By Marie Powers, Staff Writer

May 19, 2014

Although innovation is the topic of much conversation in Chinas biopharma industry, Western companies are likely to observe that the notion of innovative drug development in China is more hype than reality. However, participants at the Chinabio Partnering Forum, held in Suzhou earlier this month, offered compelling evidence that Chinese biotechs are, indeed, transforming cutting-edge discoveries into drug pipelines, with partnering opportunities very much welcomed.

No one disputes that the opportunities for drugmakers in China are enormous. Characterizing the country as a BRIC nation, along with Brazil, Russia and India, is a misnomer at this point, according to Ray Stevens, co-founder of Ruiyi Inc. and professor in the departments of molecular biology and chemistry at the Scripps Research Institute. Stevens contended that China is ahead of every other BRIC national by 10 years.That assessment isnt far off. A recent Thomson Reuters white paper, Overcoming Clinical Challenges in BRIC Markets,citing Feb. 18 data from Cortellis Clinical Trials Intelligence, indicated that more than 4,200 clinical trials were started in China over the past five years, compared to approximately 1,200 in Brazil, 2,600 in Russia and 2,300 in India over the same period. In fact, China is the only BRIC nation seeing an increase in the number of clinical trials initiated each year, according to the white paper. Forecasts suggest that China will become the second largest pharmaceutical market in the world in 2017, overtaking Japan.

Chinas potential is attracting droves of returnees Western educated Chinese nationals including tens of thousands of scientists with advanced degrees. Many also have work experience at big pharmas or biotechs and are eager to apply their knowhow to the Chinese market.

Chinese biotechs in hunt for partners

Consider Shenogen Pharma Group. After eight years of effort, the Beijing-based company advanced its lead compound, SNG- 162 (lcaritin), into a phase II study in China. Shenogen was co-founded by two lab mates: Kun Meng, chairman and CEO, who completed his postdoctoral training at Harvard University and the Washington University School of Medicine, and Charlie Wang, chief science officer, who completed postdoctoral training at Princeton University and served as an associate professor at Harvard Medical School. Wang also is a professor of pathology at Creighton University.

Jun Bao, the companys senior vice president, chief business officer and acting chief financial officer, holds a PhD from the University of Kansas. Baos resume includes tenure at Glaxosmithkline plc in China and at U.S. firms Onyx Pharmaceuticals Inc., Icos Corp. acquired in 2006 by Cialis (tadalafil) joint venture partner Eli Lilly and Co. and Cell Therapeutics Inc. (See BioWorld Today, Oct. 18, 2006.)

Shenogen is targeting first-in-class drug development. Its SNG-162 is a naturally derived traditional Chinese medicine known as yingyang huo, a perennial grass whose name translates as horny goat weed. The small molecule, which targets the estrogen receptor ER-alpha 36, is in a phase II study in China, with applications in liver and breast cancer as well as leukemia. Shenogen was started with just $100,000 in seed money, according to Bao, and now has 80 employees. The companys 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 Shenogens series B, including IDG Venture and Lapham Group Inc., also joined. (See BioWorld Asia, Nov. 6, 2013.)

Bao attended Chinabio seeking partners. Wed like to find one or two partners for the market outside China, he told BioWorld Insight, and in China we are also open for collaborations. The fact that SNG-162 has shown activity in solid tumors as well as leukemia is intriguing, Bao said, and weve observed in the clinic, not just in animal studies, that every time we saw activity, we saw it first at metastasized sites. Were thinking that, if you combine our drug with some chemotherapy, it can wipe out metastasized sites as well as the primary tumor site, which would be a nice combination. But we can only do one or two trials at a time with our resources. A partner can do multiple trials.

‘The quality of the science is outstanding’

Suzhou Alphamab Co. Ltd. is another model of innovative drug discovery. Founded in 2008, the company has 90 employees, including more than 65 scientists in its R&D operation. Alphamab is advancing biosimilars as its bread and butter but also building a pipeline of novel oncology drugs. For example, KN-014 is a genetically engineered therapeutic protein that inhibits various isotopes of VEGF, PIGF and PDGF, with the goal of treating lung, bladder, colorectal and other metastatic cancers, as well as wet age-related macular degeneration. KN-010 is a bispecific antibody that binds different epitopes on cancer cells to prohibit cancer cell growth and proliferation through a variety of mechanisms. Designed for improved efficacy against tumors while preventing resistance, the drug is being developed to treat breast cancer and other solid tumors.

