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How Chi­na turned the ta­bles on bio­phar­ma's glob­al deal­mak­ing

Fen­lai Tan still gets chills think­ing about the dark­est day of his life.

Fen­lai Tan

Three out of eight lung can­cer pa­tients who re­ceived a ty­ro­sine ki­nase in­hibitor de­vel­oped by his com­pa­ny, Bet­ta Phar­ma, died in the span of a month. Tan, the chief med­ical of­fi­cer, was sum­moned to Peking Union Med­ical Col­lege Hos­pi­tal, where the head of the clin­i­cal tri­al de­part­ment told him that the tri­al in­ves­ti­ga­tors would be con­duct­ing an au­top­sy to see if the pa­tients had died of the dis­ease — they were all very sick by the time they en­rolled — or of in­ter­sti­tial lung dis­ease, a dead­ly side ef­fect tied to the TKI class that’s been re­port­ed in Japan.

De­ject­ed and anx­ious, Tan re­turned to Bet­ta’s of­fice in Bei­jing. Yinx­i­ang Wang, the co-founder and gen­er­al man­ag­er, was wait­ing for him. Wang didn’t want to know what was said at the meet­ing; why don’t they go have din­ner to­geth­er with their col­league Xi­ao­jie Wang to take their minds off of it?

“We had like five bot­tles of liquor,” Tan re­counts.

Yinx­i­ang Wang

Pa­tient deaths are al­ways a dev­as­tat­ing blow in any tri­al, but the stakes were es­pe­cial­ly high for Bet­ta that night in 2007. Four years af­ter Yinx­i­ang Wang and Liem­ing Ding first start­ed the com­pa­ny, Tan — who had be­friend­ed them while study­ing to­geth­er at the Uni­ver­si­ty of Arkansas for Med­ical Sci­ences in Lit­tle Rock and of­fered moral sup­port for the start­up from afar — fi­nal­ly joined them in Hangzhou to lead the clin­i­cal de­vel­op­ment. Af­ter mul­ti­ple in­vestors turned them down, call­ing them crazy, they had bare­ly scraped to­geth­er the mon­ey, from a re­al es­tate com­pa­ny, gov­ern­ment grants and oth­er sources, to start test­ing their on­ly drug, an EGFR-tar­get­ing TKI dubbed ico­tinib, in hu­mans. This tri­al was their one shot.

As he downed the shots of off-brand Mao­tai — the cheap­est they could find — Tan was pre­pared for the worst case sce­nario.

“The tri­al will stop here, the com­pa­ny will stop here, and we go (in­to) bank­rupt­cy,” he re­mem­bers think­ing. “We’ll just pack up and go back to Amer­i­ca to start our post­doc again.”

Liem­ing Ding

In the end, he didn’t have to. The au­top­sies showed that lung can­cer, not ILD, killed the pa­tients. Bet­ta soon re­sumed the Phase I tri­al and sailed through Phase II and Phase III stud­ies all the way to ap­proval in 2011 as Chi­na’s first tar­get­ed ther­a­py.

There have been seis­mic shifts from the Chi­na Tan in­hab­it­ed back then to where he finds him­self to­day. Few Chi­nese com­pa­nies these days, es­pe­cial­ly those stak­ing a claim in first- or best-in-class races, would fear go­ing bank­rupt be­cause of one tri­al set­back. Mon­ey is flow­ing from every di­rec­tion.

The trans­for­ma­tion is in­cred­i­ble not just for its speed and scale, but al­so how many lay­ers and waves were packed in­to a short 20 years.

Ker­ry Blan­chard, an Eli Lil­ly vet who took his first trip to Chi­na in 2003 and now serves as CEO at Ever­est Med­i­cines, breaks the past two decades down, rough­ly, in­to four pe­ri­ods by the role Chi­nese biotechs played in the world: From 2000 to 2007, he saw them most­ly do­ing ac­tiv­i­ties for hire; 2007-2012 was a pe­ri­od of of­fer­ing pack­aged com­modi­ties; 2012 ush­ered in the de­sign­er stage; then in 2017 they be­gan to serve up cus­tomiza­tion.

And we’re on the cusp of a fifth stage.

Pe­ter Lebowitz

“Now in 2021,” says Pe­ter Lebowitz, glob­al on­col­o­gy ther­a­peu­tic area head at J&J’s Janssen, “if we have a tar­get that we like, or a plat­form that we like, and the team doesn’t bring the Chi­nese op­por­tu­ni­ties to me — which they usu­al­ly do — I’m go­ing to say, we need to see if there’s any­thing in Chi­na, right? And what we find is that those com­pa­nies in Chi­na, when we’re go­ing af­ter some­thing, there are al­ways op­por­tu­ni­ties in Chi­na. Al­ways.”

