• News
• 2024-06-03

Warner Develops New Antidepressant to Fill Billion-Dollar Market Gap

Warner Pharmaceutical Factory (688799.SH), established in 2001 and listed on the STAR Market of the Shanghai Stock Exchange in 2021, is an innovative drug production enterprise driven by research and development. The company has multiple R&D centers, can connect with global innovative resources, covers the industrial chain of traditional Chinese medicine, chemical drugs, and biologics, and is based in China with a global layout. Under the drive of its innovation strategy, the company has recently made significant progress in the development of new drugs.

On the evening of September 30th, Warner Pharmaceutical Factory announced that its holding subsidiary, Shanghai Zhigen Pharmaceutical Technology Co., Ltd. (hereinafter referred to as "Zhigen Pharmaceutical"), has completed the Phase I clinical trial of the research project ZG-001 capsule with the consent of the National Medical Products Administration. Zhigen Pharmaceutical and the Beijing Anding Hospital affiliated with Capital Medical University (hereinafter referred to as "Anding Hospital") signed a "Framework Agreement for Cooperation" for the joint development of the ZG-001 project in Mainland China.

Advertisement

ZG-001 capsule is a new type of antidepressant with a completely new structure and is classified as a Class 1 new drug. The experimental results show that ZG-001 has shown revolutionary advantages compared to existing drugs, and it is expected to become a new generation of globally First In Class antidepressant with high safety and rapid onset in the future. Moreover, as a clinical research unit, Anding Hospital has chosen to establish a project company to carry out subsequent research, further corroborating the product's impressive performance and optimistic about its future potential. With the cooperation of both parties, the product development and commercialization process will be accelerated, and it is expected to fill the billion-level market gap in antidepressant drugs as soon as possible. Securities firms estimate that the peak sales after the product is launched are expected to reach 2 billion yuan.

The incidence rate of depression is continuously rising.

Depression, also known as depressive disorder, has an "episodic" characteristic and is one of the central nervous system psychiatric disorders. Clinically, it is mainly manifested as a low mood that is not commensurate with its situation, ranging from being downhearted to being extremely sad, and even leading to stupor. Some patients may exhibit obvious anxiety and motor agitation, and severe cases may have hallucinations, delusions, and other psychotic symptoms. Some patients have self-harm and suicidal behaviors, and even die as a result.

Depression also causes huge, under-recognized social and economic losses to individuals, families, communities, and countries. The Lancet-World Psychiatric Association's major report on depression states that even before the COVID-19 pandemic, the loss of economic productivity related to depression would cause the global economy to lose 1 trillion US dollars annually.

With the development of modern society, depression has become a common mental health problem, and its incidence rate is also continuously rising.

According to data from the World Health Organization (WHO), more than 350 million people worldwide suffer from depression, with an annual patient growth rate of about 18% over the past decade. That is, 5% of adults worldwide suffer from depression each year. It is expected that by 2030, the number of patients may exceed the total number of patients with all cardiovascular diseases, becoming the disease with the highest disease burden in the world. Domestically, according to the "2022 National Depression Blue Book," there are about 95 million patients in China, with a large population. The Lancet·Psychiatry published an article in 2019 stating that the lifetime prevalence rate of depression is 6.9%, and the 12-month prevalence rate is 3.6%.

Depression also has a high recurrence rate, with a recurrence rate of 50%-85%, among which 50% of patients will relapse within 2 years after the disease occurs.

The current antidepressant drugs on the market are mainly divided into two major categories: SSRIs and SNRIs, which together account for 90% of the domestic market share. Representative drugs of SSRIs include fluoxetine and paroxetine, and representative drugs of SNRIs include venlafaxine. In addition, small categories of drugs such as tricyclic antidepressants and monoamine oxidase inhibitors (MAOIs) can also be used to treat depression.However, the limitations of the aforementioned traditional medications are also quite evident, with numerous unmet clinical needs. Firstly, the clinical effects are delayed, often requiring more than 2-4 weeks to take effect, and a certain proportion of patients still cannot be relieved even after long-term use. Secondly, there are many side effects, including gastrointestinal symptoms, addiction, mania, and sexual dysfunction. Thirdly, the efficacy is poor, with 54% of patients unable to achieve complete relief after medication, necessitating the need for second-line treatment.

