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Junshi's PD-1 drug receives approval in China; 1st among domestic drugmakers

Shanghai Junshi Biosciences Co. Ltd. received approval from Chinese regulators to launch its cancer treatment for melanoma, making it the first Chinese drugmaker to get the green light for the immuno-oncology medicines that pharma giants Merck & Co. Inc. and Bristol-Myers Squibb Co. have turned into blockbusters with Keytruda and Opdivo.

Toripalimab, also known as JS001, is one of the PD-1 class of checkpoint inhibitors that work by blocking the interaction between certain proteins on the surface of immune cells and cancer cells to enable the immune system to target the cancer.

The Shanghai-based company initially plans to hire 220 salespeople to commercialize the treatment, according to the press event that coincided with its Hong Kong IPO launch. It said in the prospectus that it is also conducting a phase 1 trial for the drug in the U.S.

China records about 20,000 new melanoma cases every year and the death rate for the disease is on the rise, according to the National Medical Products Administration, which announced the approval on its website in Chinese.

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Immune checkpoint inhibitors have become an increasingly important area for cancer treatment in China in recent years, with Merck's
Keytruda and Bristol's Opdivo both receiving regulatory approval in the country in 2018.

Chinese drugmakers, including another three that are close to launching their PD-1 treatments — Innovent Biologics Inc., BeiGene Ltd. and Jiangsu Hengrui Medicine Co. Ltd. — are also eyeing the market. There are 15 phase 3 monotherapy trials for PD-1 drugs in China, and nine for PD-L1 drugs, which act on a slightly different mechanism. There are 27 phase 3 combination trials for PD-1 and PD-L1 drugs being conducted in the country, according to Junshi's prospectus.

First past the post

Among the four companies leading the way in domestic PD-1 drug development, Junshi was the first to submit its application for a clinical trial in 2015 and filed the new drug application in March 2018. Innovent and BeiGene, however, both received priority review for their treatments, with plans to launch in the first half of 2019.

"It's a bit surprising that Junshi became the first one," Bing Zhao, UBS Securities China healthcare analyst, told S&P Global Market Intelligence, noting that market observers expected Innovent's product to launch sooner.

Zhang Jialin, a Hong Kong-based analyst at Industrial and Commercial Bank of China, said in an email that the approval will improve market sentiment for Junshi's planned Dec. 24 IPO.

Pricing is the most important thing to follow in the PD-1 drug race, he added.

As the first domestic company to release a PD-1 drug in China, Junshi will not price toripalimab substantially lower than Keytruda and Opdivo, Zhao said. However, if other Chinese companies release their versions soon, a price war will be inevitable. Innovent CEO Michael Yu, for example, said in an interview with S&P Global Market Intelligence that the company plans to price its PD-1 drug sintilimab much lower than Keytruda and Opdivo.

Zhao also said timing plays an important role for these types of drugs, as the market laggards have little room to make many groundbreaking changes that would surpass the existing drugs. With Keytruda and Opdivo already ahead of the game, Zhao said: "The first three Chinese drugmakers to launch their PD-1 drugs may still have a chance to grasp a share in the market, but the followers will have a tough time."

Junshi COO Feng Hui told S&P Global Global Market Intelligence on the sideline of a press event in Hong Kong that although being fast in releasing the drug gives the lead players an edge in the competition, the ability to produce it in large quantities and add more indications is also crucial in the long run.