Where­as set­ting up a com­pa­ny in Chi­na for Chi­na was once a bold and rev­o­lu­tion­ary con­cept, many around the coun­try’s biotech ecosys­tem now have a new mantra: “in Chi­na, for the world.”

“It’s been dra­mat­ic,” he says.

Plant­i­ng seeds

In ret­ro­spect, Chi­na’s rise in bio­phar­ma may seem in­evitable: If noth­ing else, the sheer size of the pop­u­la­tion spells a boon for both drug re­search and sales. But the world didn’t al­ways see it that way.

Nisa Le­ung

Be­fore Nisa Le­ung hopped aboard Qim­ing Ven­tures to spear­head its health­care in­vest­ments, the Stan­ford MBA grad start­ed a com­pa­ny called No­vamed to try to dis­trib­ute US ap­proved drugs in Chi­na. De­spite the size of the coun­try, by any met­ric tracked by an Amer­i­can com­pa­ny, the Chi­nese mar­ket was tiny.

“When we wrote to these com­pa­nies in the US, they were like Chi­na, where? Where’s Chi­na? Is it next to Japan?” she re­calls. “I mean, no­body cared about Chi­na.”

Blan­chard, then a “dis­cov­ery guy” at Lil­ly, ini­tial­ly con­sid­ered Chi­na one of the few po­ten­tial places he could lever­age to boost the num­ber of mol­e­cules ready for the clin­ic at a giv­en cost.

“I looked out­side the US in many ge­o­gra­phies,” he says. “And I made sev­er­al bets — I had sites in Sin­ga­pore, I col­lab­o­rat­ed a lot with com­pa­nies in In­dia, a lot with com­pa­nies in Chi­na, try­ing to build what we need­ed.”

Ker­ry Blan­chard

Ac­cord­ing to Blan­chard, Chi­na ul­ti­mate­ly won out be­cause of the grow­ing tal­ent pool: the mass of sci­en­tists, chemists and en­gi­neers grad­u­at­ing from the high­er ed­u­ca­tion sys­tem whom Lil­ly can re­cruit to staff its labs.

Le­ung has her own the­o­ry — name­ly that In­dia’s re­fusal to en­force patent pro­tec­tion (or out­right ea­ger­ness to re­voke those very patents, as was the case with Pfiz­er’s Vi­a­gra) scared Big Phar­ma away. There is al­so a more cap­i­tal­ist ex­pla­na­tion.

“What we found at the end of it, the big ben­e­fit Chi­na pro­vides is the CRO, is the ser­vice be­cause there’s ar­bi­trage of the cost dif­fer­ence, the dis­crep­an­cy,” said Dar­ren Ji, who man­aged R&D and busi­ness de­vel­op­ment for Proc­ter & Gam­ble’s phar­ma­ceu­ti­cals unit in the ear­ly 2000s be­fore start­ing his own com­pa­nies and in­vest­ing with Lil­ly Asia Ven­tures.

Re­gard­less of their mo­ti­va­tions — and each like­ly had their own mix of rea­sons — one by one, Lil­ly, As­traZeneca, Bay­er, Roche, J&J, Glax­o­SmithK­line, No­var­tis and oth­ers be­gan set­ting up shop on the ground, of­ten in Zhangjiang Hi-Tech Park in Shang­hai.

Dar­ren Ji

The multi­na­tion­als were the first cus­tomers for con­tract re­search or­ga­ni­za­tions like WuXi AppTec, hand­ing them mon­ey to build out net­works, pur­chase equip­ment and even­tu­al­ly wade in­to process de­vel­op­ment and man­u­fac­tur­ing. For a time, even biotech star­tups, such as the now-de­funct Shang­hai Ge­nomics, al­so used the mon­ey they earn from ser­vices to sub­si­dize their in­ter­nal drug hunt­ing. (It wasn’t the on­ly mod­el; Bet­ta man­aged to pull in new in­vest­ments, while Shan­dong Re­meGen sur­vived on the sales of tra­di­tion­al Chi­nese med­i­cines.)

But they did more than that. Those Eng­lish-speak­ing of­fices in Zhangjiang Hi-Tech Park be­came a breed­ing ground for the next gen­er­a­tion of biotech work­ers and lead­ers.

Lil­ly, for in­stance, quick­ly came to the re­al­iza­tion that their chemists would leave af­ter six months or a year if they were sim­ply or­dered to syn­the­size a cer­tain com­pound a cer­tain way. To keep them for longer, it as­signed more in­ter­est­ing projects that ex­posed them to new bi­o­log­i­cal as­says and es­tab­lished di­rect lines of con­tact be­tween sci­en­tists in Shang­hai and In­di­anapo­lis.

