Everest Medicines Eyes mRNA Tumor Vaccines As Drug Valuations Rebound

Key Takeaways:

• Everest Medicines’ Nefecon achieved 167 million yuan in sales in just over a month after its launch, showing its future big potential
• Therapeutic vaccines have become the core of the company’s independent R&D, with Everest’s first personalized therapeutic mRNA tumor vaccine now in clinical trials

By Molly Wen

Stock market rallies in Hong Kong and Mainland China since late September have delivered a needed shot in the arm for China’s long-dormant innovative drug sector. After four years of painful adjustment, valuations are suddenly attractive once again, with the CSI Hong Kong Innovative Drug Index up 26% in September alone.

While some of those gains went back during a broader market pause in early October, innovative drug makers with stable returns and strong overseas prospects continued to attract attention. One of those is Everest Medicines Ltd., which focuses on auto-immune disease and mRNA-based treatments.

Everest’s stock has been on a tear these last few months, up about 50%, outperforming its peers in the innovative drug field. That included a surge of more than 18% on a single trading day during a pre-negotiation session with China’s national reimbursement drug list, reflecting high expectations that Nefecon, the company’s blockbuster new drug, will soon be covered by the country’s medical insurance. Such inclusion would instantly make the recently approved drug available in the nation’s thousands of hospitals, providing a big boost to sales.

The stock surged another 16% on Wednesday, giving the company a market value of more than HK$11 billion ($1.4 billion).

With its business now stable, Everest achieved a major milestone with its first commercial-level profit in the company’s history. It achieved 301.5 million yuan ($42.5 million) in revenue in the first half of this year, up 158% from the second half of 2023, according to its latest financial report. CEO Luo Yongqing said in the report the company will have three products for sale by the end of this year and is expected to achieve 700 million yuan in sales for the whole year. That should provide a major catalyst towards its goal of achieving cash break-even by the end of 2025.

The big sales growth owes mainly to contributions from Nefecon, the world’s first treatment targeting the source of IgA nephropathy (IgAN), and Xerava, the first flucycline antibiotic. In the month of May alone, just after the first prescription of Nefecon was issued, the drug logged 167 million yuan in sales, showing its big future potential.

China has the world’s highest incidence of primary glomerular diseases, and IgAN patients account for about 35% to 50% of that. Previous treatments for IgAN included side effects such as serious infection. As a mucosal immunomodulator targeting the intestine, Nefecon is the first regimen targeting IgAN at its source. Nefecon’s two-year subpopulation data during a treatment and observation period in China was published by the authoritative industry publication “Kidney 360” magazine in October.

Industry analysts have also noted the drug’s potential to address a significant unmet clinical need, especially in Asian populations where IgAN is more prevalent and progresses more rapidly. The positive results from the Chinese subpopulation in the clinical trial further support Nefecon’s effectiveness in this demographic.

Overall, the industry sees Nefecon as a groundbreaking treatment that could improve the quality of life for many patients with IgAN. The drug’s approval and positive clinical data have generated optimism about its future impact on the nephrology field.

Nefecon has been approved for sale in Taiwan, the fifth region after Mainland China, Hong Kong, Macau and Singapore. The drug is expected to get similar approval in South Korea by year-end. Everest is actively promoting the drug’s inclusion on China’s national reimbursement drug list, which aims to improve the affordability and accessibility of drugs.

In addition, Everest’s Etrasimod, another new drug with big potential for the treatment of ulcerative colitis, has been approved for sale in Macau and Singapore, and is expected to submit a new drug application for approval in Mainland China by year-end. It has already submitted an application in Hong Kong. It could start benefiting patients with ulcerative colitis in South China’s Greater Bay Area by year-end using the region’s “Hong Kong and Macau Drug and Medical Device Access” policy that links those two cities with adjacent Guangdong province.

In 2025, Everest also expects to submit a new drug application for the potent antibiotic Cefepime-Taniborbactam in Mainland China for the treatment of complicated urinary tract infection.

Betting On mRNA Tumor Vaccines

While other innovative drug companies fight for position in a new generation of targeted anti-cancer drugs like PD-1 inhibitors and antibody-drug conjugates (ADCs), Everest has set its sights on the relatively less-developed greenfield of mRNA tumor vaccines. Such vaccines introduce mRNA encoding disease-specific antigens into the body, using host cells’ protein synthesis mechanism to produce antigens and activate specific immune responses, thus producing immune attacks against tumor cells. They are considered highly safe, and can be quickly designed and synthesized, enabling quick response to changes in tumors.

In September 2021, Everest joined with mRNA drug and vaccine maker Providence Therapeutics to develop mRNA therapeutics and vaccines. Everest obtained the necessary technology for creating such vaccines through the tie-up, allowing it to set up a clinically proven mRNA platform and establish an mRNA industrialization base in Jiashan of East China’s Zhejiang province. That base has capabilities for everything from stock solution and preparatory production, to the filling of vials for individual vaccines.

While the two companies ended their collaboration in February this year, Everest obtained all intellectual property and global rights for the preventive and therapeutic mRNA vaccine products from Providence before the agreement was terminated. Everest has now shifted its focus to mRNA cancer therapeutic vaccines, and currently has four such vaccine programs under development for various solid tumor indications.

The company’s first personalized therapeutic vaccine independently developed through its mRNA technology platform, EVM16, started clinical trials in August this year. Another spot tumor-related antigen vaccine, EVM14, is also expected to submit new drug clinical trial applications in China and the U.S. early next year.

Everest’s other drug, EVER001, is expected to release Phase 1b clinical data later this year for the treatment of primary membranous nephropathy (PMN), a kidney disease. By next year, the drug is expected to enter Phase 2 clinical trials, reflecting the drug’s promising early results as a potential new treatment option for PMN.

As a typical innovative drug maker using the license-in model, Everest can quickly bring its products to market using its strengths in clinical development, registration and listing, and commercialization. Its large investment in the mRNA platform also demonstrates the company’s ambition to become a major biopharmaceutical company.

Everest currently trades at a price-to-sales (P/S) ratio of about 14 times, nearly double the 7.5 times for Zai Lab ZLAB, another pharmaceutical company using the license-in model, indicating higher investor expectation for Everest. In his remarks in the company’s latest financial report, CEO Luo said Everest aims to become Asia’s leading global integrated biopharmaceutical company by 2030, with four major product areas achieving annual sales of up to 10 billion yuan. Meeting that ambitious pace of new drug launches will be one of the company’s biggest challenges, and investors will be watching closely.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.