Pfizer has become the latest major pharmaceutical company to look towards China for biotechnological innovation, establishing a research and development agreement focused on cancer that encompasses a dozen drugs. This partnership with Innovent Biologics is valued at $10.5 billion.
The announcement of this collaboration comes just two weeks after Bristol Myers Squibb revealed a significant research partnership on oncology drugs with Hengrui Pharma, leveraging the innovation of Chinese laboratories and the nation’s rapid clinical development capabilities. Pfizer and Innovent made their agreement public on Thursday evening, just before the Annual Meeting of the American Society of Clinical Oncology in Chicago, the largest cancer conference worldwide. While specific cancers and targets covered by the Pfizer-Innovent pact remain confidential, the companies indicated that it includes “revolutionary early-stage and de novo cancer medicines.” Additionally, the alliance is said to include antibody-drug conjugates (ADCs), a class of targeted cancer therapies that has become a prominent area for drug research and contract negotiations.
Pfizer has a vested interest in ADCs, having acquired Seagen for $43 billion in 2023. Seagen markets four ADCs, drugs designed to target tumors by linking a toxic drug payload to an antibody. Companies focusing on next-generation ADCs aim to enhance this approach further. According to Pfizer and Innovent, their ADCs will incorporate differentiated drug payloads and utilize multi-specific antibodies to improve targeting capabilities and reduce the risk of drug resistance.
The surge in ADC research is partly driven by their potential for use in new drug combinations, such as those involving bispecific antibodies. A hot area of pharmaceutical R&D is the development of bispecific cancer drugs targeting PD-1 and VEGF proteins. Last year, Pfizer pursued a license in China for one such bispecific cancer immunotherapy, paying $1.25 billion upfront for a clinical-stage asset from 3SBio.
ING Research estimates that China accounts for approximately 33% of all new innovative molecules in global drug pipelines this year, a significant increase from just 4% in 2014. Diederik Stadig, a senior economist specializing in health and technology at ING, noted in a recent report that while China has historically excelled in oncology R&D, particularly with ADCs and bispecific antibodies, its expertise is now extending into other modalities and therapeutic areas. Stadig stated that all Western pharmaceutical companies need a strategic presence in China, whether through partnerships or independent efforts.
“The rise of China is so undeniable that it is a question boards in the pharmaceutical sector must address,” he remarked.
Of the twelve drugs involved in the new Pfizer-Innovent partnership, eight are early-stage programs developed by Innovent, while Pfizer brings four discovery-phase programs to the table. The agreement stipulates that the partners will co-develop and share the costs for selected projects, with Innovent handling development through Phase 1 and Pfizer leading the global development thereafter.
In terms of commercialization, Pfizer will obtain an exclusive global license for four of the programs and will manage their worldwide development. For four additional programs, Pfizer will hold an exclusive license outside of Greater China and will bear the majority of development costs. The remaining four programs will be co-developed globally, with costs shared, and will be co-commercialized in the U.S. and Europe, while Innovent retains rights in Greater China. Jeff Legos, Pfizer’s oncology chief, stated that this partnership combines Innovent’s early discovery and clinical development strengths with Pfizer’s global R&D and commercialization capabilities, enhancing Pfizer’s product pipeline and accelerating innovation.
This arrangement marks a notable distinction from the BMS-Hengrui agreement, which allows Hengrui the opportunity to share in the global commercialization of the partnered assets. Following BMS’s announcement, Ali Pashazadeh, CEO of strategic financial consultancy Treehill Partners, suggested that such agreements reflect growing confidence in the clinical data produced in China, fostering more productive negotiations that encourage U.S. and European boards to support partnerships around Chinese assets.
“If boards are saying, ‘Well, in my time, this is what we did,’ then you don’t have much of a future because the game has changed,” Pashazadeh pointed out. “I do believe management will be more flexible. I think the leadership as a whole understands they must adapt and change.”
As for the financial terms of the Pfizer agreement, the company is set to pay Innovent $650 million upfront, with the total potentially reaching up to $9.85 billion if the drugs progress through various milestones. Innovent will also receive royalties on sales from the products developed through the collaboration. The companies aim to finalize the transaction by the third quarter of this year.
Innovent has previously engaged in similar agreements with other major pharmaceutical firms. Last year, Takeda Pharmaceutical paid $1.2 billion upfront for rights to two of Innovent’s clinical-stage cancer drugs, a transaction characterized by one Takeda research executive as “a good deal.” Earlier this year, Eli Lilly and Innovent launched a new research partnership focused on oncology and immunology that could total up to $8.5 billion upon meeting specific milestones.
Photo: Dominick Reuter /AFP, via Getty Images
