Jacobio’s $2B+ Pan-KRAS inhibitor deal with AstraZeneca: breaking through the small-molecule technology barriers

On December 21, Jacobio Pharma announced it has licensed its Pan-KRAS inhibitor to AstraZeneca in a deal valued at up to US$2.015 billion, setting a new record for out-licensing agreements in China's small-molecule drug sector. This landmark transaction coincides with Jacobio's tenth anniversary and follows the recent approval and inclusion in China's National Reimbursement Drug List (NRDL) of its KRAS G12C inhibitor, glecirasib. The year 2025 marks a pivotal commercialization phase for Jacobio.

Prior to this announcement, Jacobio's Chairman and Co-CEO, Dr. Yinxiang Wang, along with parties acting in concert, had increased their holdings by nearly HKD 100 million, demonstrating confidence in the company's future. Against a backdrop of ongoing capital market constraints and sustained pressure on drug pricing within China's healthcare system, this deal represents not only a significant commercial breakthrough—establishing a new benchmark for out-licensing in China's small-molecule field—but also signifies a deep strategic partnership between a Chinese innovator and a global pharmaceutical giant at the Phase I clinical stage. It further indicates that the value of China's innovative drug companies is being reassessed by major international players.

Industry observers believe that AstraZeneca's decision to forge this deep collaboration with Jacobio at this juncture is driven by the potential of the KRAS target. Among all anti-cancer drug targets, KRAS is one of the most prevalent, with relevant data showing that approximately 23% to 25% of malignant tumors harbor KRAS mutations, corresponding to about 2.7 million new patients globally each year. However, after nearly four decades of research and development, no pan-KRAS inhibitor has reached the market worldwide, underscoring the exceptional technical challenges involved.

Leveraging its leading expertise in small-molecule technology, Jacobio has become one of the companies with the most advanced clinical progress in this field. This collaboration extends beyond a traditional asset licensing agreement to include co-development within the Chinese market, marking the entry into a new phase of partnership models between Chinese innovative drug companies and global pharmaceutical giants.

In the world of innovative drug R&D, the choice of technical pathway often determines a company's fate.

KRAS, short for "Kirsten rat sarcoma viral oncogene homolog," has long been branded as one of the most "undruggable" targets due to its smooth structure and lack of traditional small-molecule binding pockets. The global pharmaceutical industry has primarily competed along two technical paths: molecular glues and small-molecule inhibitors. The former is exemplified by the U.S. company Revolution, whose program has advanced to Phase III clinical trials, propelling its market value past 100 billion RMB. In the latter category, Jacobio Pharma stands as the global frontrunner with the most advanced development, closely followed by giants like BeOne Medicines (formerly known as BeiGene) and Eli Lilly.

"As for which of the two technical pathways is superior, there is no definitive answer from either academia or industry at present," admits Dr. Yinxiang Wang. However, clinical data is offering preliminary direction. Disclosed data shows that molecular glues have a skin toxicity incidence rate as high as 90%, with Grade 3 toxicities accounting for 8%. In contrast, Jacobio's small-molecule inhibitor reports a skin toxicity rate of only 10%, all of which are Grade 1. "Patients with Grade 3 toxicity experience severe skin toxicity that impedes daily activities like wearing clothing, and there is currently no specific treatment for it," Dr. Wang explains.

The fundamental difference in mechanism defines these two paths. Small-molecule inhibitors directly bind to the pocket on the KRAS protein to inhibit its function. Molecular glues, however, "stick" another intracellular protein to KRAS, forming a ternary complex that simultaneously inhibits multiple targets. "There is academic debate: does inhibiting targets unrelated to the tumor alongside the intended one lead to additional side effects?" Dr. Wang notes.

The vast disparity in barriers and costs further tilts the scales toward small molecules. Dr. Wang contrasts screening efficiency: "For antibodies, injecting a mouse can yield about 1,000 clones in two months. But to synthesize a small molecule, a team of PhDs might only produce about 100 compounds in a year." On the synthesis route, molecular glues require many steps, whereas small molecules need only 6-7 steps. Due to the several chiral centers in molecular glues, their synthesis cost is "roughly 10 to 20 times that of small molecules."

