The company’s two core hepatitis drugs were dropped from China’s state insurance scheme on July 1, effectively wiping out the remains of its legacy drug sales
Key Takeaways:
- The company has exited antivirals and is now wagering its future on weight-loss drugs that are just entering overseas trials
- But a late start and intensifying competition leave Ascletis facing steep challenges
The first company to take advantage of Hong Kong’s revised listing rules for biotechs eight years ago has had a difficult journey since its debut, switching from one drug type to another in search of commercial success
Now Ascletis Pharma Inc. (1672.HK) has suffered a further blow, as its two core hepatitis drugs have been dropped from China’s medical insurance coverage, virtually eliminating its product sales
For most Hong Kong-listed innovative drugmakers, sustained sales are a key test of a company’s technological prowess and prospects for stable revenue. By that measure, Ascletis looks to be falling short. The drugs that were the centerpiece of its listing have faltered, and a big investment in developing weight-loss drugs has yet to pay off
The company’s two therapies for hepatitis C, Ganovo and Asclevir, failed to secure reimbursement renewals, meaning the cost of their use will no longer be covered from July 1. While the products remain on the market, their sales are set to plummet, shrinking the company’s drug revenue to pretty much zero
The two Ascletis products were among eight drugs that failed to hold on to their place in the reimbursement list this time
The Ascletis earnings report for last year records 127 million yuan ($19 million) in revenue, but almost all of it came from bank interest, government grants and fair-value gains on its equity investment in Nasdaq-listed Sagimet Biosciences
The two main Ascletis businesses — R&D services and drug sales — contributed only 2.03 million yuan, with token product sales of just 382,000 yuan
When Ascletis listed in Hong Kong in 2018 as the first Chapter 18A biotech stock, it had the two hepatitis drugs in hand and its turnover more than tripled that year to 166 million yuan, apparently putting the business on the path to profit. But the Chinese drugs have lost out to rival products from multinational drugmakers
Ganovo needed to be used in combination with long-acting interferon, requiring injections and carrying greater risks of side effect risks, while alternative drugs from Gilead Sciences and Merck & Co. could be taken in tablet form without any additional booster, and became the global standard
Full pivot to weight loss
With its antiviral business beyond saving, Ascletis opted for sweeping reforms. In 2024, the company terminated several programs, including candidates for chronic hepatitis B, HIV and RSV, while seeking out-licensing opportunities for ASC40, a treatment for fatty liver disease. As a result, antiviral R&D spending was slashed from 33.7% of the total to just 0.4%
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