Founded last year, Mabspace Biosciences Co. also is focusing on antibodies for therapeutic and diagnostic applications. Using immune tolerance breaking technology, the company has identified three therapeutic antibodies, MSB-001, MSB-002 and MSB-003, and one diagnostic application, MSB-004, that it is seeking to partner. MSB-001 is designed as a best-in-class antibody that targets the tumor microenvironment for treating gastric and lung cancers. MSB-002 is a first-in-class antibody with the potential to treat tissue fibrosis and cancer, and MSB-003 is an antibody-targeted immunotherapy for lung cancer, renal cancer and melanoma. 

And Ruiyi has a bi-coastal strategy in its effort to develop novel drugs for the Chinese market. The company is headquartered in La Jolla, Calif., but has its discovery efforts and research facility in the Zhangjiang Hi-Tech Park in Shanghai. Earlier this year, Ruiyi netted a $15 million series B round from its existing investors, which include 5AM Ventures, Versant Ventures, Apposite Capital, SR One, Merck Serono Ventures and Aravis SA. (See BioWorld Asia, April 2, 2014.)

Ruiyi is using its intermembranous Conformation Antigen Presenting System, or iCAPS, technology to leverage therapeutic specificity across a set of targets from the large G proteincoupled receptor (GPCR) family. Although nearly one-third of approved drugs modulate GPCRs, traditional drug discovery methods have been stymied in exploring many of the selective targeting GPCRs especially those with small extracellular domains. Ruiyis iCAPs changed that equation, enabling the purified, isolated, conformationally correct presentation of functional GPCRs, optimized to identify selective antibody inhibitors or activators with greater specificity, resulting in the potential development of more effective antibodies and other biologics.

The companys lead candidate, RY I-008, is an anti-IL-6 monoclonal antibody with potential uses in autoimmune diseases and cancer, with rheumatoid arthritis as a proposed initial indication. (See BioWorld Today, May 17, 2013.)

Ruiyis Stevens was lured to China by the energy and entrepreneurship in the nations science community. After teaching students from China for more than a decade and hearing the hype about their home country, he wanted to answer three questions: Is the science real? Is it high quality? And how would it lead to innovative drug development? Ive been coming to China for 20 years, and I used to see a lot of empty buildings, Stevens told BioWorld Insight. After three years on the ground in Shanghai, hes convinced the science is very real. His students at the iHuman Institute at ShanghaiTech University a research university modeled after the Massachusetts Institute of Technology and developed from the ground up by the Shanghai Municipal Government and Chinese Academy of Sciences already are publishing papers in Nature and Science.

The quality of the science is outstanding, Stevens said, adding that the opportunity to conduct drug development is better in China than almost anywhere else in the world, including the U.S. Putting Ruiyi in China was exactly the right thing to do, he said.

‘you have to be fully invested’

Thats not to say innovative drug development in China is a cakewalk. Locals cite challenges with importing cells, gaining access to radioactivity and interfacing with the China Food and Drug Administration (CFDA), along with mundane tasks such as making bank deposits, which can require a half-day of standing in line. The perception of drug development also is different in China, where biosimilars remain the standard and domestic investors view phase II as early stage.

For that reason, Ruiyis lead compound uses well-established biology that is sufficiently innovative to help the CFDA gain experience working with the companys technology. Once we have that one going, we can follow suit with our GPCR antibodies, which are innovative, Stevens said. Pursuing innovative drug discovery and development in China requires commitment, he added.


Everything is changing rapidly, so if you want to do drug development here, you cant do it part-time, he maintained. You commit or you dont. If you care about quality, you have to

be fully invested.


In some ways, however, China reminds Stevens of California, which was the wild, wild West in the early days of biotech. No one has really hit it big yet in China in terms of innovative drug development, he said, but our investors know this is where they need to be. We know a breakthrough drug is going to happen.


Until it does, patience is the key. Dont come to China because you think thats where the money is, Stevens advised. Instead, come to China if you have a really good business model. Theres double-digit growth potential and a large population of treatment-naive patients with unmet medical needs. But you need long-term thinking, not just one or two years.


Two Chinas emerging as biopharmas shift toward innovative drugs