"In the current global environment of healthcare cost containment, production cost is key to commercialization," Dr. Wang emphasizes. The patent barrier is consequently high. "It is exceptionally difficult for latecomers to break through the existing patents; it's very hard for newcomers to enter this field." With its earliest and broadest patent portfolio, Jacobio has built a deep moat.

Looking back at the development journey of the KRAS target, it reads almost like a history of the relentless siege in modern oncology drug discovery. Dr. Wang recalls, "When I was a graduate student, the first generation of KRAS inhibitors entered clinical trials in the 1990s, and they all failed." From attempts targeting its modifying enzymes to inhibiting its downstream pathways, through three generations of exploration over nearly forty years, it wasn't until 2013 when scientists identified the crucial "Switch II" pocket that a theoretical possibility for direct inhibition was opened.

"KRAS was the first tumor-related gene discovered by scientists; the term 'oncogene' actually emerged because of it," Dr. Wang points out, noting its complexity far exceeds that of EGFR. Even with the successful launch of KRAS G12C inhibitors in 2022, only the easiest mutation subtype had been conquered, accounting for just about 4% of lung cancer patients and a mere 1% in pancreatic cancer.

Pan-KRAS inhibitors, however, aim at a market of a completely different magnitude, targeting the 23%-25% of solid tumor patients harboring KRAS mutations. "The success of G12C inhibitors technically opened a window, providing an excellent foundation for subsequent research into Pan-KRAS inhibitors," Dr. Wang concludes. Progressing from the easier to the more difficult targets step by step is the typical path of scientific breakthroughs.

For Jacobio, the choice of technical pathway is tightly linked to the company's long-term strategy. Dr. Wang notes that over its ten-year history, Jacobio has consistently focused on developing small-molecule drugs for specific targets and achieving global leadership. Now, Jacobio is iterating on this strength by using its small molecules as "warheads" or payloads to develop a new generation of ADC drugs, forming a "dual-pipeline" R&D strategy.

"Our pipeline is exceptionally deep in two signaling pathways: KRAS and CDK," Dr. Wang states with pride. "Within the KRAS pathway, we are one of the companies with the deepest and broadest global portfolio." This focus and depth are the core of Jacobio's differentiation in fierce competition.

The evolution of technical barriers also reflects industry trends. Dr. Wang analyzes that the technical threshold for antibody-based drugs is currently lowering, while that for small molecules is rising. "Technological advancements have made developing large molecules easier; there are numerous small companies in China capable of early-stage antibody screening. However, small-molecule synthesis requires profound chemical expertise and patience, which is precisely our advantage."

Looking ahead, Dr. Wang soberly recognizes that even if the first generation of Pan-KRAS inhibitors successfully reaches the market, it is only the beginning of a long journey. "The first generation may need to address issues like drug resistance, safety window... This path is still very long, possibly requiring another 20 years, with continuously iterated products emerging." This long-term perspective is the source of resilience needed to navigate cyclical fluctuations.

This collaboration with AstraZeneca breaks away from the conventional model for China's innovative biotech firms, which typically involves "licensing out ex-China rights while retaining rights for China." It pioneers a new paradigm of co-development within the Chinese market, a decision rooted in a deeper strategic calculus of partnership value.

"The agreement has just been signed, and detailed development plans are pending discussions between the joint teams," Dr. Wang stated. The core rationale for choosing AstraZeneca lies in the scale of its global resource commitment and the synergies with its extensive oncology pipeline. Oncology contributes to nearly half of AstraZeneca's revenue, with an annual growth rate of around 20%. Its rich internal portfolio (including immuno-therapies, ADCs, and targeted therapies) creates significant potential for combination therapies.

"Future competition hinges on global development capability and commercialization. Front-line treatments must involve combination therapies, and combining with internal pipeline assets is far more feasible than partnering with another company's products," Dr. Wang highlighted, emphasizing the strategic necessity of partnering with a large pharmaceutical company. Using PD-1 as an example, he noted, "MSD can secure approvals for 30 indications, achieving annual sales of $25-30 billion. If you only pursue a few indications, you might not even reach $10 billion."

