Another innovative pharmaceutical company plans to list in the US! Is Ascentage Pharma worth looking forward to?
As a globally renowned capital market, the U.S. stock market has attracted many domestic companies to list there, including innovative pharmaceutical companies such as $Beigene(BGNE.US) , $Legend Biotech(LEGN.US) , $Zai Lab(ZLAB.US) , and Hutchison China MediTech.
On December 23, news showed that $ASCENTAGE-B(06855.HK) has filed with the China Securities Regulatory Commission and plans to issue no more than 33.7393 million ordinary shares in the U.S. and list on the Nasdaq.
Affected by this news, on December 24, Ascentage Pharma's stock price surged 4.16%, accumulating a year-to-date increase of over 65%, performing impressively.
Impressive Commercialization Progress, with One Product Already Launched
Founded in 2009, Ascentage Pharma is a comprehensive global biopharmaceutical company engaged in the discovery, development, and commercialization of first-in-class and best-in-class therapies, primarily addressing unmet medical needs in the field of hematologic malignancies worldwide.
Ascentage Pharma's flagship asset, Olverembatinib (HQP1351), is a novel third-generation tyrosine kinase BCR-ABL1 inhibitor and the first and only approved third-generation BCR-ABL inhibitor in China for treating CML patients with T315I mutations. It is indicated for chronic myeloid leukemia (CML) patients in chronic phase (CP) and accelerated phase (AP) with T315I mutations, as well as CP patients resistant or intolerant to first- and second-generation TKIs.
In 2021, Ascentage Pharma partnered with Innovent Biologics (01801.HK) for the domestic sales promotion of Olverembatinib. In June 2024, it collaborated with Takeda Pharmaceutical for the international expansion of Olverembatinib. By November 2024, Olverembatinib's new indications were included in the updated National Reimbursement Drug List.
Additionally, another key product, the BCL-2 inhibitor APG-2575, was submitted for domestic approval in November 2024, potentially becoming the second globally approved BCL-2 inhibitor. It is also in registrational clinical trials for frontline CLL/SLL, CLL/SLL without CR after BTKi treatment, AML, and MDS.
Furthermore, targeting the apoptosis pathway, Ascentage Pharma has also developed APG-115 (an oral small-molecule MDM2-p53 inhibitor) and APG-1252 (a dual BCL-2/BCL-xL inhibitor), both currently in Phase 1b/2 trials.
The first domestically developed third-generation ALK inhibitor, APG-2449 (a FAK/ALK/ROS1 inhibitor), was also approved by the CDE in October 2024 to initiate a registrational Phase 3 study for NSCLC.
Turning a Profit in the Interim Period—What’s the Reason?
As an innovative pharmaceutical company with a commercialized product, Ascentage Pharma's financial performance has been relatively strong.
Data shows that before 2024, Ascentage Pharma was consistently in the red. However, in the first half of 2024, its revenue skyrocketed 477.25% YoY to RMB 824 million, primarily from intellectual property income, pharmaceutical product sales, commercialization rights for patented intellectual property, and service revenue.
Among these, the sales revenue (including tax) of its core product Olverembatinib in H1 was RMB 113 million, up 120% QoQ and 5% YoY. Ascentage Pharma has established a commercialization team of about 100 people for Olverembatinib's domestic sales promotion and partnered with Innovent Biologics. By H1 2024, the drug was available in 670 hospitals and DTP pharmacies nationwide.
Moreover, in H1 2024, Ascentage Pharma achieved its first-ever profit, recording a net profit of HKD 163 million.
Although Ascentage Pharma's product sales were decent in H1, the surge in revenue and profit turnaround were mainly driven by intellectual property income, which accounted for RMB 678 million.
In June 2024, Ascentage Pharma signed an exclusive option agreement with Takeda Pharmaceutical for the global rights to Olverembatinib outside China and certain other regions. Under the agreement, Ascentage Pharma will oversee all clinical development activities for Olverembatinib until the option is exercised. Upon signing, Ascentage received a $100 million option payment and is eligible for up to approximately $1.2 billion in option exercise fees, additional potential milestone payments, and double-digit royalty rates based on annual sales.