The do­mes­tic phar­ma­ceu­ti­cal in­dus­try didn’t tap in­to the glob­al pulse “un­til the multi­na­tion­als be­gan to build R&D sites in Chi­na,” ob­serves Min Li, the last head of Glax­o­SmithK­line’s R&D site in Chi­na be­fore it shut­tered. “I think that is some­thing that should not be un­der­stat­ed.”

Stayin’ alive

Chris­t­ian Hogg

Hutchi­son MediPhar­ma is one of the few home­grown biotechs born at the dawn of the mil­len­ni­um that are still alive to­day. Grant­ed, it’s a bit of an out­lier: Bankrolled by well known Hong Kong-based con­glom­er­ate CK Hutchi­son Hold­ings, the ini­tial idea for the com­pa­ny was to bring tra­di­tion­al Chi­nese med­i­cines to the world by screen­ing through the herbs in a sci­en­tif­ic man­ner, pro­fil­ing them and as­sem­bling li­braries of in­for­ma­tion about which ex­act mol­e­cules with­in them were in­fer­ring ther­a­peu­tic ben­e­fits.

So when Hutchi­son wooed Chris­t­ian Hogg, then at P&G, to be­come em­ploy­ee #1, he thought it was a nat­ur­al ex­ten­sion of his ca­reer in con­sumer prod­ucts. The sto­ry around Chi­nese med­i­cine was large­ly what helped Chi-Med (now Hutchmed) pull off an IPO in Lon­don back in 2006, even if the com­pa­ny had start­ed piv­ot­ing to on­col­o­gy drug dis­cov­ery af­ter hit­ting chem­istry, man­u­fac­tur­ing and con­trol hur­dles.

Then came the fi­nan­cial cri­sis.

“That killed off many com­pa­nies,” Hogg says. “We lost 85% of our mar­ket val­ue be­tween 2006 and 2009 be­cause of the fi­nan­cial cri­sis. We were down to sort of $30 mil­lion US mar­ket cap. It was very dif­fi­cult.”

Pearl Huang

For Hutchmed, the crunch time led to col­lab­o­ra­tions with Lil­ly, As­traZeneca, J&J and Nes­tle Health Sci­ence. Lil­ly end­ed up li­cens­ing the VEG­FR in­hibitor fruquin­tinib, while As­traZeneca picked up the MET in­hibitor savoli­tinib.

“As we did those deals, more and more in­vestors built con­fi­dence in us be­cause, you know, if our as­sets were good enough for J&J and As­traZeneca and Lil­ly, they had to be sort of pret­ty sol­id in­no­va­tions,” Hogg says.

Sim­i­lar­ly, deals with Mer­ck helped put BeiGene — then a fresh start­up helmed by John Oyler, who was known in the cir­cle for run­ning the CRO Bio­Duro — on the map.

Ar­bi­trage was still very much in play, even if the cal­cu­la­tions have be­come more so­phis­ti­cat­ed. As Pearl Huang, a co-founder of BeiGene once re­marked to End­points News: “To be hon­est, the plat­form for BeiGene was al­ways the ge­og­ra­phy.” As long as you have ex­perts in drug dis­cov­ery who know how to pick tar­gets and make mol­e­cules, Chi­na was the most cap­i­tal ef­fi­cient place to run a biotech busi­ness.

Jian­min Fang

“The sit­u­a­tion was very unique, be­cause there was a gap in terms of the lev­el of de­vel­op­ment stage of the drug in­dus­try in the US and Chi­na,” says Jian­min Fang, who start­ed the an­ti­body and an­ti­body-drug con­ju­gate play­er Re­meGen in 2008.

In­vestors still took a lot of con­vinc­ing. Le­ung, the VC from Qim­ing Ven­tures, lined up ear­ly in­vestors for Oyler but failed to get her own part­ners on board for the in­vest­ment. A drug dis­cov­ery and de­vel­op­ment com­pa­ny that won’t gen­er­ate rev­enue for at least sev­en or eight years was a tough sell when com­pared side by side with al­ready prof­itable gener­ic mak­ers.

John Oyler

The com­pa­ny that Qim­ing did come around to was Zai Lab, which was found­ed by Hutchmed’s for­mer CSO, Saman­tha Du, to in-li­cense drugs from the US or Eu­rope and tai­lor de­vel­op­ment pro­grams to score speedy Chi­na ap­proval while re­search­ing new can­di­dates in house.

“Zai and oth­ers, they re­al­ly be­came one of the first vir­tu­al mod­els where they can re­ly on a lot of CROs and they don’t need big teams,” Le­ung says.

