China Galaxy Securities: Cell gene therapy has entered the stage of result realization, and CXO is expected to benefit first

According to the report released by China Galaxy Securities, cell gene therapy (CGT) is currently the most promising development direction in the biopharmaceutical field. The global industry is now in the period of realizing CGT research and development results, with a rich pipeline of ongoing research both domestically and internationally, and the industry's prosperity continues to improve. In terms of research and innovation, attention should be paid to companies with high pipeline maturity and those with good clinical trial data and breakthrough progress. In addition, the outsourcing ratio of CGT is relatively high, and the market concentration is high, with CXO expected to benefit first. The main points of China Galaxy Securities are as follows: Cell gene therapy (CGT) is currently the most promising development direction in the biopharmaceutical field and has entered the results realization period. CGT is a new generation of precision therapy following small molecule and large molecule targeted therapies, leading a new wave in biopharmaceuticals, specifically divided into cell therapy and gene therapy. CGT has good drug efficacy and high clinical success rates, treating diseases at their source, providing long-term effects from a single treatment, and offering new options for difficult-to-treat diseases. Various products such as CAR-T, stem cells, TCR-T, and TIL have been successively launched in recent years. There is a rich pipeline of ongoing research both domestically and internationally, and the industry's prosperity continues to improve, focusing on key track investment opportunities. The CGT field has frequent transactions and high investment and financing activity, with trends consistent between China and the United States. Specifically: 1) CAR-T cell therapy is the most groundbreaking therapy in the field of tumor immunotherapy since 2013, with 6 products successfully approved for market launch in China, and several potential products are expected to be launched soon. The world's first approved TCR-T cell therapy is expected to be launched in 2024, with an ORR of 43% for advanced synovial sarcoma. The main listed companies in China focusing on TCR-T cells include XPH and NEPG, with TAEST16001 injection becoming China's first TCR-T drug included in breakthrough therapy categories. Phase II interim results show good safety and tolerability, with an ORR of 50% and mPFS of 5.9 months. Stem cell therapy is an important branch of regenerative medicine, with treatment areas expanding from leukemia and malignant hematological tumors to anti-aging, rare diseases, cartilage injuries, and cardiovascular diseases. Since 2024, both China and the U.S. have seen the first approvals for mesenchymal stem cell (MSC) therapies. Rare diseases, genetic diseases, and malignant tumors with clear pathogenic mechanisms are the main indications for gene therapy. Ultragenyx Pharmaceutical submitted a Biologics License Application (BLA) to the U.S. FDA in December 2024 for the treatment of patients with Mucopolysaccharidosis Type IIIA. The gene therapy drug NL003 from Nossland has had its market application accepted and is expected to be launched in 2025. The outsourcing ratio of CGT is relatively high, and the market concentration is high, with CXO expected to benefit first. The complex technical mechanisms, high difficulty in process development, stringent legal and regulatory oversight, and lack of industrialization experience and platform technology in the cell and gene therapy industry have led to a higher demand for CXO compared to traditional pharmaceuticals. According to J.P. Morgan, the outsourcing penetration rate for gene therapy exceeds 65%, far surpassing the 35% for traditional biologics Risk Warning The risk of insufficient growth in pharmaceutical consumption capacity; the risk of innovative drug medical insurance payment policies falling short of expectations; the risk of global order shifts due to geopolitical factors; the risk of centralized procurement or fee reductions exceeding market expectations