Jiangsu Hengrui’s Breakthrough in Epigenetic Oncology and Strategic Collaborations: A High-Stakes Investment Play

Jiangsu Hengrui Medicine has emerged as a pivotal player in China’s oncology sector, leveraging conditional National Medical Products Administration (NMPA) approvals and high-profile cross-border partnerships to accelerate its global ambitions. The company’s recent conditional NMPA approval for trastuzumab rezetecan—a HER2-directed antibody-drug conjugate for non-small cell lung cancer (NSCLC)—marks a critical step in its epigenetic oncology strategy. Fast-tracked through Breakthrough Therapy and Priority Review designations, this drug is now under Orphan Drug review in the U.S. for biliary tract cancer, underscoring Hengrui’s ability to navigate global regulatory frameworks [2].

However, conditional approvals come with strings attached. Under revised 2025 NMPA guidelines, Hengrui must complete post-marketing confirmatory trials within four years, with a single extension allowed if justified. Failure to meet these deadlines could halt sales, except for ongoing treatments for existing patients [1]. This creates both upside and downside risk: successful trials could solidify trastuzumab rezetecan’s market position, while delays might strain cash flow or dilute investor confidence.

Hengrui’s strategic collaborations, particularly its $500 million partnership with GlaxoSmithKline (GSK), offer a buffer against such risks. The deal grants GSK global rights (excluding China) to HRS-9821, a COPD treatment, and allows for up to 11 additional programs, each with tailored milestone payments. If all 12 programs reach commercialization, Hengrui could receive up to $12 billion in milestone payments, plus tiered royalties on global sales [3]. This structure not only diversifies revenue streams but also aligns Hengrui with GSK’s global commercial infrastructure, enhancing its ability to scale therapies like trastuzumab rezetecan.

Financially, Hengrui is in a strong position. First-half 2025 revenue hit RMB 15.76 billion, with net profit at RMB 4.45 billion, driven by a 33% year-on-year increase in innovative drug revenue [4]. The company’s R&D investment remains robust, with over 100 products in clinical development. Yet, the conditional approval model introduces volatility. For instance, ifupinostat, an HDAC/PI3K inhibitor approved for diffuse large B-cell lymphoma, requires confirmatory trials that often differ in design from pivotal studies—raising questions about long-term efficacy data [3].

Investors must weigh these factors. Hengrui’s conditional approvals and global partnerships position it to capitalize on the $50 billion projected oncology market by 2025 [1]. However, regulatory timelines and the success of confirmatory trials remain wild cards. The GSK collaboration mitigates some of this risk by spreading development costs and leveraging GSK’s commercial expertise, but it also exposes Hengrui to potential revenue dilution if GSK underperforms in global markets.

In conclusion, Hengrui’s epigenetic oncology breakthroughs and strategic alliances present a compelling growth story. Yet, the conditional approval model and reliance on cross-border deals necessitate close monitoring of trial progress and partnership dynamics. For investors, the key will be balancing optimism about Hengrui’s innovation with caution regarding regulatory and operational hurdles.

Source:
[1] China approves 4 new drugs, including a global first-in-class [https://www.fiercepharma.com/pharma/china-approves-4-new-drugs-including-global-first-class]
[2] Hengrui Medicine: A High-Conviction Growth Play in ... [https://www.ainvest.com/news/hengrui-medicine-high-conviction-growth-play-china-oncology-revolution-2508/]
[3] GSK and Hengrui Pharma enter agreements to develop up ... [https://www.gsk.com/en-gb/media/press-releases/gsk-and-hengrui-pharma-enter-agreements/]
[4] Jiangsu Hengrui Pharmaceuticals Co., Ltd., [https://www.hengrui.com/en/media/detail-829.html]