In-Depth Analysis of the Differentiated Advantages of Lepu Biopharma's "IO+ADC" Combination Strategy

Based on the latest collected market data and research materials, I will prepare an in-depth analysis report on the differentiated advantages of Lepu Biopharma’s “IO+ADC” combination strategy in the red-sea HER2 ADC market.

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The HER2 ADC sector is rapidly shifting from a “blue ocean” to a “red ocean”. With AstraZeneca/Daiichi Sankyo’s Enhertu (Trastuzumab Deruxtecan) continuing to advance to earlier-line indications, this track is approaching the final round, and the industry is likely to enter a fierce knockout stage [1].

From the perspective of competitive landscape, major domestic players have formed clear strategic divisions:

Company	Core Product	Differentiation Strategy	Indication Layout
RemeGen	Disitamab Vedotin	Avoid Direct Competition (Tian Ji’s Horse Racing Strategy)	Gastric cancer, urothelial carcinoma, breast cancer liver metastasis
Kelun Biotech	Batuzotuzumab (A166)	Replicate Enhertu’s Path	Second-line HER2+ breast cancer (approved)
BrightGene	T-Bren (BL-M07D1)	Direct Confrontation	First-line breast cancer, adjuvant/neoadjuvant therapy
Hengrui Medicine	SHR-A1811 (Ruiqang Trastuzumab)	Surround the Cities from the Countryside	Multi-cancer layout including NSCLC
Lepu Biopharma	MRG002	IO+ADC Combination Ecosystem	Urothelial carcinoma, breast cancer, etc.

Enhertu has established strong market barriers:

• Indication Coverage
  : Advancing from second-line and later-line treatment for HER2+ breast cancer to first-line treatment, and currently making progress in adjuvant and neoadjuvant therapy fields [1]
• Clinical Data Advantages
  : Demonstrated “efficacy-dominating” clinical data in multiple pivotal Phase III studies
• Global Layout
  : Approved for marketing in major markets including China, the US, Europe, and Japan, establishing first-mover advantage

Facing such a “boss-level” competitor, the single-product strategy of domestic ADC enterprises is under enormous pressure.

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Although Lepu Biopharma is often labeled as an “ADC leader”, an in-depth analysis of its strategic layout reveals that the company’s core competitiveness lies not in a single ADC drug, but in the construction of a

[2].

From a revenue logic perspective, the sales growth of Putilizumab (Lepu Biopharma’s self-developed PD-1 inhibitor) is the core revenue driver for Lepu Biopharma. The core value of multiple ADC drugs including MRG002 is to build a solid competitive moat for the PD-1 drug through combination regimens.

Lepu Biopharma has built a multi-level “IO+” combination therapy matrix [2][3]:

• “Putilizumab + MRG002 (HER2 ADC)”
• “Putilizumab + MRG003 (EGFR ADC)”

• “Putilizumab + CG0070 (Oncolytic Virus)”

This combination layout forms a differentiated treatment solution system, enabling Lepu Biopharma to open up a new battlefield beyond the competition of single ADC drugs.

Lepu Biopharma’s ADC pipeline has clear strategic divisions:

Product	Target	Monotherapy Positioning	Combination Value
MRG002	HER2	Niche scenario of breast cancer liver metastasis	Enhance the efficacy of PD-1 in solid tumors
MRG003	EGFR	The first domestically developed EGFR-ADC in China to be approved imminently	Break through immunotherapy-resistant populations
CMG901	Claudin 18.2	The world’s most advanced Claudin 18.2 ADC	Breakthrough in gastric cancer
MRG004	TF	The most advanced domestically developed TF-ADC	Refractory tumors such as pancreatic cancer
MRG006A	GPC3	The first domestically developed GPC3 ADC to enter clinical trials	Fields such as liver cancer

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At the 2025 ESMO Congress, Lepu Biopharma released long-term follow-up results of a Phase II study [3]:

• 30 patients with recurrent/metastatic nasopharyngeal carcinoma (R/M-NPC) who previously failed immunotherapy and platinum-based therapy
• 96.7% (29/30) had previously received PD-(L)1 therapy
• 30% (9/30) had received EGFR monoclonal antibody therapy

Metric	Result	Industry Significance
Confirmed ORR	73.3%	Highest in similar studies
DCR	93.3%	Significantly better than historical data
Median PFS	10.9 months	Longest in similar studies
Median DoR	12.1 months	Durable response
12-month OS Rate	92.8%	Trend of long-term survival benefit
18-month OS Rate	85.7%	Preliminary indication of OS improvement

Achieving such efficacy in a drug-resistant population where 96.7% of patients had previously received PD-(L)1 therapy demonstrates the unique potential of MRG003 combined with Putilizumab in breaking through immunotherapy resistance and EGFR pathway resistance.

The high-dose treatment group (DL2) showed encouraging efficacy:

• ORR: 60%
• DCR: 100%
• 12-month DoR Rate: 100%
  —— All patients who achieved response remained in continuous response at the data cutoff [3]

Clinical data from a study involving 43 urothelial carcinoma patients showed [2]:

Metric	Result
Investigator-assessed ORR	55%
CR	8%
DCR	89%
DoR (patients with complete response)	>9.5 months

The baseline characteristics of this cohort are more challenging: 67.4% are advanced patients who previously received 2 or more lines of treatment, and 81.4% have received PD-(L)1 inhibitors (i.e., immunotherapy-experienced population), which confirms the clinical value of the combination regimen in refractory populations.

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Compared with the strategies of other competitors, Lepu Biopharma has chosen a completely different competitive path:

Competitor Strategy	Lepu Biopharma Strategy
Directly challenge Enhertu (BrightGene)	Break through drug-resistant bottlenecks via combination strategy
Focus on large indication of breast cancer (Kelun Biotech)	Cover multiple cancers with combination therapies
Deeply cultivate a single target (RemeGen)	Multi-target ADC+IO ecosystem
Independent global advancement (EOC Pharma)	Maximize synergistic effects

The strategic positioning of Lepu Biopharma’s MRG002 is not to pursue single-product sales growth, but to act as an “efficacy-enhancing partner” to further amplify the clinical value and market competitiveness of Putilizumab [2]. In the current context where competition in the HER2 ADC monotherapy track is becoming a red sea, this combination layout with “IO as the core and ADC as the auxiliary” is a differentiated survival strategy to avoid direct confrontation.

The synergistic effect of MRG003 and Putilizumab has a clear biological basis [3]:

• MRG003
  : Achieve direct killing of tumor cells through precise delivery of cytotoxic drugs
• Putilizumab
  : Enhance the body’s immune response by removing immunosuppression and reactivating T cell activity
• Synergistic Effect
  : The two act on different pathways of tumor treatment respectively, achieving a dual effect of “internal and external attack”, forming a “1+1>2” synergistic effect, and bringing a deeper and more durable anti-tumor response

Lepu Biopharma has established a significant first-mover advantage in the field of “IO+ADC” combination therapy:

1. MRG003’s Leading Progress
   : BLA application has been submitted, making it the first domestically developed EGFR-ADC in China to apply for marketing [4]
2. Regulatory Certifications
   : MRG003 for nasopharyngeal carcinoma has successively received FDA’s Orphan Drug Designation, Fast Track Designation, and Breakthrough Therapy Designation
3. Clinical Data Advantages
   : It is one of the few regimens with clear combination efficacy data, while most enterprises are still in the layout stage

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Lepu Biopharma’s commercialization logic is clear [4]:

• Putilizumab
  was commercialized in 2022, and continues to expand new indications through combination with ADC drugs to increase revenue
• The core value of
  ADC drugs
  is to build a competitive moat for PD-1 drugs, rather than single-product sales growth
• Actively seek BD collaborations
  to amplify the commercial value of the pipeline (e.g., CMG901 has successfully out-licensed overseas)