Global First In Class

Against this backdrop, patients with depression urgently need new therapeutic drugs to meet clinical demands. Therefore, the research and development of antidepressant drugs is a focus of investment for many institutions and pharmaceutical companies both domestically and internationally. However, historically, due to unclear pathogenic mechanisms, large individual differences, side effects, and drug resistance, the difficulty of research and development is quite significant, and there are few successes.

The emergence of ZG001 is expected to be a game-changer. Preclinical studies and Phase I clinical reports officially announce that ZG001 capsules are a new type of antidepressant Class 1 new drug with a completely new structure, intended for the treatment of adult depressive disorders, including major depressive disorder with suicidal ideation or behavior (MDDI), treatment-resistant depression (TRD), or major depressive disorder (MDD). This heralds the dawn of a new generation of depression treatment drugs, bringing hope for countless patients to regain their health.

Compared to traditional medications, ZG-001 has a completely new mechanism of action, working by activating the BDNF-TrkB signaling pathway, and it is the only domestic product under research for this target. According to incomplete statistics, there are at least 18 Class 1 chemical new drugs for depression under research in China, but most of them are still concentrated in traditional areas such as SSRIs from a target mechanism perspective, with few products like ZG-001 that have new mechanisms and new structures.

Under the new mechanism of action, ZG-001 can completely solve the current defect of slow onset of traditional antidepressants. Preclinical studies have shown that the mechanism of ZG-001's antidepressant action is clear, and the experimental data indicate that a single oral administration of ZG-001 can rapidly increase the expression of pTrkB in the brain, activate the BDNF-TrkB signaling pathway, and thus exert rapid and lasting antidepressant effects. In addition, in several classic animal models of antidepressant efficacy, ZG-001 has shown good antidepressant activity, characterized by rapid onset and lasting effects.

More importantly, even compared with similar products worldwide, ZG-001 capsules are leading in progress and have a clear first-mover advantage.

In 2019, the US FDA officially approved the use of S-ketamine nasal spray for standard therapy for treatment-resistant depression, which has rapid and lasting antidepressant effects on treatment-resistant depression. Research has found that ketamine can increase the content of BDNF in the rat brain, and ketamine exerts antidepressant effects in BDNF gene knockout mice. However, the side effects of this new drug are also very obvious, including drug dependence, anesthesia, and serious side effects such as psychotic-like symptoms.

Compared with S-ketamine, ZG-001 shows rapid and lasting antidepressant effects that are comparable or superior to the former. More crucially, ZG-001 can completely eliminate serious mental side effects such as drug dependence, anesthesia, and psychotic-like symptoms. The results of Phase I clinical trial studies show that ZG-001 has excellent safety, with no adverse reactions exceeding Grade 1, and safety scales designed for ketamine-related side effects (CADSS, MOAA/S, PWC-20) show no ketamine-related dissociation, sedation symptoms, and no withdrawal symptoms upon discontinuation. ZG-001 has excellent pharmacokinetic performance, with rapid absorption and exposure increasing linearly with the dose; there are no significant gender differences and no accumulation.

In summary, the biggest core advantage of ZG-001 is that it can perfectly separate rapid-acting antidepressant activity from serious mental side effects, and can rapidly treat patients with severe depression accompanied by suicidal tendencies (MDDI), drug-resistant depression (TRD), and severe depression (MDD) that are ineffective with traditional antidepressants. It meets this huge, urgent, and globally unmet clinical need, and is expected to become a new generation of high-safety, rapid-acting global First In Class antidepressant drugs in the future.Fangzheng Securities believes that the preclinical research of ZG-001 has demonstrated revolutionary advantages and has the potential to become the first rapid-acting, non-addictive antidepressant drug in China. This could fill a gap in a billion-dollar market.

As one of the earliest public mental health hospitals in China, Anding Hospital, in collaboration with Zhigen Pharmaceutical, has established a project company to conduct subsequent research, further corroborating the impressive performance of the product. Anding Hospital is a century-old, leading national clinical key special hospital in the field of mental illness clinical practice and scientific research, both domestically and internationally renowned. It possesses an excellent platform for scientific and technological innovation and the transformation of results, capable of providing comprehensive clinical research and transformation services for innovative drug studies.

