Out-licensed global rights of DLL3 ADC to Roche. Innovent has out-licensed the global rights of IBI3009, a novel DLL3 ADC, to Roche through a blockbuster deal.
The drug candidate obtained IND approval for a global Ph1 study in Dec 2024.
Innovent and Roche will jointly focus on the early-stage development of the asset before Roche assumes full responsibility for its subsequent development. Innovent will receive an upfront payment of US$80mn, with potential milestone payments up to US$1.0bn, and tiered royalties on net sales reaching up to the mid-teens percentage. Besides the DLL3 ADC, Innovent also has IBI115 (DLL3/CD3 bsAb) at clinical development stage.
DLL3 ADC represents a promising therapy for pre-treated ES-SCLC. DLL3 is a neuroendocrine-specific antigen highly expressed in SCLC (85%) and neuroendocrine tumors (NETs, 20-40%). Various strategies targeting DLL3 are being explored, including ADCs, bsAbs, tri-specific mAbs, CART, and antibody radionuclide conjugates. The early DLL3 ADC candidates faced challenges.
AbbVie’s Rova-T (DLL3 ADC) failed in Ph3 trial for 2L SCLC with ORR of 15% vs 21% and mOS of 6.3 vs 8.6 months compared to chemo topotecan (link), and its Ph3 trials in 1L maintenance and 3L SCLC also failed. AbbVie’s another DLL3 ADC SC-002 delivered a modest ORR of 14% in SCLC with serious safety concerns (link). Nevertheless, recently, Zai Lab’s next-gen DLL3 ADC, YL212, delivered a promising ORR of 74% in SCLC and favourable safety profile (grade≥3 TEAEs of 40%, link). Hengrui’s SHR-4849 (DLL3 ADC) also demonstrated an ORR of 73% (link) in pre-treated SCLC. Amgen/BeiGene’s tarlatamab, a DLL3/CD3 bispecific T- cell engager, was approved by the FDA for pre-treated ES-SCLC, which delivered an ORR of 40%, while it comes with 58% grade>=3 TEAEs and 51% CRS (link).
Moreover, multiple B7-H3 ADCs are being assessed for pre-treated SCLC, including HS-20093, I-DXd, YL201, DB-1311, which have showed ORRs ranging from 55% to 68% .
DLL3-targeted therapy has become increasingly dynamic with several significant transactions. Recently, Hengrui out-licensed its DLL3 ADC to IDEAYA with a deal size similar to that between Innovent and Roche. In Jan 2024, MSD acquired Harpoon for US$680mn, securing its lead candidate, HPN328, a DLL3/CD3/albumin trispecific antibody. This was followed by a global development and commercialization agreement with Daiichi Sankyo for HPN328 in Aug 2024.
Additionally, in late 2023, Novartis in-licensed LB2102 (DLL3 CART) from Legend Biotech, in a transaction valued at US$1.1bn.
Rich innovative drug pipeline with global potentials. Besides DLL3 ADC,
Innovent has multiple ADC assets in clinical stage with global rights, targeting CLDN.18.2, B7H3, TROP2, HER3, HER2, EGFR/B7H3, etc. Notably, Innovent’s next-gen IO asset IBI363 (PD-1/IL-2) has demonstrated encouraging results in IO- resistant sq-NSCLC, MSS CRC, IO-naive melanoma, etc. Another notable candidate, IBI343 (CLDN18.2 ADC), has demonstrated encouraging outcomes in PDAC, and has received a fast track designation from FDA. We see significant potential for out-licensing IBI363, IBI343, and other innovative drug candidates.
Maintain BUY. We are positive on the global potential of Innovent’s rich innovative drug pipelines. Factoring in the deal with Roche, we raise our DCF-based TP from HK$55.21 to HK$57.67 (WACC: 9.5%, terminal growth rate: 3.5%).