Qim­ing led Zai’s $30 mil­lion Se­ries A round in 2014. Its cur­rent mar­ket cap on Nas­daq? $9 bil­lion.

‘It’s like a sport’

Still, the gen­er­a­tion of Chi­nese biotech en­tre­pre­neurs who left be­hind promis­ing ca­reers in the US hop­ing to make a dif­fer­ence in their home­land in the 2010s found them­selves fac­ing a dif­fer­ent set of re­stric­tions.

Jing­wu Zang

“The en­vi­ron­ment, the cul­ture, the poli­cies all cen­tered around mak­ing gener­ics,” writes Jing­wu Zang, who first re­turned from Bel­gium to run GSK’s Shang­hai cen­ter and lat­er found­ed I-Mab.

The shift was grad­ual and painstak­ing. By 2013, Qiang Lu — a Bran­deis-ed­u­cat­ed sci­en­tist who held roles at Wyeth and No­var­tis — had helped WuXi open up a bi­o­log­ics busi­ness. Yangtze Riv­er Phar­ma­ceu­ti­cals, then Chi­na’s biggest drug­mak­er by rev­enue, re­cruit­ed him be­cause they were hop­ing to add a new mol­e­c­u­lar en­ti­ty to the mix.

Ex­ecs there, Lu re­calls, had no idea how dif­fer­ent cre­at­ing a new drug would be from gener­ics, how long that would take, or even how to cal­cu­late the re­turn of in­vest­ment.

“I did a lot of ed­u­ca­tion­al stuff there,” he says.

Clin­i­cal and med­ical ex­per­tise were al­so lag­ging, ac­cord­ing to Li, the for­mer GSK ex­ec who suc­ceed­ed Zang. When a drug de­vel­op­er wants to un­der­stand un­met needs in neu­rode­gen­er­a­tive dis­eases, for in­stance, they doesn’t just need the sim­ple an­swer of Alzheimer’s. Where­as when he was at Johns Hop­kins, he could’ve walked down the street to ask a neu­rol­o­gist col­league about Alzheimer’s sub­types, ge­net­ic links for each and po­ten­tial drug­gable tar­gets. Chi­na at the time didn’t have as many clin­i­cians in­volved in that kind of re­search, who could of­fer such col­li­sion of ideas that are cru­cial to break­throughs.

Min Li

“With every great idea, there are prob­a­bly 15, 20, 100 bad ideas that wouldn’t work,” says Li, now al­so the CEO of his own start­up, SciNeu­ro. “Or they wouldn’t work be­cause you didn’t re­al­ly run in­to the right per­son who can tell you there is a way to deal with this, even though you think there’s no way of do­ing it.”

Yet the biggest chal­lenge for com­pa­nies hop­ing to de­sign a drug from scratch and steer it to­ward ap­proval, by far, was still reg­u­la­to­ry.

That was like­ly why no sin­gle per­son was more of­ten cred­it­ed for Chi­na’s bio­phar­ma boom than Jingquan Bi, an eco­nom­i­cal­ly savvy tech­no­crat who be­came di­rec­tor of the Chi­na Food and Drug Ad­min­is­tra­tion in 2015. With­in three years, he cleared out a back­log of gener­ic drug fil­ings, im­ple­ment­ed a self au­dit sys­tem that put pres­sure on com­pa­nies to be hon­est about da­ta qual­i­ty, shaved the av­er­age time for IND re­view from years to months and went on an ag­gres­sive hir­ing spree.

With pri­or­i­ty re­view and oth­er new mea­sures in place, and as Chi­na joined ICH (the in­ter­na­tion­al body gov­ern­ing rules for drug de­vel­op­ment and reg­u­la­tion), the whole sys­tem al­so be­came a lot more trans­par­ent.

“It’s like a sport,” Li says. “If there’s no clear rule, why am I go­ing to play it?”

Fur­ther out­lin­ing the pa­ra­me­ters of the game, Chi­na in­tro­duced the first full re­view to the Na­tion­al Re­im­burse­ment Drug List.

“The first batch of nov­el on­col­o­gy drugs to go on the NRDL were added to the NRDL in late 2017,” Hogg says. “So sud­den­ly, you’ve got Her­ceptin, Avastin, Er­bitux, Su­tent, you’ve got all of these tar­get­ed ther­a­pies that are sud­den­ly on the re­im­burse­ment list.”

If the im­pact wasn’t im­me­di­ate­ly clear, it be­came so in 2018, when the likes of Roche, As­traZeneca, and No­var­tis re­port­ed sub­stan­tial growth in Chi­na de­spite the steep dis­counts they had to make in or­der to get on the NRDL.

