Kelun Pharmaceutical
Chinese pharma group selling hospital drugs, with an oncology antibody-drug-conjugate arm tied to Merck.
The call
Kelun's hospital-supply business funds the bills while its oncology arm burns cash waiting on Merck's trial readouts and a patent fight with Daiichi Sankyo to settle.
Kelun Pharmaceutical makes hospital medicines and injectable drugs in China, plus develops cancer treatments through its biotech unit. The company is not easy to replace because it has regulatory approvals, a major deal with Merck, and a proprietary technology platform. However, many rivals make similar cancer drugs: Hengrui and RemeGen are Chinese competitors doing the same thing, while companies like Daiichi Sankyo and Pfizer already sell approved versions worldwide. The biggest wildcard is whether Kelun can use its technology outside China without getting sued over patents controlled by Daiichi Sankyo, which could make or break its global expansion plans.
Why
01
AI pressure: None apparent. Cancer drug approvals ride on clinical trial data and regulators, not on AI products, so no AI tool is displacing Kelun's sales today. Could AI do the core job? Unlikely.
02
Bigger players: Daiichi Sankyo/AstraZeneca (Enhertu, Dato-DXd), Pfizer/Seagen, and domestic rival Hengrui Pharmaceutical. Enhertu and other approved ADCs already sell in the same cancer markets, and Daiichi Sankyo's payload patents could block Kelun's drugs outside China. Could a giant copy it? No, they are blocked.
03
What protects it. Four approved oncology products plus a Merck licensing pact worth over $12B in potential milestones if trials keep reading out positive.
What would change this call
Kelun-Biotech H1 2026 earnings release on August 17, 2026. Shows whether product revenue is closing the gap with milestone-dependent income.
Whether Kelun-Biotech raises further equity within 12 months of the July 2026 HK$2.7B placement. Repeated dilution would indicate the biotech unit still cannot self-fund from operations.
Whether Kelun-Biotech raises further equity within 12 months of the July 2026 HK$2.7B placement. Repeated dilution would indicate the biotech unit still cannot self-fund from operations.
Key numbers
- Kelun-Biotech FY2025 net loss widened 43% to RMB 382M
- Merck deals with Kelun could total over $12B in milestones
- Kelun-Biotech H1 2025 revenue fell 31% to RMB 950.4M
Named risks
- FTO patent dispute with Daiichi Sankyo could block ex-China commercialization of DXd-type ADCs.
- Recurring dilutive equity placements to fund cash burn, HK$2.7B raise July 2026.
- Kelun-Biotech net loss widened 43.2% YoY to RMB 381.97M in FY2025.
- Revenue heavily dependent on lumpy milestone payments, H1 2025 revenue fell 31% YoY.
- Crowded domestic ADC field with Hengrui, RemeGen, Innovent and Duality Bio eroding differentiation.
Rivals, as read in July 2026
| Rival | Direction | Evidence |
|---|---|---|
| Hengrui Pharmaceutical | contesting | 31 pipeline ADCs, one approved in China 2025, called most credible Chinese ADC challenger as of 2026-05-09 |
| Daiichi Sankyo/AstraZeneca | losing to | Enhertu and Dato-DXd already marketed globally; holds patent estate posing FTO risk to Kelun ADCs, as of 2026-05-09 |
| Pfizer/Seagen, Roche/Genentech, Gilead, AbbVie/ImmunoGen | losing to | Collectively hold 10+ marketed ADCs versus Kelun-Biotech's 4 approved projects as of 2025-12-31 |
| RemeGen | contesting | One approved ADC and 10+ pipeline programs, presented 20+ oncology programs at ASCO 2025 |
| Innovent Biologics | contesting | Competing in China ADC and bispecific space per ASCO 2025 recap |
Questions people ask
- Is Kelun Pharmaceutical profitable in 2026?
- Parent Kelun Pharma (002422.SZ) reported TTM earnings of CN¥1.57 billion on CN¥18.38 billion revenue as of July 26, 2026. However its oncology subsidiary Kelun-Biotech (06990.HK) posted a widening net loss of RMB 381.97 million for FY2025, up 43.2% year over year.