Additionally, Takeda Pharmaceutical invested $75 million in Ascentage Pharma, acquiring a 7.73% stake and becoming the second-largest shareholder, deepening the ties between the two companies.
Thanks to the recognition of intellectual property income and Takeda's investment, Ascentage Pharma's cash and bank balances stood at RMB 1.1 billion as of mid-2024, providing ample liquidity.
What’s the Outlook for Ascentage Pharma?
Based on its current R&D pipeline, Ascentage Pharma's prospects largely depend on the already-launched Olverembatinib and the upcoming BCL-2 inhibitor APG-2575.
Chronic myeloid leukemia (CML) is a malignant tumor formed by the clonal proliferation of hematopoietic stem cells in the bone marrow, accounting for 15% of adult leukemias. The global annual incidence is 1.6-2 per 100,000, while epidemiological surveys in China show a domestic annual incidence of 0.39-0.55 per 100,000.
In an early December research report, Ping An Securities noted that Olverembatinib was approved in November 2021 for CML-CP or AP patients with T315I mutations and added a new indication in November 2023 for adult CP patients resistant or intolerant to first- and second-generation TKIs. Additionally, Phase 3 trials are underway for frontline Ph+ALL and GIST, with domestic approvals expected in 2027 and 2029, respectively. For Olverembatinib's domestic sales, Ping An Securities forecasts revenue of RMB 1.03 billion by 2033.
In overseas markets, Olverembatinib received FDA approval in February 2024 to initiate the global Phase 3 POLARIS-2 trial for CML-CP patients with or without T315I mutations. The trial is expected to complete by late 2025 or 2026, with overseas approval anticipated in 2027. Ping An Securities projects risk-adjusted (70%) overseas sales of RMB 5.77 billion by 2033, with a 15% royalty rate, translating to overseas royalty income of RMB 870 million in 2033.
Meanwhile, as of November 2024, Ascentage Pharma's BCL-2 inhibitor APG-2575 has been approved for five registrational clinical trials, with its application for R/RCLL/SLL treatment accepted by the CDE. It is poised to become the second globally approved BCL-2 inhibitor after venetoclax.
Venetoclax, the first globally approved BCL-2 inhibitor, is approved in the U.S. for treating adult CLL/SLL and AML patients, while in China, it is conditionally approved only for AML. Data shows Venetoclax's global sales exceeded $2 billion in 2022, reaching $1.928 billion in the first three quarters of 2024, up 13.5% YoY.
APG-2575 has demonstrated significant efficacy, good safety, and advantages in rapid dose escalation for CLL/SLL treatment.
Ping An Securities pointed out that APG-2575's application for R/RCLL/SLL treatment was accepted in November 2024, with approval expected in 2025. Additionally, APG-2575 is in registrational Phase 3 trials in China for frontline CLL/SLL in combination with acalabrutinib and frontline AML and intermediate/high-risk MDS in combination with azacitidine. Ping An Securities forecasts risk-adjusted (70%) domestic sales of RMB 420 million by 2033.
Overseas, in August 2023, the FDA approved APG-2575's registrational Phase 3 trial in combination with BTKi for CLL/SLL patients previously treated with BTKi. The trial is expected to complete in H2 2025, with overseas approval and sales commencing in 2026 and 2027, respectively. Ping An Securities projects risk-adjusted overseas sales of RMB 5.84 billion by 2033.
Conclusion
Currently, Ascentage Pharma's interim revenue surge and profit turnaround in 2024 are primarily due to the recognition of intellectual property income. However, compared to other biotech stocks in Hong Kong, Ascentage Pharma's overall performance is relatively strong. Future focus should remain on the commercialization progress of its two key products.
Additionally, a successful U.S. listing would enhance Ascentage Pharma's liquidity and raise its profile in overseas markets, making its progress worth investors' attention.
Author: Yun Zhi Feng Qi
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