Pfizer is the latest big pharmaceutical company turning to China for biotechnology innovation, striking up a cancer R&D agreement spanning a dozen drugs that will be developed under a partnership with Innovent Biologics valued at up to $10.5 billion.
The deal comes two weeks after Bristol Myers Squibb unveiled a wide-ranging drug research partnership with Hengrui Pharma, tapping into innovation from Chinese labs and leveraging the country’s speed at early-stage clinical development. Pfizer and Innovent announced their agreement late Thursday on the eve of the start of the American Society of Clinical Oncology’s annual meeting in Chicago, the largest cancer conference in the world. Specific cancers and targets for the Pfizer and Innovent pact remain confidential, but the companies said they span “new breakthrough early-stage and de novo cancer medicines.” They also said the alliance would cover antibody drug conjugates (ADCs), a class of targeted cancer therapies that has become one of the most active areas for drug research and dealmaking.
Pfizer already has a presence in ADCs through subsidiary Seagen, which it acquired for $43 billion in 2023. Seagen has four commercialized ADCs, a type of drug made by linking a toxic drug payload to an antibody that delivers a targeted strike to tumors. Companies developing next-generation ADCs aim to make this approach even better. Pfizer and Innovent said their ADCs will incorporate novel differentiated payloads. They added that these ADCs will use multi-specific antibodies, which are intended to improve the targeting ability of a therapy and reduce the risk of drug resistance.
ADC research is surging in part due to their potential use in new drug pairings, such as combinations with bispecific antibodies. One hot area of drug R&D is developing bispecific cancer drugs that target the proteins PD-1 and VEGF. Pfizer turned to China to in-license one such drug last year, paying $1.25 billion up front for a clinical-stage asset from 3SBio.
ING Research estimates that China accounts for about 33% of all innovative new molecules in global drug pipelines this year, up from 4% in 2014. Diederik Stadig, senior economist, healthcare & technology, at the firm, said in a report this week that China has historically been strong in oncology drug R&D in ADCs and bispecific antibodies, but its expertise extends to other modalities and therapeutic areas as well. Stadig said all Western pharma companies need a China strategy, whether it’s partnering or playing defense.
“China’s rise is so undeniable that this is a question pharma boardrooms must answer,” Stadig wrote.
Eight of the drugs in the new Pfizer partnership are early-stage programs from Innovent. Pfizer is contributing four discovery-stage programs to the pact. The agreement calls for the partners to co-develop and share development costs for select programs. According to the deal terms, Innovent will develop these programs through Phase 1; Pfizer will lead future global development.
As for commercialization, Pfizer will receive an exclusive global license for four programs and is responsible for their global development. For four other programs, Pfizer will receive an exclusive license outside of Greater China and will bear most of the development costs. For the four remaining programs, Pfizer and Innovent will co-develop them globally, sharing in development costs. These programs will be co-commercialized in the U.S. and Europe and the partners will share the profits; Innovent retains rights to these programs in Greater China. In the deal announcement, Jeff Legos, Pfizer’s chief oncology officer, said the partnership combines Innovent’s discovery and early clinical development capabilities with Pfizer’s global R&D and commercialization capabilities. He added that the partnership brings Pfizer the opportunity to strengthen its pipeline and accelerate the delivery of drug breakthroughs.
Pfizer’s shouldering of most of the commercialization responsibility differs from BMS’s agreement with Hengrui, which gives that Chinese company the opportunity to share in global commercialization of the partnered assets. In an interview after the BMS deal announcement, Ali Pashazadeh, CEO of strategic and financial advisory firm Treehill Partners, said a transaction is a blueprint only for the two companies involved in the deal and only for that point in time. Two years from now, things could look very different for those companies. But Pashazadeh added that the big pharma deals with Chinese companies are a sign of growing trust in China-generated clinical data. That trust leads to more productive negotiations and makes U.S. and European boards of directors more supportive of striking deals for Chinese assets.
“If the boards are standing there saying, ‘Well, in my day, this is what we did,’ then you don’t have much of a future because the game has changed,” Pashazadeh said. “Do I think management will be more flexible? Yes, they will. I think management overall understand that they need to flex, they need to change.”
Financial terms of Pfizer’s deal call for the pharma company to pay Innovent $650 million up front. Pfizer could pay up to $9.85 billion more if the drugs achieve milestones. Innovent will also receive royalties from sales of approved products that come out of the alliance. The companies expect to close the transaction in the third quarter of this year.
Innovent has reached other deals with big pharma companies. Last year, Takeda Pharmaceutical paid $1.2 billion up front for rights to two clinical-stage Innovent cancer drugs, a transaction that the Japanese company’s top R&D executive described as “a bargain.” Earlier this year, Eli Lilly and Innovent began a new research pact focused on oncology and immunology that could reach up to $8.5 billion if milestones are achieved.
Photo: Dominick Reuter /AFP, via Getty Images