- Who owns Kelun-Biotech and does Merck have a stake?
- Kelun Pharma (002422.SZ) is the controlling shareholder of Kelun-Biotech (06990.HK). Merck also took an equity investment in Kelun-Biotech as part of its December 2022 licensing deal, alongside cumulative licensing agreements potentially worth over $12 billion in milestones as of May 22, 2026.
- Who is Kelun-Biotech's biggest competitor?
- Domestically, Hengrui Pharmaceutical is the most credible Chinese ADC challenger with 31 pipeline ADCs and one approved product in 2025. Globally, Daiichi Sankyo/AstraZeneca, Pfizer/Seagen, Roche and Gilead already have 10+ marketed ADCs, as of a May 9, 2026 landscape analysis.
- Could AI replace Kelun-Biotech's drug development work?
- No. Kelun-Biotech's value rests on physical manufacturing, regulated NMPA/FDA clinical trials, and its proprietary OptiDC ADC conjugation platform plus patent-protected chemistry, none of which generative AI can substitute; as of FY2025 it had 4 approved projects covering 8 indications.
- Is it financially risky to join Kelun-Biotech right now?
- Kelun-Biotech raised HK$2.7 billion via a dilutive H-share placement completed July 10, 2026 at an 8.5% discount, which triggered an 8.2% share-price drop on disclosure, signaling ongoing cash burn despite a workforce of 1,837 employees as of March 2025.
- Did Kelun-Biotech's cancer drug sac-TMT succeed in trials?
- Yes. Sac-TMT (SKB264/MK-2870), partnered with Merck, showed positive Phase 3 results in endometrial cancer reported May 18, 2026, and a 65% reduction in progression or death risk versus Keytruda alone in first-line NSCLC at ASCO 2026.
Timeline
- 2026-07-10Kelun-Biotech completed HK$2.7B H-share placement at HK$470.20/share via Goldman Sachs, Citigroup, JP Morgan
- 2026-07-07Kelun-Biotech shares fell 8.2% on disclosure of planned HK$2.7B placement
- 2026-06-01Kelun-Biotech received ~RMB 603M milestone payment from MediLink
- 2026-05-22Sac-TMT showed 65% risk reduction vs Keytruda alone in first-line NSCLC at ASCO
- 2026-05-18Sac-TMT hit positive Phase 3 endometrial cancer results in Merck global trial
- 2026-03-25NMPA IND approval granted for SKB103, Kelun-Biotech's second bispecific ADC
- 2026-03-23Kelun-Biotech FY2025 results: net loss widened 43.2% YoY to RMB 381.97M
- 2025-07Kelun Pharma acquired Jiangsu Huashitong
- 2022-12-22Merck signed licensing deal with Kelun worth up to $9.3B plus $175M upfront
- 2010-06Kelun Pharma listed on Shenzhen Stock Exchange as 002422.SZ
Revision history
26 July 2026
First assessed. Defensible for now. The text above is fixed as of this date and is not edited afterwards.
In the same band
Sources
- Sichuan Kelun Pharmaceutical 2026 Company Profile (2026-07-26)
- Sichuan Kelun Pharmaceutical (XSEC:002422) (2026-07-07)
- KELUN-BIOTECH ANNOUNCED 2025 ANNUAL RESULTS (2026-03-23)
- Sichuan Kelun-Biotech Biopharmaceutical Investor Relations, Earnings Summary & Outlook (2026-06-24)
- Merck Expands ADC Footprint with $9.3B Kelun Licensing Deal (2022-12-22)
- Merck snaps up cancer drug from China's Kelun in $1.4bn deal (2022-05-17)
- Merck-Kelun ADC's triple wins; Fierce Pharma Asia (2026-05-22)
- Sichuan Kelun-Biotech Seeks HK$2.7 Billion via Share Placement (2026-07-07)
- Merck ADC, licensed from China, hits mark in first big global trial (2026-05-18)
- CB Insights company page (2026-03-25)
- Biospace (2026-03-24)
- Kirkland Assists Kelun-Biotech on its HK$2.7 Billion H-Share Placing (2026-07-10)