Summary of InnoCare Pharma (9969.HK) Conference Call Company Overview - **Company**: InnoCare Pharma (9969.HK) - **Partner**: Zenas BioPharma (ZBIO) - **Focus**: Global development of Orela (orelabrutinib) for multiple sclerosis (MS) and other non-oncology diseases Key Points Licensing Agreement with Zenas - InnoCare announced a licensing deal with Zenas for three assets, including: - Ex-China/Southeast Asia rights for orelabrutinib in MS and non-oncology diseases - Global rights for a preclinical oral brain-penetrant TYK2 inhibitor - A preclinical oral IL-17AA/AF inhibitor - Financial terms include: - Upfront cash payments of **US$100 million** - **7 million** new shares of Zenas upon achieving a milestone in early 2026 (valued at approximately **US$145 million** at **US$20.85/share**) - Development/regulatory/commercial milestone payments of up to **US$1.4 billion** - Tiered royalties on net sales [1][2][4] Clinical Development and Market Potential - Zenas is currently completing a phase 2 study on RMS for its core asset obexelimab but faces challenges in moving to phase 3 due to recruitment difficulties and financial constraints. - There is a higher chance for Zenas to prioritize Orela's phase 3 studies for PPMS and SPMS due to significant unmet medical needs, with a total addressable market (TAM) estimated at **US$12 billion** for PPMS and SPMS [4][5]. - Orela is noted for its best-in-class potential with high selectivity, CNS penetration, and low IC90, indicating high potency [4]. Execution and Recruitment Track Record - Zenas has demonstrated effective patient recruitment, completing enrollment of **93 patients** in about **9 months** for its phase 2 study, comparable to Roche's fenebrutinib study [4]. Financial Considerations - Zenas has a cash balance of **US$305 million** as of September, with a **US$120 million** raise and **US$100 million** payment due in 2025/2026 for the deal. - Additional funding may be required over the next three years to support ongoing and upcoming studies, including Orela's two phase 3 studies with a combined enrollment of approximately **1700 patients** [5]. Preclinical Assets - Zenas plans to start phase 1 on ZB021 (oral IL-17A/F inhibitor) in 2026, with preclinical data showing high potency. - ZB022, a brain-penetrant TYK2 inhibitor, is also in development, awaiting further data to validate its potential for neuroinflammatory and neurodegenerative diseases [6]. Earnings Forecast and Valuation Changes - Earnings forecasts for 2025E/2026E/2027E have been revised up by **Rmb116 million/Rmb204 million/Rmb204 million** due to the licensing deal. - The price target for InnoCare's H-Share has changed to **HK$22.89** (previously **HK$20.59**), and for the A-Share to **Rmb44.10** (previously **Rmb39.66**) [7][10]. Risks and Challenges - Key risks include R&D challenges for clinical assets, lack of a proven commercialization track record, pricing uncertainties, potential entry of generic ibrutinib in 2027 in China, and below-expected progress in global expansion [10]. Competitive Landscape - The competitive landscape for drugs targeting SPMS/PPMS includes Roche's Ocrevus and Sanofi's tolebrutinib, with limited competition for Orela in these indications [9]. Conclusion - The partnership with Zenas is seen as a strategic move for InnoCare to enhance the development of Orela in MS, with significant financial backing and market potential. However, careful monitoring of financial health and competitive dynamics will be essential for future success [1][4][10].

InnoCare Collaboration - Zenas BioPharma has a collaboration agreement with InnoCare Pharma, a biopharmaceutical company with a market cap exceeding $4.5 billion USD, two marketed products, and over 10 candidates in clinical development[9] - InnoCare will receive global rights to Orelabrutinib and ZB022, and global rights to ZB021 excluding China and Southeast Asia, while retaining global rights to Orelabrutinib in oncology indications[11] - Zenas will receive $35 million USD in cash and 5 million shares of Zenas common stock upfront from InnoCare[11] - Zenas is eligible for up to an additional 2 million shares of Zenas stock and up to $240 million USD in development and regulatory milestone payments for Orelabrutinib, as well as commercial sales milestone payments and tiered royalties on net sales[11] Orelabrutinib (BTKi) Program - A Phase 3 PPMS registration-directed trial has been initiated in the U S for Orelabrutinib, with a Phase 3 SPMS registration-directed trial expected to initiate in Q1 2026[11] - Orelabrutinib treatment in a Phase 2 RRMS trial resulted in a significant reduction in new GdE+ T1 lesions, with a >90% reduction observed at the 80mg QD dose at week 12 (P=0 0018)[48] - The global MS market is expected to exceed $30 billion USD, with SPMS and PPMS representing >$12 billion USD[61] Pipeline Programs - IND clearance and enrollment of the first patient for ZB021, an oral IL-17AA/AF inhibitor, and ZB022, a brain penetrant TYK2 inhibitor, are expected in 2026[11] - The anti-IL-17 biologics market is currently a $10 billion USD global market with ~50% average annual growth since first approval[74] Obexelimab Program - Phase 3 INDIGO trial for IgG4-RD is fully enrolled with topline results expected around year-end 2025[83] - Phase 2 MoonStone trial for RMS is fully enrolled with (12-week) data expected early Q4 2025[83] - Phase 2 SunStone trial for SLE is enrolling with (24-week) data expected mid-2026[83] - Obexelimab represents a compelling $1 billion+ USD commercial revenue opportunity in the U S alone for IgG4-RD[120]

Core Insights - Zenas BioPharma has entered a transformative license agreement with InnoCare Pharma for the global development and commercialization rights to orelabrutinib, a highly selective oral BTK inhibitor for Multiple Sclerosis (MS) [1][4][12] - Orelabrutinib is currently in Phase 3 trials for Primary Progressive MS (PPMS) and is expected to begin trials for Secondary Progressive MS (SPMS) in Q1 2026 [2][21] - Zenas has also secured rights to two additional promising molecules: an oral IL-17AA/AF inhibitor and a TYK2 inhibitor, both expected to enter Phase 1 trials in 2026 [1][4][9] Company Developments - Zenas announced a private placement financing of approximately $120 million to support its operations and clinical development [1][13][16] - The license agreement includes upfront and milestone payments to InnoCare totaling up to $100 million in cash and up to 7 million shares of Zenas common stock, with total potential payments exceeding $2 billion [10][11] - Zenas aims to leverage this collaboration to enhance its position as a fully integrated biopharmaceutical company focused on autoimmune diseases [4][5] Clinical Trials and Pipeline - The Phase 3 trial for PPMS has been initiated, while the SPMS trial is set to start in early 2026 [2][21] - Orelabrutinib has shown significant efficacy in previous Phase 2 trials for Relapsing-Remitting MS (RRMS), demonstrating sustained reductions in inflammatory activity [3][21] - Zenas is also advancing obexelimab, which is concluding Phase 3 development for IgG4-RD, and expects to report key trial results in late 2025 and early 2026 [6][8] Market Potential - Orelabrutinib is positioned as a potential blockbuster treatment for progressive forms of MS, addressing a significant unmet medical need [4][5] - The collaboration with InnoCare is expected to enhance Zenas's capabilities in drug development and commercialization, particularly in the global market for autoimmune therapeutics [5][6] Financial Overview - The private placement is expected to provide sufficient funds to support Zenas's operations into Q4 2026, with additional potential funding from milestone payments [16][14] - Zenas's strategic focus on developing a balanced portfolio of therapies aims to maximize clinical and commercial potential across multiple therapeutic areas [6][10]