friends. Through numerous experiments, the team discovered that the root bark of *Magnolia denudata*, a plant endemic to China, could replace *Chrysanthemum indicum* in the extraction of parthenolide, at a cost of only 5,000 RMB per kilogram. This discovery not only significantly reduced the international price of parthenolide, but also made its preparation technology internationally leading.

But nobody believed they could create a truly original drug.

'Before ACT001 received clinical trial approval, the chances of getting investment from investment institutions were very low, except for some government science and technology special funds. At that time, financing was extremely difficult, so we could only mobilize our relatives and friends to invest in our original innovative drug. In the most difficult time, Chen Yue mortgaged the only house in her family.' Hao Manlin, co-founder of Tianjin Accendatech Pharmaceutical Technology Co., Ltd. who was in charge of financing, said with emotion, 'Original creations from 0 to 1 often require great courage, luck, foresight, and unwavering perseverance. At the beginning, there were relatively few people who understood and supported it, and many people were just watching. This is precisely the inherent, essential, and valuable aspect of originality.'

“In the early stages of our original drug development, the government’s matching guidance fund provided significant support. However, due to limited special funds, the largest project funding we received before animal experiments was 6.1167 million yuan from the national major project ‘Construction of Enterprise Original Drug Incubation Base.’ Most other project funding was less than 500,000 yuan. This was a drop in the bucket for an original drug project. For example, the project invested 50 million yuan in the lead compound discovery stage,” said Hao Manlin.

Faced with skepticism and financial pressure, they could only tighten their belts and focus on research and development, striving to make their basic research system more solid.

Chen Yue's team started with the discovery of the lead compound, and then conducted standardized preclinical studies. Under strict experimental conditions, they verified the safety and efficacy of the candidate drug again, and commissioned qualified companies to carry out a large number of GLP safety assessments.

“GLP safety assessments need to be conducted by nationally qualified organizations. This is a legal document, and a whole set of measures ensures that preclinical safety data is reliable and accurate,” Chen Yue explained.

From 2008 to 2015, over seven years, Chen Yue's team completed all preclinical development, successfully improved the chemical structure of parthenolide, and applied for dozens of patents. Among them, ACT001 is mainly used for preclinical applications in brain tumors. Next, the team also solved a series of problems such as drug scale-up production, crystal form, formulation, and metabolites.

'In the preclinical stage, original drugs only have basic research literature, scientists' ideas, and some laboratory data. The uncertainty of risks and results is inherently contradictory to the certainty of returns required by capital.' Cheng Jie, Managing Director of the Healthcare Industry Group of CITIC Securities Investment Banking Department, has his own views on the early-stage financing difficulties of biopharmaceutical companies.

'Currently, China's capital market has begun to embrace original drugs. Entrepreneurs in the pharmaceutical industry must first have solid laboratory data, rigorous scientific evidence, and a strict academic attitude. Secondly, they need to have a business mindset, letting professionals handle professional tasks and resolving issues such as equity structure that are frequently encountered in early-stage original drug financing,' said Cheng Jie. He believes that by cultivating mature and professional investors through a mature capital market, coupled with rational and professional government guidance, the predicament of early-stage preclinical financing will gradually improve.

Original drugs are met with a cold reception; why does capital prefer to 'ride the wave' of trending topics?

In 2016, as Chen Yue and his team's research entered the clinical stage, they gradually attracted more investors, and many large investment institutions began to pay attention to their original drug.

“Many investment institutions have decision-makers with strong financial and economic backgrounds, but the high-tech nature of original drugs places higher demands on investors' multidisciplinary backgrounds. This is to prevent investment institutions from simply applying rigid frameworks to data analysis when making decisions on original drug projects,” Chen Yue said. However, often when faced with original drugs, especially those that even developed countries in Europe and America have not yet developed, investment institutions inevitably categorize them simply as high-risk investments to be avoided. Therefore, gaining investors' trust can sometimes be very difficult.

Investing in the biopharmaceutical field is highly specialized, and the requirements for investors are becoming increasingly demanding, from generic drugs to biosimilars and then to truly original drugs.

“There aren’t many professional investors like this in China right now; most are just ordinary investors who don’t have the expertise to work in the biotechnology industry,” Brad Lonca said.

In contrast to the lukewarm reception received by Chen Yue's original drug project, many popular target drugs are highly favored by capital. Domestic pharmaceutical companies are mainly focused on the research and development of drugs targeting EGFR, PD-1/PD-L1, HER2, CD19, and VEGFR2. Among them, there are 60 companies developing EGFR drugs, 33 companies developing HER2 drugs, and 155 companies developing PD-1/PD-L1 drugs (including those in clinical trials and those already on the market).

The clustering of drugs targeting the same target has led to a situation where dozens of companies are competing instead of just a few to meet market demand. This results in significant drug homogenization, no significant improvement in efficacy, and the consumption of already limited clinical resources. Consequently, the enrollment of patients for other anticancer drugs will be slower.

Capital played a crucial role in this process. 'Standing on the shoulders of giants always makes success easier,' Cheng Jie believes. Due to capital's aversion to risk, coupled with the need to improve basic scientific research in China, investing in mature, profitable companies is safer for these investors.

