Biogen terminated partnership with InnoCare. On 15 Feb, Biogen terminated the collaboration with InnoCare on orelabrutinib for the treatment of multiple sclerosis (MS) and other autoimmune diseases. The two parties started the collaboration in Jul 2021, and since then, InnoCare has received US$125mn upfront payment, and was eligible to receive up to US$812.5mn milestone payment and future sales royalties according to the original agreement. However, due to the current termination, future payment will not happen, while InnoCare doesn’t need to return the upfront payment.
Ph2 MS trial of orelabrutinib partially on hold by US FDA due to liver toxic problem, while no real liver injury observed as per management.
Last Dec, the US FDA placed the Ph2 trial (NCT04711148) of orelabrutinib in R/R MS partially on hold based on drug-induced liver injury cases observed. However, before the pause, the majority (80+%) of enrolled patients had completed at least 70 days of treatment and could continue the study. According to InnoCare management, there were no actual liver injuries, but only a very limited number of liver transaminase increases. The increases were transitory, only happened during the first two months of treatment, and were revisable. Compared to the MS trial of Sanofi’s evobrutinib - ~26% patients had raised liver enzymes and 11% discontinued the study, the liver toxic problem of orelabrutinib seems minimal.
InnoCare targets to continue the MS study. An interim analysis (12 weeks of treatment) of the ongoing Ph2 MS trial was performed, while the results were not released. The trial was mainly led by InnoCare from start.
InnoCare has amended and submitted the revised protocol to the US FDA in January. Monitoring frequency and enrolment inclusion criteria would be the major protocol revisions. InnoCare plans to release the data of the MS trial in 2Q23E (24 weeks of treatment), and if positive, to initiate a Ph3 trial.
In the future, InnoCare still expects to collaborate with a global partner. Concern remains regarding the liver toxic problems of orelabrutinib in treating MS. There are concerns that Biogen could have made its decisions based on the results of the first interim analysis of the ongoing MS trial, which were not released and only accessible to a few people from Biogen/ InnoCare. However, orelabrutinib, as a successful oncology therapy widely used for the treatment of CLL and MCL, doesn’t have liver toxic effects based on treating thousands of patients with hematologic malignancies. We look forward to the data readout of the Ph2 MS trial in 2Q23E.
Maintain BUY. Orelabrutinib is also under assessment for the treatment of other autoimmune diseases, including SLE, ITP, and NMOSD. Particularly, based on positive PoC data on SLE, a potentially registrational Ph2b study of SLE has been started. We are still interested in orelabrutinib’s potential for autoimmune disease, besides its success in oncology. InnoCare has a sufficient RMB7.7bn net cash as of Sep 2022. We revised our TP from HK$20.14 to HK$10.84 (WACC: 10.11%, terminal growth rate: 3.0%).