That same year, the Hong Kong Stock Ex­change re­formed its rules to al­low pre-rev­enue biotechs to ap­ply for an IPO un­der Chap­ter 18A — open­ing up a new ex­it for pri­vate in­vestors who may want to re­coup their mon­ey be­fore com­pa­nies start ac­tu­al­ly sell­ing drugs.

The pi­o­neer­ing biotechs did the rest. BeiGene and Hutchmed both list­ed on Nas­daq in 2016, with Zai Lab soon join­ing in 2017. Their ever-soar­ing val­u­a­tions (and sub­se­quent mam­moth sec­ondary list­ings in Hong Kong) sent a clear mes­sage to in­vestors about the mon­ey to be made.

Even though can­di­dates orig­i­nat­ing from US or Eu­ro­pean biotech com­pa­nies con­tin­ued to present at­trac­tive op­por­tu­ni­ties — new play­ers con­tin­ue to be formed to this day to tar­get spe­cial­ty needs for de­vel­op­ment and com­mer­cial­iza­tion; both Lian­Bio and Over­land are thriv­ing — push and pull fac­tors of reg­u­la­to­ry re­forms and fi­nan­cial suc­cess­es weaved in­to an ir­re­sistible whirlpool, draw­ing star­tups deep­er and deep­er in­to some form of in­no­va­tion.

Zai Lab, the pi­o­neer of in-li­cens­ing, has al­ways main­tained in-house dis­cov­ery as a key bal­ance to the ex­ter­nal as­sets. Ker­ry Blan­chard’s Ever­est has al­so re­cent­ly set up its own re­search op­er­a­tions, ex­plor­ing every­thing from an­ti­bod­ies to RNA.

“We want to be the whole ball of wax,” he says.

From In­novent to Leg­end

In a sense, In­novent per­fect­ly en­cap­su­lates the sub­tle and fre­quent shifts in the think­ing around Chi­na biotech over the past decade.

Michael Yu

The biotech, found­ed by Michael Yu back in 2011, is mul­ti­ple waves com­pressed in­to one com­pa­ny. First con­cep­tu­al­ized by Fi­deli­ty as a con­tract de­vel­op­ment and man­u­fac­tur­ing or­ga­ni­za­tion spe­cial­iz­ing in bi­o­log­ics, it caught the at­ten­tion of Lil­ly Asia Ven­tures when Lil­ly de­cid­ed it need­ed a lo­cal part­ner that can re­li­ably man­u­fac­ture bi­o­log­ics at a glob­al qual­i­ty stan­dard and fa­cil­i­tate its reg­u­la­to­ry deal­ings in Chi­na.

Af­ter mak­ing an in­vest­ment, though, Lil­ly got in­ter­est­ed in a dis­cov­ery and de­vel­op­ment part­ner­ship.

“We were los­ing mo­men­tum af­ter about two years of ef­fort,” says Blake Sal­is­bury, Lil­ly’s di­rec­tor of cor­po­rate BD at the time. “And then In­novent said, oh, and by the way, we have this pre­clin­i­cal PD-1, and we could put that on the ta­ble.”

Blake Sal­is­bury

That af­ter­thought PD-1 would even­tu­al­ly be­come not just the cen­ter of that deal but the sec­ond home­grown check­point to be ap­proved in Chi­na (where Sal­is­bury notes In­novent has a “com­mer­cial en­gine” in place) and, af­ter some back and forth, a cen­ter­piece of Lil­ly’s promise to shake up drug pric­ing in the US.

Around 2016, when Lil­ly re­struc­tured its BD group, Sal­is­bury wound up get­ting a job as In­novent’s deal­mak­er. Mak­ing that same jump from Lil­ly to the Suzhou biotech two years lat­er was Ker­ry Blan­chard, who served briefly as CSO.

“When I came to In­novent, I think I would say one of the strik­ing things is the fo­cus on speed of de­liv­ery,” he says. “And I would say al­most speed at all cost men­tal­i­ty.”

By that, he clar­i­fies, he doesn’t mean cut­ting cor­ners or do­ing slap­dash, low qual­i­ty work. To be faster than every­body else, the strat­e­gy was to over re­source — put more peo­ple on the projects than what oth­er com­pa­nies would, “be­cause the speed is the com­mod­i­ty.”

The fast fol­low­er ap­proach con­tin­ued to play out in the PD-(L)1 space as EQRx and No­var­tis las­soed in can­di­dates from CStone and BeiGene, re­spec­tive­ly.

But the re­al re­ver­sal in li­cens­ing di­rec­tion, where drugs from Chi­na aren’t just me-too com­peti­tors, came in 2017, when an ob­scure biotech by the name of Nan­jing Leg­end took the podi­um at AS­CO.