Addressing market perceptions that the upfront payment might seem "on the lower side," Dr. Wang provided an industry benchmark. He pointed out that between 2024-2025, China's major out-licensing deals have largely concentrated in the bispecific antibody or ADC fields with existing Phase II/III data. For a small-molecule oncology asset at the Phase I clinical stage, this deal represents the largest global out-licensing transaction by total value. Historically, an upfront payment constituting 3%-8% of the total deal value is considered a reasonable range. The 5% proportion in this deal is "above the median" within that range.

The collaboration also influences the clinical development timeline. Originally planned for release at an academic conference next year, the Phase I clinical data may see adjustments as it now requires "joint confirmation by both parties." However, Dr. Wang clearly stated that the partnership will significantly accelerate global development. "With AstraZeneca taking the lead, we can advance studies in multiple indications (lung cancer, colorectal cancer, pancreatic cancer) concurrently in both first-line and second-line settings—a feat difficult to achieve alone."

The specific division of labor exemplifies complementary strengths. Dr. Wang explained that since all preclinical research was completed by Jacobio, the company primarily provides technical support regarding pharmacological mechanisms. Oversight of overseas clinical development rests with AstraZeneca. "Our deep understanding of the target is highly valuable for clinical protocol design, such as patient population selection and dosing regimens," he added.

For development in the Chinese market, a model with Jacobio leading and both parties collaborating has been adopted. "For some trials, we may directly utilize global data to support a regulatory submission in China. Others may require trials specifically designed for the Chinese population," Dr. Wang noted. This flexible and pragmatic approach aims to maximize development efficiency while meeting regulatory requirements.

Although commercialization plans are not fully detailed, the framework is clear. Dr. Wang pointed out that AstraZeneca, as the multinational pharmaceutical company with the highest market share in the Asia-Pacific region, possesses a commercial network that reaches deep into China's county-level markets. "We will commercialize the product in China together with our partner in the future," he said.

This deal is not Jacobio's first partnership. The company has previously collaborated with firms like Merck. Dr. Wang believes this strategy of "out-licensing + co-development" is becoming a core part of Jacobio's approach. "This is the norm in the global pharmaceutical industry. In the U.S., a mature ecosystem has formed where biotechs handle early-stage work and big pharma takes on late-stage development and commercialization," he remarked.

Dr. Wang also reflected on the journey of Chinese biotechs integrating into the global ecosystem: "Before 2020, Chinese biotech companies lacked the capability to embed themselves into this global chain; we were operating in our own bubble." It wasn't until after 2020 that a growing number of licensing deals emerged. "When we signed with AbbVie in 2020, a $1 billion deal was considered very large. Now, $1 billion deals are no longer rare."

He also offered a positive assessment of the commercialization partnership with Allist Pharmaceuticals for the KRAS G12C product. "Allist is exceptionally focused on the lung cancer field, and their team's commitment and resource investment are substantial," Dr. Wang said. Because Allist's current pipeline is concentrated, their dedication to the G12C product may even exceed that of larger companies with diversified portfolios.

Retaining global rights remains part of Jacobio's long-term business strategy. Dr. Wang revealed that global rights for the KRAS G12C inhibitor are still held by Jacobio, and Jacobio is in communication with regulatory authorities in Europe and the U.S., seeking opportunities to initiate registration-focused clinical trials overseas. This "regional and model-specific" partnership strategy demonstrates Jacobio's flexible business acumen.

Dr. Wang concluded: "Chinese biopharmaceutical companies can no longer pursue a 'large and comprehensive' path. You must establish deep expertise in a specific niche and aim to become the best in the world at it—that is the source of long-term value." The collaboration with AstraZeneca is a crucial step in translating specialized depth into commercial success.