According to Pacific Securities’ forecast, Lepu Biopharma’s revenue will show rapid growth:

Year	Revenue (RMB 100 million)	YoY Growth	Main Driver
2024E	3.06	-	Sales growth of Putilizumab
2025E	5.04	65%	Approval of MRG003 + growth of Putilizumab
2026E	8.70	73%	Harvest period of ADC pipeline
2027E	16.18	86%	Launch of multiple products
2028E	28.67	77%	Synergistic effect of combination therapies

Product	2025E	2026E	2027E	2028E
Putilizumab	3.74	5.32	6.43	8.15
MRG003	1.92	5.83	11.23	13.47
MRG002	0.36	1.80	2.73	3.86
CMG901 (Revenue Share)	0.12	0.40	1.49	2.29
CG0070	2.00	4.21	6.64	8.37
MRG004A	-	1.94	4.70	8.43
Total	4.04	7.60	16.18	28.67

According to Pacific Securities’ valuation model [4]:

• Discounted Cash Flow (DCF) Valuation Method
  : Corresponding market capitalization of HK$10.08 billion
• Pipeline Peak Sales Multiple Method
  : Corresponding market capitalization of HK$11.41 billion

Initiates coverage with a “Buy” rating.

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• R&D progress of drug candidates may fall short of expectations
• The safety of combination therapies requires larger-scale clinical verification
• Technology platforms may face challenges of updating and iteration

• Global giants such as Enhertu continue to squeeze market space
• Intensified competition among domestic ADC enterprises, risk of price wars
• Combination strategy may be imitated by competitors

• Uncertainty in the sales growth rate of Putilizumab
• BD collaboration progress may fall short of expectations
• Medical insurance negotiations may affect product pricing and profitability

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Lepu Biopharma’s differentiated advantages in the red-sea HER2 ADC market are mainly reflected in the following aspects:

1. Differentiated Strategic Positioning
   : Break away from single ADC drug competition and build an “IO+ADC” combination therapy ecosystem
2. Differentiated Clinical Data
   : Show breakthrough efficacy in drug-resistant populations, filling clinical gaps
3. Differentiated Pipeline Synergy
   : Multi-target ADCs form synergistic effects with PD-1 to amplify overall value
4. Differentiated First-Mover Advantage
   : MRG003 is expected to become the first domestically approved EGFR-ADC in China

Lepu Biopharma has the following investment highlights:

• High Certainty of Performance Growth
  : Putilizumab continues to grow in sales, and the ADC pipeline enters the harvest period
• Large Valuation Upside Potential
  : Multiple drugs with FIC potential are in R&D, driven by both commercialization and BD
• Clear Differentiated Competitive Advantages
  : The “IO+ADC” strategy avoids direct confrontation and builds a unique ecological moat

It is recommended to pay attention to catalysts such as the approval progress of Lepu Biopharma’s ADC pipeline, updates of clinical data of combination therapies, and progress of BD collaborations.

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[1] Jinduan Research Institute - “HER2 ADC Market Shrinks, Domestic Players: Live or Die?” (https://news.pedaily.cn/202601/559755.shtml)

[2] Jinduan Research Institute - “HER2 ADC Market Shrinks, Domestic Players: Live or Die?” Tencent News Version (https://news.qq.com/rain/a/20260112A01DTT00)

[3] Lepu Biopharma Official Website - “ESMO 2025 | Lepu Biopharma ‘Launches Three Arrows’ to Target the Golden Track of ADC+IO” (https://www.lepubiopharma.com/joindetail/220.html)

[4] Pacific Securities - “In-Depth Report on Lepu Biopharma: Commercialization Shows Initial Results, ADC Pipeline Enters Harvest Period” (https://pdf.dfcfw.com/pdf/H3_AP202412231641399207_1.pdf)

[5] Sina Finance - “2025 Biopharmaceuticals: Let True Innovation Receive Deserved Rewards” (https://finance.sina.com.cn/stock/relnews/hk/2026-01-05/doc-inhffwpp2202348.shtml)