Chinese biopharmas eager to translate 'innovation' into drug approvals

By Marie Powers
Staff Writer

Thursday, May 8, 2014

SUZHOU, China -– "Innovation" is a prominenttheme in China's life sciences community, but for all the talk about the needto move from generics to novel drugs, focusing on the science withoutgenerating results is a wasted effort. That, in short, is a key message emergingfrom Chinese life science executives and research leaders at the ChinabioPartnering Forum.

Without question, the country's changing market – anaging population but also a wealthier one seeking higher-quality therapies – isdriving the development of innovative drugs. Central, provincial and localgovernments have created programs to fund new drug development, providing up to$10 million per grant. And China's universities and institutes are generatingsignificant intellectual property, resulting in a growing number of patents fornew molecular entities.

But the payoff – approval and commercialization of newmolecular entities using new mechanisms of action to treat diseases affectingChinese citizens – remains elusive.

That shortcoming has not gone unnoticed. China hasrocketed to the top in a host of industries, from computer technology to heavyequipment, with at least one Chinese company among the top 10 global leaders invirtually every major business segment.

"But pharma is a very different industry,"observed Lewis Ho, partner and head of life sciences in Asia for Dechert LLP.Not a single Chinese company has broken into the top 100 in drug development,let alone the top 10, he said. Thus, when he's asked whether innovative drugdevelopment is occurring in China, Ho said his response, for now, is "notyet."

The Chinese government is spending plenty of money inthe life sciences sector with the goal of moving beyond the rhetoric ofinnovation to the goal of novel drug approvals. In some ways, Chinese biotechshave almost too much access to capital, Ho maintained, which has prevented themfrom making disciplined decisions and establishing reasonable priorities.

Some would argue the funding is simply following themarket. The average life span in China is now 84 years for women and 81 formen, said Yang Ye, deputy director general of the Shanghai Institute of MateriaMedica (SIMM), during a panel presentation on the evolution of R&D inChinese pharma. Developing therapies for the country's population – which alsofaces health burdens ranging from cancer to diabetes to stroke – is a hugeunmet medical need.

Seasoned business management is another resource inshort supply among Chinese biotechs. Although Chinese nationals educated in theWest are returning home in droves, many lack experience running a sizableoperation, Ho pointed out, and their years away from China have created a gapin their understanding of the country's complex regulatory system.

"To actually navigate the Chinese market, youneed to spend more time in China," Ho told BioWorld Today.

Multinational companies can help to bridge these gapsby collaborating with Chinese biotechs to migrate their candidates throughearly and midstage clinical development in return for handling eventual marketlaunch, distribution and product positioning, according to Ho.

"Some Chinese biotechs want to grow into aone-stop shop, which is ambitious," he said. "But in terms of thesuccess rate, it's better to focus on the science."

'Innovation is good, but we're looking to developdrugs'

That's precisely what Shenogen Pharma Group is seekingto do. After eight painstaking years of effort, the Beijing-based company hasadvanced its lead compound, SNG-162 (lcaritin), into a phase II study in China.The first-in-class small molecule is a naturally derived traditional Chinesemedicine targeting ER-alpha 36 to treat liver, breast and potentially otherforms of cancer.

"Innovation is good, but we're looking to developdrugs," Jun Bao, Shenogen's senior vice president and chief businessofficer, told Chinabio attendees. The company's business acumen and scientificprowess last year helped Shenogen attract a $20 million series C from asyndicate that included Qiming Venture Partners LLC, of Shanghai, and LegendCapital, of Beijing, an affiliate of tech company Lenovo, along with ChinaInvestment Wealth Venture Fund and Shenzhen Venture, a venture arm of themunicipal government. Lead investors from Shenogen's series B, including IDGVenture and Lapham Group Inc., also joined. (See BioWorld Asia, Nov. 6,2013.)

Although the science emerging from Chineseuniversities is compelling, no Chinese biopharma can go it alone in drugdevelopment so partnerships with pharmas are welcomed, Bao said. He cautioned,however, that many Chinese biopharmas are still working with early stageassets. Thus, pharmas looking for "ready-made drugs to license" arelikely to be disappointed.

In general, the infrastructure to conduct drug developmentin China is improving, according to Bao, who credited Wuxi Pharmatech Inc. as atrailblazer in growing from a small biotech into an integrated R&D servicesgiant. This week, the FDA granted the first approval for the use of a biologicmanufactured by a Chinese company in a U.S. investigational new drug trial.Wuxi is manufacturing the HIV therapy, known as ibalizumab (TMB-355), forTaiwan Taimed Biologics Inc., of Taipei. (See the article in this issue.)

But regulatory uncertainties in China loom large,Chinabio panelists agreed. Despite the vast government investment in scientificinnovation, the pipeline of novel drugs developed in China faces a bottleneckat the CFDA, where reviewers are accustomed to seeing generics but have littleexperience handling innovative drugs. Plus, the work force is limited – by mostcounts, just one-tenth the reviewers as the U.S. FDA.

Acknowledgment of those challenges prompted AnandGautam, director of biopharma innovation sourcing at Novo Nordisk A/S, toobserve that China may be ahead of the curve in drug discovery, "but we donot see that converted into biotech companies or investments." If Chinacan grow its pool of pharmaceutical business talent, leverage the use ofventure and government funding and manage the regulatory work flow,opportunities to in-license promising drug candidates could grow exponentiallyover the next three to four years, Gautam suggested, "but we don't seethose opportunities yet."

The Chinabio conference concludes Thursday.