Frank Fan

Frank Fan, Leg­end’s CSO, walked up and pre­sent­ed da­ta from a tri­al of its BC­MA CAR-T show­ing a jaw-drop­ping 100% over­all re­sponse rate among mul­ti­ple myelo­ma pa­tients.

Among the crowd was J&J’s head of clin­i­cal de­vel­op­ment hema­to­log­ic ma­lig­nan­cy, who walked up to Fan to raise the pos­si­bil­i­ty of a col­lab­o­ra­tion giv­en J&J’s ex­per­tise in myelo­ma. Less than six months af­ter that ini­tial meet­ing, the phar­ma gi­ant an­nounced it was pay­ing $350 mil­lion up­front to get its hands on the what is now cil­ta-cel.

“Of all the drugs that I’ve done, all the deals that I’ve done — and I’ve done a lot — this was the one where I got the most re­sis­tance,” Lebowitz says.

Skep­ti­cism poured in both with­in the com­pa­ny and from its in­dus­try peers. How could you trust da­ta from an un­known group (as Fan lat­er told End­points) that didn’t even have a web­site? What if they were ma­nip­u­late or worse, made up? Giv­en the low­er stan­dard of care in Chi­na, wouldn’t these pa­tients be less sick and, there­fore, eas­i­er to treat? At a time when there were plen­ty of high-fly­ing US CAR-T play­ers to team up with, which peers at Gilead and Cel­gene did with Kite and Juno, why would J&J go with this? One brash com­ment par­tic­u­lar­ly stuck with Lebowitz: Janssen didn’t do their due dili­gence.

What ul­ti­mate­ly sealed the deal, ac­cord­ing to the ex­ec, were mul­ti­ple trips to Chi­na where J&J vis­it­ed the clin­i­cal tri­al sites, combed through the da­ta, met with the Leg­end team — and heard, in per­son, Fan talk about the mul­ti­ple vari­a­tions his med­ical group had test­ed of its BC­MA CAR-T to tease out the op­ti­mal de­sign, dosage and reg­i­men.

Ying Huang

For Leg­end, team­ing up with J&J wasn’t just about bring­ing its ther­a­py out­side of Chi­na, ei­ther. One of the biggest ac­com­plish­ments for the pact be­sides af­firm­ing the drug’s clin­i­cal ef­fi­ca­cy in the US, CEO Ying Huang says, was build­ing out a GMP grade man­u­fac­tur­ing fa­cil­i­ty in Chi­na with help from J&J.

“It’s not just fa­cil­i­ty per sé, be­cause GMP is not just about the equip­ment you have, it’s al­so about the men­tal­i­ty and the way you con­duct man­u­fac­tur­ing,” he says. “So we would re­quire that kind of help from a part­ner in train­ing our work­force.”

Zang, the I-Mab CEO, like­wise cit­ed Ab­b­Vie’s years of ex­pe­ri­ence with an­ti­body pro­duc­tion as a key ap­peal to their CD47 tie-up, on top of the hefty $180 mil­lion up­front.

Both Leg­end’s cil­ta-cel and I-Mab’s lem­zopar­limab are be­ing po­si­tioned as best-in-class can­di­dates that could help their phar­ma part­ners beat pro­grams from high-pro­file ri­vals like Bris­tol My­ers Squibb, Gilead and Pfiz­er — who sourced their drugs from the US. The same sto­ry goes for Re­meGen and Seagen, which inked a $2.6 bil­lion al­liance to pluck a HER2 ADC from the Chi­nese part­ner. Many more will come.

Best and bright­est

Xi­ao­jie Wang

The found­ing team at Bet­ta Phar­ma has now some­what scat­tered. Yinx­i­ang Wang and Xi­ao­jie Wang launched Ja­co­bio, which boasts of an SHP2 pipeline that Ab­b­Vie swooped in to part­ner on. Tan start­ed Lu­peng Phar­ma with a new part­ner, Yi Chen, with goals of tak­ing on Ab­b­Vie and Roche’s Ven­clex­ta.

In se­lect­ing drugs to pur­sue, Tan’s first con­sid­er­a­tion is al­ways the US and Eu­ro­pean mar­kets. If it’s some­thing that multi­na­tion­al com­pa­nies won’t be in­ter­est­ed in, “I will not start the project at all.”

“There’s no way,” he says. “If you on­ly want your drug from Chi­na for Chi­na, on­ly the Chi­nese mar­ket, you will not have suc­cess.”

Hong­tao Lu

For now, the job of call­ing those shots and con­nect­ing the dots large­ly falls on the shoul­ders of ex­pe­ri­enced ex­ec­u­tives, like Dar­ren Ji’s co-founder and CSO at Elpi­science, Hong­tao Lu, who cut his teeth at GSK and Zai Lab.