Domestic entrepreneurs also tend to develop molecules with clear mechanisms and well-defined targets that can be developed into drugs.

This behavior of copying other people's success stories is more like 'waiting for a rabbit to run into a tree stump,' but it seems that the 'rabbit' is not so easy to find again.

The rush to invest in pharmaceutical companies targeting popular targets leads to fierce competition, declining profit margins, and difficulties in recouping R&D costs after drug launch, making a sustainable virtuous cycle unsustainable. The consequence is that what could have been a high-value, profitable sector becomes a value vacuum characterized by over-investment and product homogenization. In homogeneous competition in new drug development, speed is crucial, adhering to two '3s': a 3-year timeframe—the time lag behind the first drug to market should not exceed 3 years. For the top three drugs, exceeding this timeframe significantly reduces clinical value, often to less than 1/10 of the original drug. The National Medical Products Administration has repeatedly warned against homogeneous competition, and the fifth standard for listing on the Science and Technology Innovation Board also repeatedly emphasizes innovation. This seems insufficient to fuel the enthusiasm for such a rush. While such rushes may have occurred in developed countries in Europe and America, the high proportion of homogeneous competition seen in China is rare now. The high cost and cost of past lessons have forced companies to calm down.

How to break through the funding bottleneck and make original drug development smoother?

Despite Chen Yue's 11-year journey toward original drug development being largely marked by financial difficulties, things have improved in recent years with strong support from various institutions. Especially in the past year, favorable policies for original drugs have emerged one after another, with the government actively introducing policies to make life a little easier for companies focused on innovation.

For example, my country has opened up listing channels for unprofitable original pharmaceutical companies through Hong Kong's 18A (according to Chapter 18A of the Main Board Listing Rules of the Stock Exchange of Hong Kong Ltd.) and the fifth set of listing standards for the Science and Technology Innovation Board (STAR Market), supporting the development of original pharmaceutical companies with core technologies. The STAR Market, in particular, places special emphasis on technological innovation. At the same time, governments at all levels in my country have also established a large number of investment institutions, one of whose key investment areas is biopharmaceuticals.

Chen Yue believes that 'these policies are of great significance in improving the commercialization rate of new drug research results in my country, promoting the launch of high-tech new drug products in my country, thereby driving the development of my country's GDP, further meeting the accessibility of medicines, and improving the level of life and health protection for the whole people.'

'Since 2015, successive industrial policies have delivered tangible support for original innovative drugs. Coupled with capital market reforms rolled out in 2018 and 2019, investors and scientist entrepreneurs who had backed original drug development in the early reaped rewards. Accelerated securitization, shortened investment exit cycles and resultant wealth gains have drawn a flood of additional capital into this sector,' said Cheng Jie.

'China’s innovation-supportive policies are highly effective. Drawing on and absorbing experience from developed economies within a short timeframe, the country has rapidly caught up with their regulatory standards. While the original intent behind these pro-innovation policies is widely understood, few investment institutions have mustered the resolve to commit to in-depth research and discovery. When China’s original drug sector most needed nurturing, it was often overlooked. Many institutions expressed interest, yet only a handful took concrete investment action,' Chen Yue reflected with a sigh.

Some have likened this mindset to the ancient fable of Lord Ye Who Loved Dragons. When confronted with the 'real dragon' of original innovative drugs, investment institutions initially shied away, watching one another and waiting for a first mover before swarming into competitive bidding en masse. This pattern leads to wasted capital and uneven resource allocation.

According to statistics from PharmCube, 30 biotech firms have gone public under Chapter 18A of the Hong Kong Stock Exchange Listing Rules. The STAR Market hosts 31 biomedical enterprises (excluding medical device and in vitro diagnostic companies). Regrettably, very few of these listed firms own first-in-class (FIC) or best-in-class therapeutic candidates.

Hao Manlin proposed that government policy guidance should incentivize and identify genuine innovation at its source. To help investors better pinpoint high-value breakthrough innovation, a tiered classification system for original drugs marketed in China could be introduced. 'Drug tier classification is a common practice in overseas pharmaceutical regulation. Tailored to China’s current national conditions, the domestic tiered framework for original drugs should prioritize clinical, economic and social value as core evaluation dimensions,' she noted.

'Meanwhile, government-backed funds should take the lead to boost risk tolerance. Quantitative benchmarks may be implemented, such as mandating investment vehicles with state capital participation to allocate no less than 50% of their healthcare investment budget to original innovative drug pipelines,' Hao Manlin suggested.

Furthermore, investment institutions need to strengthen their science-driven professional decision-making frameworks. 'Fund houses with government industrial fund backing must establish scientific advisory committees staffed by professionals with hands-on experience in original drug R&D to rigorously vet investment projects and channel capital exclusively toward high-potential assets,' Hao Manlin recommended. She also advised appointing full-time chief scientists to conduct qualitative scientific assessments, complemented by quantitative financial and risk control analysis.

Cheng Jie held the view that smooth exit channels and reasonable returns will consistently attract greater capital inflows into original innovative drug development. Original innovative drugs address unmet clinical needs and are therefore poised for robust market prospects.

Source: Science and Technology Daily