The apparent disconnect between Jacobio Pharma's stock performance and the market's enthusiasm for its landmark deal has sparked discussions about the shifting valuation logic for innovative biotech companies. Dr. Wang Yinxiang attributed the complexity in the secondary market to multiple overlapping factors: the short history and relative immaturity of Hong Kong's Chapter 18A listing regime; a shift in dominant investors from long-term-focused U.S. dollar funds to northbound investments, which tends to prioritize short-term trading; the fact that the sector has already rebounded several-fold this year, leading to year-end profit-taking pressure; and the typically thin trading volumes during the Christmas and New Year holiday period.

"We anticipated this and are not surprised," Dr. Wang emphasized. As a research-driven company, "we cannot let the secondary market dictate our pace. We must focus on and excel in our R&D work."

Jacobio's confidence is demonstrated through action: the Chairman and parties acting in concert have increased their holdings by nearly HKD 100 million this year, making it one of the largest executive share purchases in the 18A sector.

When asked whether "the worst is over," Dr. Wang offered a cautious yet macro-oriented outlook. "Looking at the seven years from the launch of the 18A rules in 2018 until now, the most difficult three-year period from mid-2021 to late 2024/early 2025 is indeed behind us." The future remains complex, but he believes the trajectory is "improving."

Deep-seated reforms in the healthcare payment system are seen as a long-term positive. Dr. Wang specifically highlighted the inaugural launch of China's commercial health insurance reimbursement drug list as a significant starting point. This represents not only an enhancement of payment capacity but also a broadening of the pathway for realizing the value of innovative drugs.

The role of Chinese innovative biotechs within the global ecosystem is also evolving. Dr. Wang reflected that before 2020, Chinese biotechs were not integrated into the global chain. While collaborations have increased since 2020, "China still lacks companies capable of competing in the global market." He observes that companies like BeOne Medicines have begun independently exploring global markets. "In the future, more companies will start with licensing deals and gradually progress towards independent globalization. The ecosystem will continue to improve."

Jacobio's own strategy focuses on achieving "technology depth." Dr. Wang stated with pride that in signaling pathways like KRAS, "we are among the companies with the deepest and broadest global pipeline. Chinese biopharmaceutical companies can no longer pursue a 'large and comprehensive' model. They must achieve global leadership in specific, specialized fields. That is the source of long-term value."

Addressing market questions about whether "all commercialization will be handed over to partners," Dr. Wang provided a more fundamental perspective. "All commercialization requires partners. There is no company that doesn't need partners." Using multinational corporations (MNCs) as an example, he noted that even such giants rely on primary and secondary distributor networks and need local partners in county-level markets.

"Collaboration is highly complex. Some companies only operate in tier-1 cities and hand over tier-2 and tier-3 markets to partners," Dr. Wang pointed out. While Jacobio is not yet at the stage of detailing commercial plans, the strategic framework is clear: to maximize product market coverage by leveraging partners' channel advantages. Specific commercialization details will be refined gradually after the framework agreement is in place.

This flexible approach may be a sign of the maturation of China's innovative biotech sector: no longer rigidly adhering to a single model but, anchored by technology, flexibly seeking the optimal path to maximize value within the global industry chain.

From a macro perspective, Dr. Wang sees positive signals at the policy level. "China is stimulating domestic demand, and healthcare represents one of the largest areas for potential investment." He cited recent statements from the State Council of the People's Republic of China and the Central Economic Work Conference, viewing them as positive guidance for the biopharmaceutical industry.

Statistics from Nature magazine offer a third-party validation of Jacobio's industry standing—the company is among those with the highest number of programs targeting the KRAS pathway globally. Such focus and depth are particularly valuable in a market environment often chasing "hot trends."

Dr. Wang concluded by emphasizing that all milestone payments from the collaboration will be allocated to R&D investment. "R&D expenses account for over 90% of Jacobio's expenditures. These funds will be allocated according to project progress." This sustained, high-intensity investment in R&D is the fundamental guarantee for maintaining technological leadership.

Regarding the industry's future, Dr. Wang maintains cautious optimism: "Barring major macro-level disruptions, the worst period should be over. If the macro environment remains favorable, it will undoubtedly get better." This confidence stems from both his reading of industry trends and Jacobio's solid technological foundation and clear strategic path.