“All the pipeline strate­gies that we have came from his brain and his con­sul­ta­tion with our sci­en­tif­ic ad­vi­sors,” Ji says.

The mas­sive out­flow of “the best and bright­est peo­ple” from Chi­na to the world in the 1980s and 1990s, af­ter all, un­der­pinned the tremen­dous growth of the biotech sec­tor.

“The rea­son the ac­cel­er­a­tion has been so fast in Chi­na for the last 20 years, 15 years is be­cause ac­tu­al­ly, we didn’t have to re­ly on aca­d­e­m­ic in­sti­tu­tions for in­no­va­tion, we were able to bring re­al­ly high­ly qual­i­fied re­search and de­vel­op­ment peo­ple back to Chi­na to get this go­ing,” Hutchmed’s Chris­t­ian Hogg says.

Si­mone Song

Will Chi­na have to switch up its mod­el even­tu­al­ly to shift re­liance from over­seas re­turnees and tap in­to lo­cal uni­ver­si­ties for new start­up ideas? That’s like­ly up to VCs — like Qim­ing, like 6 Di­men­sions, like Hill­house — who have the ca­pa­bil­i­ty to brain­storm, in­cu­bate, staff, fund and guide biotech spin­outs.

“It’s im­por­tant to un­der­stand that tech­nol­o­gy will not walk out of the lab to be trans­lat­ed on their own,” re­marks Si­mone Song, man­ag­ing part­ner at Hong Kong-based ORI Cap­i­tal.

The next 10 years

A com­mon com­plaint among sea­soned Chi­nese biotech ex­ecs is that the drug de­vel­op­ment land­scape has be­come too crowd­ed. Hot tar­gets pull in way too many play­ers who are not just me-too but me-a-lit­tle-bit-worse. Case in point: the dozens of PD-(L)1 clog­ging up the pipeline.

“I would ex­pect some washout,” Ji says.

Be­fore then, most ex­pect a squeeze in tal­ent where com­pa­nies sim­ply can’t find enough CEOs, CMOs, CSOs or CFOs to run the show, or hire enough mid-lev­el man­agers to han­dle projects.

Qiang Lu Gen­Fleet

Reg­u­la­tions around ex­perts of ge­net­ic ma­te­ri­als are still in flux and murky. In fact, Leg­end’s co-founder Frank Zhang was ar­rest­ed and placed un­der house ar­rest last year as part of a mys­te­ri­ous cus­toms in­ves­ti­ga­tion re­lat­ed to Gen­Script, the CRO from which Leg­end was spun out.

As more play­ers en­ter the race, the cost of do­ing ex­per­i­ments and run­ning a clin­i­cal tri­al — whether it’s reagents, sites or in­ves­ti­ga­tors — is al­so bal­loon­ing. The re­im­burse­ment poli­cies or pay­er land­scape for pricey, be­spoke treat­ments, on the oth­er hand, are a long way from ma­tur­ing.

Qiang Lu is now the CEO of Gen­Fleet, an on­col­o­gy/im­munol­o­gy-fo­cused com­pa­ny that re­cent­ly li­censed a KRAS drug to In­novent. While tac­it­ly ac­knowl­edg­ing these new chal­lenges, he doesn’t get both­ered.

“I got used to this,” Lu says. “The first day I re­turned from the States, and I was still run­ning the lab in WuXi. I sort of feel com­plete­ly dif­fer­ent en­vi­ron­ments here in Chi­na. And nowa­days, it’s im­prov­ing a lit­tle bit, but still, there are some is­sues. But my point is, those are, you know, tech­ni­cal­i­ties. As long as I have some­thing, as long as I made up my mind to pur­sue some­thing, I wouldn’t be both­ered by those tech­ni­cal­i­ties.”

M&A: a crit­i­cal dri­ver for sus­tain­able top-line growth in health­care

2021 saw a record $600B in healthcare M&A activity. In 2022, there is an anticipated slowdown in activity, however, M&A prospects remain strong in the medium to long-term. What are future growth drivers for the healthcare sector? Where might we see innovations that drive M&A? RBC’s Andrew Callaway, Global Head, Healthcare Investment Banking discusses with Vito Sperduto, Global Co-Head, M&A.

15 LGBTQ lead­ers in bio­phar­ma; Paul Stof­fels’ Gala­pa­gos re­vamp; As­traZeneca catch­es up in AT­TR; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

A return to in-person conferences also marks a return to on-the-ground reporting. My colleagues Beth Synder Bulik and Nicole DeFeudis were on-site at Cannes Lions, bringing live coverage of pharma’s presence at the ad festival — accompanied by photos from Clara Bui, our virtual producer, that bring you right to the scene. You can find a recap (and links to all the stories) below.

