Chinese biopharmas eager to translate 'innovation' into drug approvals

By Marie Powers
Staff Writer

Thursday, May 8, 2014

SUZHOU, China ­– "Innovation" is a prominent theme in China's life sciences community, but for all the talk about the need to move from generics to novel drugs, focusing on the science without generating results is a wasted effort. That, in short, is a key message emerging from Chinese life science executives and research leaders at the Chinabio Partnering Forum.

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

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

That shortcoming has not gone unnoticed. China has rocketed to the top in a host of industries, from computer technology to heavy equipment, with at least one Chinese company among the top 10 global leaders in virtually 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 drug development is occurring in China, Ho said his response, for now, is "not yet."

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

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

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

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

Multinational companies can help to bridge these gaps by collaborating with Chinese biotechs to migrate their candidates through early and midstage clinical development in return for handling eventual market launch, distribution and product positioning, according to Ho.

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

'Innovation is good, but we're looking to develop drugs'

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

"Innovation is good, but we're looking to develop drugs," Jun Bao, Shenogen's senior vice president and chief business officer, told Chinabio attendees. The company's business acumen and scientific prowess last year helped Shenogen attract a $20 million series C from a syndicate that included Qiming Venture Partners LLC, of Shanghai, and Legend Capital, of Beijing, an affiliate of tech company Lenovo, along with China Investment Wealth Venture Fund and Shenzhen Venture, a venture arm of the municipal government. Lead investors from Shenogen's series B, including IDG Venture and Lapham Group Inc., also joined. (See BioWorld Asia, Nov. 6, 2013.)

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

In general, the infrastructure to conduct drug development in China is improving, according to Bao, who credited Wuxi Pharmatech Inc. as a trailblazer in growing from a small biotech into an integrated R&D services giant. This week, the FDA granted the first approval for the use of a biologic manufactured by a Chinese company in a U.S. investigational new drug trial. Wuxi is manufacturing the HIV therapy, known as ibalizumab (TMB-355), for Taiwan 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 scientific innovation, the pipeline of novel drugs developed in China faces a bottleneck at the CFDA, where reviewers are accustomed to seeing generics but have little experience handling innovative drugs. Plus, the work force is limited – by most counts, just one-tenth the reviewers as the U.S. FDA.

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

The Chinabio conference concludes Thursday.



Chinese biopharmas eager to translate 'innovation' into drug approvals