Daiwa has issued a research report stating that Hengrui Pharma (01276) has reached a licensing agreement with Novo Nordisk for HRS-1596, with a total transaction 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 firm considers this out-licensing deal impressive for several 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. At the same time, both the total transaction value and the upfront payment are attractive.

The firm believes that Novo Nordisk's recognition reflects its confidence in the potential of Hengrui's independently developed, once-weekly oral HRS-1596. Once-weekly oral administration is a key trend in the global development of next-generation GLP-1 drugs.

The firm also believes that this transaction highlights Hengrui's R&D strength in developing globally competitive GLP-1 drugs.