An obscure Chinese company called Genuine Biotech(Chinese: 真实生物) was suddenly put under the spotlight on July 25 when the Chinese authority announced the conditional approval of the company's application for adding the treatment of COVID-19 as a new indication of Azvudine under the special review and approval procedures for drug registration.
Genuine Biotech, founded in 2012 in Pingdingshan, Henan Province, is dedicated to the R&D, manufacturing and commercialization of innovative drugs for treating viral, oncological and cerebrovascular diseases.
Earlier this year, the market began to speculate which drug would become China's first domestically produced oral antiviral medications for COVID-19. The three most promising candidates were VV116 of Junshi Biosciences(Chinese: 君实生物), Azivudine of Genuine Biotech and Proxalutamide of Kintor Pharmaceuticals(Chinese: 开拓药业). When the news came on July 25, it was revealed that Azvudine is the first COVID-19 oral treatments developed in China.
That evening, Fosun Pharma(Chinese: 复星医药) announced that it had signed a strategic cooperation agreement with Genuine Biotech on the joint development and exclusive commercialization of Azivudine. If everything goes smoothly, Fosun Pharma will pay CNY 800 million to Genuine Biotech for the cooperation.
Puzzle of Azvudine Manufacturer and Distributor
Azvudine, invented by Dr. Junbiao Chang of Zhengzhou University, is originally an oral small molecule drug for the treatment of AIDS. Azivudine is a nucleoside analogue that inhibits RNA-dependent RNA polymerase (RdRp). Since both SARS-CoV-2 and AIDS are RNA viruses, Azivudine, as a 'broad-spectrum RNA virus inhibitor', can inhibit the RdRp of SARS-CoV-2, thereby preventing its replication. On August 2, Azvudine tablets went into production in Pingdingshan.
Soochow Securities appraised that small molecule therapeutics for COVID-19 also have an effect on its virus mutation and have the advantages of production cost and ease of use, thus having great potential in epidemic prevention and control.
According to Southwest Securities, the global market size of oral COVID-19 drugs is estimated to be around several billion to tens of billions of dollars. Its related pharmaceutical intermediates and API(Active Pharmaceutical Ingredients) market can be as large as 100 billion yuan, said Soochow Securities.
Analysis of Zhongtai Securities states that the market size of Azvudine tablets can reach CNY3.8 to 6.25 billion, and its APIs (active pharmaceutical ingredients) market is valued at CNY0.71 to 2.14 billion.
Investors have swarmed into this vast market. The share price of Azvudine-related pharmaceutical companies started to surge when Genuine Biotech, an unlisted company, signed strategic cooperation agreements with them on the production and distribution of Azvudine.
Specifically, Genuine Biotech reached an agreement on the production and distribution of Azulfidine with Xinhua Pharmaceutical(Chinese:新华制药) (000756.SZ) this April and another two on manufacturing with a subsidiary of Ausun Pharma(Chinese: 奥翔药业) (603229.SH) and CR Double-Crane(Chinese: 华润双鹤) (600062.SH) this May.
Following the news of these agreements, the share price of Xinhua Pharmaceutical jumped by more than 500%, while the share price of Ausun Pharma once doubled from the beginning of the year to May 11. CR Double-Crane's share price also multiplied by more than three times during two months after mid-March.
However, the news of the strategic cooperation between Genuine Biotech and Fosun Pharmaceuticals on July 26 left the question of whether the agreements mentioned above are still valid, especially the agreement between Genuine Biotech and Xinhua Pharmaceuticals on the distribution of Azvudine. Based on the announcement from Fosun Pharmaceuticals, commercialization of the drug includes its distribution, import, export, sales, promotion and so on.
On the day following the approval of Azvudine, the share price of CR Double-Crane tumbled to limit down within half an hour after open. Ausun Pharma reached its limit down for four consecutive days, wiping out CNY6.6 billion in total. Fosun Pharmaceuticals fell by 3.11%. Only Xinhua Pharmaceuticals edged up 0.63%.
The fact that the approval of Azivudine should be good news but the stocks of these companies have been sliding since then puzzles many. As a matter of fact, Azvudine itself is still in dispute.