The Cooperation Framework Agreement signed between Anding Hospital and Zhigen Pharmaceutical indicates three main points of cooperation. First, both parties plan to jointly establish a project company targeting the development of ZG-001's patent achievements in China. Second, both parties will jointly promote the project company to carry out the drug registration of ZG-001 in China. Third, after completing the drug registration of ZG-001 in China and obtaining the drug registration approval as the main body of the project company, both parties will jointly plan drug promotion matters on the platform of the project company. This includes promoting market access, market coverage, market education, and brand building for the drug; and sharing benefits according to the agreed proportion.

This cooperation breaks through the original cooperation model between domestic pharmaceutical companies and clinical research institutions, pioneering a new approach to drug development. For Anding Hospital, engaging in equity-level cooperation indicates a high regard for the potential value of ZG-001. For Warner Pharmaceutical Factory, this cooperation will safeguard the clinical research and future clinical application of the product, accelerate the research and commercialization process, and fill the billion-dollar market gap for antidepressant drugs.

According to an analysis report by Research and Markets, the market size of China's antidepressant drugs was about 17.2 billion yuan in 2022. With the continuous increase in the number of patients with anxiety and depression after the COVID-19 pandemic in China, and the further improvement of treatment rates, there is a huge growth space in China's antidepressant drug market. It is expected to reach a market size of 23.8 billion yuan by 2030, with a compound annual growth rate (CAGR) of 4.2% from 2022 to 2030. The global antidepressant drug market was estimated at 14.5 billion US dollars in 2022 and is expected to reach 17.6 billion US dollars by 2030, with a CAGR of 2.5% from 2022 to 2030.

Data published in The Lancet Psychiatry shows that the treatment rate for patients with depression in China is only 9.5%, and the rate of adequate treatment is even lower at 0.5%, while the treatment rate in developed countries is close to 50%. Compared to Europe, America, and even Japan and South Korea, the treatment rate for depression in China is very low, with a huge room for improvement. Moreover, the relapse rate of depression is as high as 50%-85%, with 50% of patients relapsing within 2 years after the onset of the disease, indicating a significant demand for medication.

It is evident that there is a huge growth space in the domestic antidepressant drug market. After ZG-001 is approved and launched, it will effectively replace existing products, reshape the market structure, and accelerate the sharing of the billion-dollar market space. Based on the development process of innovative drugs, Fangzheng Securities estimates that ZG-001 will be approved and launched around 2030, with the protection period expiring around 2039, followed by peak sales, with peak sales exceeding 2 billion yuan.

Driven by research and development,ZG-001 is a first-class novel candidate drug for depression developed over seven years based on the lead compound 2R,6R-HNK, which has no dependency and minimal neurological side effects. The inventor is Yang Yushe from the Shanghai Institute of Materia Medica, Chinese Academy of Sciences, and his team members.

Yang Yushe graduated from the Chemistry Department of Sichuan University in 1987, and in July 1993, he pursued his doctoral degree under the guidance of Academicians Ji Ruyun and Chen Kaixian at the Shanghai Institute of Materia Medica, Chinese Academy of Sciences. After completing his postdoctoral research in 1998, he has been working at the institute. Currently, Yang Yushe holds the positions of Research Group Leader, Doctoral Supervisor, and Second-Level Researcher at the Shanghai Institute of Materia Medica, Chinese Academy of Sciences. He is also a recipient of the Second Prize of the National Technical Invention Award and a Shanghai Labor Model.

Yang Yushe is one of the few scientists in China who has successfully developed innovative drugs and has extensive experience in new drug development. In 2009, he successfully developed the first fluoroquinolone drug with independent intellectual property rights in China, hydrochloric antotroquinolone (NCE). In recent years, he has led his team to develop eight innovative candidate drugs, seven of which have been transferred, four have obtained clinical trial approvals, and four are in the preclinical research stage. Currently, Yang Yushe is the first inventor of more than 50 domestic and international patents.