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AstraZeneca's new Evusheld direct to consumer campaign aims to reach more immunocompromised patients.

As­traZeneca de­buts first con­sumer cam­paign for its Covid-19 pro­phy­lac­tic Evusheld — and a first for EUA drugs

AstraZeneca’s first consumer ad for Evusheld is also a first for drugs that have been granted emergency use authorizations during the pandemic.

The first DTC ad for a medicine under emergency approval, the Evusheld campaign launching this week aims to raise awareness among immunocompromised patients — and spur more use.

Evusheld nabbed emergency authorization in December, however, despite millions of immunocompromised people looking for a solution and now more widespread availability of the drug.

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De­spite a slow start to the year for deals, PwC pre­dicts a flur­ry of ac­tiv­i­ty com­ing up

Despite whispers of a busy year for M&A, deal activity in the pharma space is actually down 30% on a semi-annualized basis, according to PwC’s latest report on deal activity. But don’t rule out larger deals in the second half of the year, the consultants said.

PwC pharmaceutical and life sciences consulting solutions leader Glenn Hunzinger expects to see Big Pharma companies picking up earlier stage companies to try and fill pipeline gaps ahead of a slew of big patent cliffs. Though a bear market continues to maul the biotech sector, Hunzinger said recent deals indicate that pharma companies are still paying above current trading prices.

Abortion-rights protesters regroup and protest following Supreme Court's decision to overturn Roe v. Wade. (AP Photo/Gemunu Amarasinghe)

Fol­low­ing SCO­TUS de­ci­sion to over­turn abor­tion pro­tec­tions, AG Gar­land says states can't ban the abor­tion pill

Following the Supreme Court’s historic decision on Friday to overturn Americans’ constitutional right to an abortion after almost 50 years, Attorney General Merrick Garland sought to somewhat reassure women that states will not be able to ban the prescription drug sometimes used for abortions.

Following the decision, the New England Journal of Medicine also published an editorial strongly condemning the reversal, saying it “serves American families poorly, putting their health, safety, finances, and futures at risk.”

Yong Dai, Frontera Therapeutics CEO

Scoop: Lit­tle-known Or­biMed-backed biotech clos­es $160M round to start gene ther­a­py tri­al

Frontera Therapeutics, a China and US biotech, has closed a $160 million Series B and received regulatory clearance to test its first gene therapy stateside, Endpoints News has learned.

Led by the largest shareholder, OrbiMed, the biotech has secured $195 million total since its September 2019 founding, according to an email reviewed by Endpoints. The lead AAV gene therapy program is for an undisclosed rare eye disease, according to the source.

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invoX Pharma CEO Ben Toogood (L) and F-star CEO Eliot Forster

F-star bought out in $161M all-cash deal as Hong Kong's Sino Bio­pharm looks to­ward in­ter­na­tion­al ex­pan­sion

After more than a decade and a half of charting its own course, F-star Therapeutics will now settle under a new umbrella company.

The UK biotech will be acquired by invoX Pharma, a subsidiary of Hong Kong’s Sino Biopharm, in a roughly $161 million all-cash deal, the companies announced Thursday morning. F-star’s buyout will value its shares $FSTX at $7.12 apiece, nearly an 80% premium above Wednesday’s closing price.

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GSK says its drug for chron­ic hep B could ‘lead to a func­tion­al cure’ — but will it be alone or in com­bi­na­tion?

GSK, newly branded and soon-to-be demerged, shared interim results from its Phase II trial on its chronic hepatitis B treatment, one that it says has the “potential to lead to a functional cure.”

At a presentation at the EASL International Liver Congress, GSK shared that in around 450 patients who received its hep B drug bepirovirsen for 24 weeks, just under 30% had hepatitis B surface antigen and viral DNA levels that were too low to detect.

FDA un­veils new draft guid­ance to help with oligonu­cleotide ther­a­peu­tics de­vel­op­ment

While oligonucleotides, a wide variety of synthetically modified RNA or RNA/DNA hybrids that bind to a target RNA sequence to alter RNA and/or protein expression, have been winning approvals in recent years (e.g. Novartis’ cholesterol drug Leqvio), the regulatory agency is offering new draft guidance for those looking to follow a similar path.

The non-binding guidance, titled “Clinical Pharmacology Considerations for the Development of Oligonucleotide Therapeutics Guidance for Industry” deals with pharmacokinetic, pharmacodynamic, and safety assessments required as part of oligonucleotide therapeutics R&D.

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