Perceptive births its first in-house startup — and it's a China play
Perceptive Advisors is going to China.
The decision dates back two years, chief investment officer Adam Stone tells Endpoints News, when the firm began to figure out how it can, in hedge fund-speak, strategically increase its exposure to a growing biopharma market poised to be a key geographic area in the next several decades. It was a bit of a blindspot for Perceptive, he admits.
As “globalized scientist-investors, we just couldn’t afford to have that blindspot in place,” he says.
A deep dive pointed to creating a new company based on an in-licensing model, leveraging Perceptive’s extensive biotech network in the US, and they recruited two seasoned executives — CEO Bing Li and Debra Yu, president and CBO — to get things started in October. Barely a year later, LianBio is bursting out the gate with 30 staffers, several late-stage assets and a big portfolio deal.
BridgeBio and MyoKardia have signed up as the anchoring partners. For $26.5 million in near-term payments and $505 million in potential milestones, Neil Kumar’s genetics-focused shop is handing over two targeted oncology drug candidates and giving Lian preferential future access to 20-plus programs in its portfolio. The latter deal centers around mavacamten, the cardiomyopathy drug that CEO Tassos Gianakakos said was “good to go” after clinching a crucial Phase III win earlier this year. The upfront comes in at $40 million, with another $147.5 million on the table.
Pioneers like Zai Lab and Everest paved the way to fill the innovation gap by bringing experimental and new drugs from the US and Europe to China — with a promise to complete the local clinical work required for approval as well as the commercial troops needed to field the treatments.
But these days, with a horde of Chinese players clamoring for Western assets, it has become an increasingly challenging area. You need a next-generation model to tap into truly “paradigm shifting assets,” Li says.
“My experience clearly tells me that this is probably the only way to make this model work, to pair the management team with a very strong business development engine, which Perceptive provides.” he adds.
Having facilitated the acquisition of Ambryx by Chinese investors in 2015 and helped set up the Fosun/Kite CAR-T joint venture, Li had just stepped down from the CEO post at China Biologic when Yu introduced him to Perceptive. Yu, the former head of strategy at WuXi AppTec, had been going around the US doing what she calls “China 101” meetings with stateside investors. Perceptive stood out as “orders of magnitude off the spectrum sophisticated” in how they were thinking about the market.
The investor group — historically a passive investor that enjoys clinical-stage investments and crossover rounds — also made its first foray into the company formation and Series A space late last year, setting up a $210 million early-stage VC fund with Xontogeny. That partnershp gave it access to Chris Garabedian’s incubator and a taste of startup building.
With heavy help from Konstantin Poukalov, managing director at Perceptive, and his colleagues, Yu says her group is able to soup up the BD formula and present tailor-made development proposals to each partner.
“We talk to KOLs, we do analysis upside down, backwards and forwards if you will,” she says.
Yu now manages a small office in Princeton, New Jersey tasked with handling BD and alliances, while Li spends the bulk of his time with the core team in Shanghai.
“They are thinking creatively about this,” Kumar writes in an email to Endpoints. “This is exemplified by their work on our FGFR inhibitor infigratinib and their plans to expand indications into areas like gastric cancer.”
Other than the Phase III drug, which is housed in QED, Lian is notching China and selected Asian rights to Navire’s SHP2 inhibitor BBP-398.
Poukalov, who’s also executive chairman of Lian, notes that MyoKardia and BridgeBio will become shareholders in the cardiorenal and oncology subsidiaries. Kumar and Gianakakos will join the board and play a part in guiding future in-licensing decisions, which can involve compounds in even earlier stages.
Looking further down the road, Lian may set up more subsidiaries focused on neurology, inflammatory diseases and even ophthalmology.
The exact timing will depend in part on the pace of China’s ongoing regulatory reforms. From the revision of the rare disease list to new reimbursement approaches, the Lian team sees positive trends all around.
“We just saw the breakthrough designation policy implemented and in fact they just granted the first one to Legend Biotech. So you can see that clearly, they are still adding more elements similar to the US,” Li says. “The big direction is there, but there’s more details and refining that’s coming.”