Hengrui Therapeutics' Breakthrough Hepatitis B Therapy and Its Market Implications

The global biotech sector is witnessing a paradigm shift in the fight against chronic hepatitis B (CHB), driven by innovative therapies that target the virus at its genetic roots. At the forefront of this revolution is Hengrui Therapeutics, whose next-generation siRNA drug, HRS-5635, has emerged as a beacon of hope for the 75 million HBV carriers in China alone. With its Breakthrough Therapy Designation (BTD) from the China Center for Drug Evaluation (CDE) and a robust Phase II clinical trial underway, HRS-5635 exemplifies how pharmaceutical innovation is catalyzing investment in China's biotech ecosystem.

A New Era in Hepatitis B Treatment: HRS-5635's Mechanism and Clinical Progress

HRS-5635 leverages RNA interference (siRNA) technology to degrade HBV transcripts, inhibit viral replication, and suppress hepatitis B surface antigen (HBsAg)—a critical step toward a functional cureHengrui’s breakthrough hepatitis B therapy arrives – media^[1]. Unlike traditional antiviral therapies, which merely suppress viral load, HRS-5635 aims to achieve HBsAg seroclearance, a milestone that could redefine CHB management. Non-clinical studies have demonstrated its efficacy against all HBV genotypes, with no observed off-target effects, underscoring its safety profileHengrui Pharmaceuticals Receives NMPA Clearance for HRS-5635^[2].

The drug's Phase II trial, a multicenter, randomized study involving 303 participants, is evaluating its efficacy both as a monotherapy and in combination with pegylated interferon α (Peg-IFN-α)A Multicenter, Randomized, Open, Parallel-designed Phase II Study to Evaluate the Efficacy and Safety of HRS-5635 Injection Alone or in Combination With Other Agents in Patients Treated for Chronic Hepatitis B^[3]. This dual approach addresses a key limitation of existing treatments: the inability to induce a sustained immune response in many patients. By combining HRS-5635's direct antiviral activity with Peg-IFN-α's immunomodulatory effects, Hengrui is positioning itself to significantly improve functional cure rates—a metric that could redefine market expectations.

Market Dynamics: Growth, Competition, and Policy Tailwinds

China's HBV treatment market is poised for exponential growth, projected to expand from $2.48 billion in 2025 to $6.25 billion by 2032 at a compound annual growth rate (CAGR) of 14.1%Hepatitis B Therapeutics Market Size, Share & Forecast [2032]^[4]. This surge is fueled by an aging population, rising awareness of CHB, and the emergence of next-generation therapies like siRNA. However, Hengrui is not alone in this race. Competitors such as Argo Biopharma (with BTD-granted BW-20507) and Brii Biosciences (BRII-179 and Elebsiran) are also advancing siRNA candidates, creating a fiercely competitive landscapeArgo Biopharma’s Novel siRNA Therapeutic BW-20507 Granted Breakthrough Therapy Designation^[5].

Government policies are further accelerating innovation. The CDE's BTD program, coupled with the 2024 “Full-Chain Support for Innovation” initiative, provides streamlined regulatory pathways and financial incentives for breakthrough therapiesFull-Chain Support for Innovation: Chinese …^[6]. These measures not only expedite drug development but also attract venture capital. For instance, Epigenic Therapeutics recently raised $60 million in a Series B round to advance its HBV functional cure, while MagicRNA secured funding for its lipid nanoparticle (LNP)-based RNA delivery platformFierce Biotech Fundraising Tracker 2025^[7]. Such investments highlight the sector's potential to deliver high returns, particularly for firms with differentiated pipelines.

Pharma Innovation as a Catalyst for Biotech Investment

The success of HRS-5635 and similar therapies underscores a broader trend: RNA-based technologies are reshaping the HBV treatment paradigm. With over 20 siRNA candidates in global development, the field is attracting cross-border partnerships and licensing deals. For example, Systimmune's $850 million upfront payment from Bristol-Myers Squibb for its ADC program illustrates how Chinese biotechs are gaining global recognitionChina's Biotech Innovation: Top 10 Outbound Deals with Pfizer^[8].

Investors are also capitalizing on policy-driven opportunities. The 2024 easing of foreign investment restrictions in biotech—particularly in gene therapy and RNA—has opened doors for international collaborationChina’s New Policies on Foreign Investment in Healthcare and Biotechnology^[9]. This, combined with venture capital inflows (over $1 billion in RNA and gene editing investments in Q3 2025China Biopharma Tracker – August 2025^[10]), positions China as a hub for cutting-edge therapeutics.

Conclusion: A Win-Win for Patients and Investors

Hengrui Therapeutics' HRS-5635 represents more than a scientific breakthrough—it is a testament to the power of innovation in driving market growth. As the drug progresses through clinical trials, its potential to achieve a functional cure could redefine CHB treatment while generating substantial shareholder value. For investors, the confluence of regulatory support, competitive differentiation, and robust funding pipelines makes China's HBV sector a compelling long-term bet. In an era where pharma innovation and biotech investment are inextricably linked, Hengrui's journey offers a blueprint for success.