Daiwa: Jiangsu Hengrui Pharmaceuticals (01276) reaches licensing agreement with Novo Nordisk for HRS-1596; total deal value and upfront payment are both attractive.

Daiwa released a research report stating that Jiangsu Hengrui Pharmaceuticals (01276) has reached a licensing agreement with Novo Nordisk for HRS-1596, with a total deal value of US$2.6 billion, including a US$300 million upfront payment. Novo Nordisk will obtain exclusive rights to develop, manufacture, and commercialize HRS-1596 in markets outside China. The bank believes this out-licensing deal is impressive for reasons including that this is Hengrui's first out-licensing of a GLP-1 product to a top multinational pharmaceutical company, and more importantly, Novo Nordisk is one of the two global GLP-1 leaders; meanwhile, both the total deal value and the upfront payment are attractive. The bank believes that Novo Nordisk's recognition reflects its confidence in the potential of Hengrui's independently developed, oral once-weekly HRS-1596. Once-weekly oral administration is a key trend in the global development of next-generation GLP-1 drugs. The bank also believes that the deal highlights Hengrui's R&D strength in developing globally competitive GLP-1 drugs.