Magic Bullet for COVID-19?
Chaoze Zhou, an analyst of Minsheng Securities, said that the competitiveness of oral COVID-19 pills relies on their efficacy, cost, and safety. The most crucial factor is efficacy.
Dr. Chang said in an interview, "Azvudine has an obvious anti - COVID-19 effect. It is effective in patients with both mild and severe clinical conditions. The drug also possesses the features like small dosage, good therapeutic effect and a fast decline in viral load for different COVID-19 variants (Alpha, Beta, Delta, Omicron and so on)."
However, there are still voices that question the efficacy of Azvudine. Virologist Rongshan Chang said that the primary endpoint of phase III clinical trial on the effectiveness of the drug(Azvudine) in COVID-19 patients was 'improvement of clinical symptoms’ rather than a reduction in 'all-cause mortality'. That is to say, it is not the drug that could kill the COVID-19 virus, thus it can not be considered a broad-spectrum antiviral drug. By contrast, an interim analysis of Phase II/III study of Paxlovid published by Pfizer on its website on November 5, 2021, showed that Paxlovid reduced the risk of hospitalization or death for patients by 89%.
Concerning the endpoint standard, the Center for Drug Evaluation of NMPA in China announced the adjustment of the criteria for clinical trials of COVID-19 antiviral drugs on August 1. The authority said due to the low death rate of patients infected by Omicron variant, and it is hard to observe improvements in clinical outcomes, improvement in clinical efficacy indicators could be considered as the primary efficacy endpoint, with virologic indicators as the key secondary efficacy endpoint. This adjustment justifies Genuine Biotech's primary endpoint of phase III clinical trial.
However, the Phase III clinical data of Azvudine disclosed by the comapny on July 16 is far from detailed. Its specific clinical trials protocol, numbers and eligibility criteria of patient enrollment,dose usage among other details have not been published so far. The final results of the three registration studies of Azvudine for the treatment of COVID-19 have not yet been published either.
The controversy surrounding the safety of Azvudine is less but not absent. Immunology scholar Yebin Zhou said that according to a technical review report of the drug regulatory agency for Azvudine in July 2021 and the drug's instructions, the drug showed genotoxicity and reproductive toxicity in animal studies. So the potential safety issues of Azvudine require close attention. In comparison, Chang believes that the dose of Azvudine is small and safe for the majority of the normal population. The tablet itself is an approved drug administered for the long-term treatment of AIDS, so it should be innocuous.
Although Azvudine has not yet been priced, its price as a drug to treat AIDS is only CNY 25.86 per milligram. Its price as COVID-19 pills is projected to be lower considering the fierce competition it will face. Pfizer's Paxlovid, provisionally added to the list of medicines covered by China's medical insurance system, is priced at CNY2,300 per box. Therefore, Azvudine will have an obvious advantage in price in contrast with imported drugs.
Destined To Have the Last Laugh?
More than 10 Chinese companies are developing oral anti-COVID-19 drugs. Multiple drugs are approaching the stage of authorization.
On April 6, Kintor Pharmaceuticals announced the key results of the phase III clinical trial of Proxalutamide for the treatment of COVID-19 and said that it would actively promote the application for EUA(Emergency Use Authorization) from drug supervision authorities in China, the United States and other countries. On May 23, Junshi Biosciences said its Phase III registration clinical study of VV116, an oral COVID-19 antiviral drug developed by the company, met the primary endpoint of its protocol. It will submit the application for the approval of VV116 in the near future.
Azvudine could gain the edge to capture the market as the first authorized oral COVID-19 drug developed by a Chinese company, but that does not mean it will maintain a lead in the market. Molnupiravir of MSD, the world's first authorized small molecule oral COVID-19 antiviral drug, generated USD3.2 billion in revenue in the first quarter of 2022, more than twice the sales of Pfizer's Paxlovid. However, because Molnupiravir was less effective than Paxlovid, its sales were only USD1.2 billion in the second quarter, while Paxlovid contributed USD8.1 billionto Pfizer's global sales during the same period.
Genuine Biotech needs to disclose detailed data about its oral COVID-19 antiviral drug, Azvudine, and show its effectiveness to win the market and investors.