In March 2022, Warner Pharmaceutical Factory became the controlling shareholder of Zhigen Pharmaceutical through capital increase and shareholding, thereby successfully acquiring the ownership of the ZG-001 project. Currently, Warner Pharmaceutical Factory directly holds 40% of the shares in Zhigen Pharmaceutical. From the current perspective, Warner Pharmaceutical Factory has an extremely advanced R&D layout capability, which is inseparable from its long-term high emphasis on R&D.

After more than 20 years of accumulation, Warner Pharmaceutical Factory has established a professional R&D team based on the platforms of the Process Research Center, Pharmaceutical Research Center, Clinical Monitoring Center, and Project Management Center, gathering more than 300 R&D and technical personnel. Among them, academic leaders and technical leaders are all from prestigious schools and returned overseas doctors, provincial and municipal leading talents, etc., with strong professional backgrounds and relatively rich work experience. The basic R&D capabilities, information resource analysis and integration capabilities, and communication and collaboration capabilities for external scientific research cooperation have been basically established.

Based on this, Warner Pharmaceutical Factory continues to carry out the research and development of high-end chemical generic drugs and improved chemical new drugs, and continuously improves the chemical drug imitation and improved R&D capabilities of its independent technology platform, maintaining the company's advantageous position in the field of chemical generic drugs. At the same time, through R&D outsourcing, cooperation, introduction, and other means, it actively lays out the research and development of original new drugs.

Warner Pharmaceutical Factory attaches great importance to R&D investment, helping the company's product matrix to take shape. The company's R&D investment in 2023 totaled 103 million yuan, accounting for 7.2% of revenue, which is at a relatively high level in the industry; in the first half of 2024, R&D investment further increased by 21.54% to 66.47 million yuan, accounting for 9% of business income. Currently, the company has 91 products under research and development, including 8 first-class innovative drugs, 2 improved new drugs, 63 new registration classification generic drug R&D projects, 9 consistency evaluation projects, and 9 international registration projects.

In terms of innovative drug research and development, in addition to ZG-001, the ZG-002 project under the control of the subsidiary Zhigen Pharmaceutical is also worth looking forward to. ZG-002 is also a first-class new drug, intended for the treatment of moderate to severe plaque psoriasis, and obtained the clinical trial approval in August 2024. Studies have shown that ZG-002 has made breakthrough progress in efficacy, better than all currently reported candidate drugs, and is expected to become a new generation of safer and more effective psoriasis treatment drugs, and has the potential to expand to the clinical application of other autoimmune diseases. According to relevant statistics, by 2030, the global market space for anti-autoimmune diseases will reach 163.8 billion US dollars, and the Chinese market space will reach 24.1 billion US dollars.

In addition, the first-class innovative Chinese medicine Ganqing Granules is in the second phase of clinical trials, the endangered animal medicine substitute research project undertaken by the joint venture company Tianji Rare is also progressing steadily, ZY-022 has completed preclinical research, and ZY-023 and ZY-025 are currently advancing preclinical research work as planned. As an important industrial capital of Tianji Rare, the company is expected to seize the opportunity to share the long-term growth space of the industrialization of artificial substitutes for endangered animal medicines.

For future planning, Warner Pharmaceutical Factory's mid-term report for 2024 stated that the company will continue to increase investment in R&D, build a cluster advantage in product quantity and product quality in the fields of digestion, respiration, and anti-infection, expand and strengthen the chemical industry, and create a high-end chemical industry industrialization platform with international market competitive advantages. At the same time, it will use endangered animal medicine substitutes, plant extraction raw materials, and other characteristic Chinese medicine products as entry points to create a characteristic innovative Chinese medicine industrialization platform. Through various forms such as independent research and development, cooperative research and development, and investment incubation, it will explore the research and development of innovative drugs, laying the foundation for the company's long-term development.The mid-year report for 2024 released on August 31st shows that Warner Pharmaceuticals achieved a revenue of 739 million yuan in the first half of the year, a year-on-year increase of 2.43%; net profit was 113 million yuan, a year-on-year increase of 0.52%. At the close on September 30th, the company's stock price soared by 9.13% to 47.8 yuan per share, with a total market value of 4.484 billion yuan.