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The Week in Review: Innovative Structures for Biopharma Deals

publication date: Feb 14, 2009
 | 
author/source: Richard Daverman, PhD

The new economic climate is already making causing an effect on biopharma deals, especially for early stage companies. But dealmakers have always been known for their ingenuity, and we saw some results of their imaginative thinking last week in ChinaBio® Today.

Roche Holding AG (Switz: ROG), for example, is considering a new model of entrepreneurial partnership in China (see story). Roche is apparently aware of attractive, entrepreneurially minded individuals who are not attracted to working for a big company like Roche. Rather than just saying goodbye and wishing them well, Roche is considering a plan that would ask these individuals to work for Roche for a few years. Then, they could establish their own companies. Roche will spin off compounds in development to them, while maintaining some sort of post-partum relationship between the giant Roche and its entrepreneurial progeny. The same offer may be made to some people already employed at Roche who want to run their own shops. According to Roche, the new proposal suits China’s highly “dynamic” culture, and may not be appropriate for the US or Switzerland. Although Roche might ideally prefer maintaining tighter control over its drug candidates, the relationship allows Roche to accommodate scientists who would leave anyway. A loose relationship is better than none, is Roche’s explanation of the plan.

Shanghai Zhangjiang (Group) Co., which operates the Zhangjiang Hi-Tech Park, has joined with CRO Sundia MediTech Company (桑迪亚医药技术(上海)有限公司) developed a different entrepreneurial plan. The two companies have formed a platform that combines Intellectual Property, CRO and Venture Capital services in one group, a biopharma incubator that includes its own CRO and access to capital (see story). The goal is take a young biopharma from original discovery into clinical trials. At the same time, the incubator will help draw the best young biopharmas to Zhangjiang Park. Over the next four years, Shanghai Zhangjiang and Sundia MediTech intend to use the incubator to establish and develop a pipeline of innovative drug candidates.

As data developed by the ChinaBio® research team shows, there certainly are innovative drugs being developed in China, the kind of ferment that causes deals to happen. In a new article, one of a series that explains why we are cautiously optimistic about China biopharma, ChinaBio® presents original research on the life science patents that have been filed in China since 2000 (see story). We screened over 120,000 patents filed and published between 2000 and 2008, analyzing 6,000 patents in detail. We determined that China is, in fact, developing new molecular entities, not just “me too” products, and at a more rapid rate than might be expected.

Meanwhile, investment continues in China biopharma. Bayer Schering Pharma (Frankfurt: SCH) of Germany will spend $129 million to build a global R&D center located in Beijing (see story). The investment will take place over five years. China is Bayer Schering’s third largest market, and the company already has already located R&D centers in the US and Europe. The Beijing center will be very mindful of the clinical profile and medical needs of Asian patients, though the center is not exclusively devoted to the Asian market. Bayer Schering also announced it is in advanced discussions with Tsinghua University about forming a drug discovery collaboration.

CRO Sundia MediTech (桑迪亚医药技术(上海)有限公司) and Xcovery of Florida reported that their two-year drug discovery collaboration has yielded four pre-clinical candidates, with two more that could be identified in the next three months (see story). The results far surpassed the original timetable. Xcovery, a recent spin-off of The Scripps Research Institute, is focused on next-generation kinase therapeutics that will seek to treat inflammation and cancer. Formed by industry veterans in 2005, Xcovery adopted a virtual business model, and they are very pleased with the results so far.

Wishing to calm fears caused by the bird flu deaths this year, the SFDA reported that it has built a stockpile of human bird flu vaccine. The vaccine, a whole virus product called Panflu, was produced by Sinovac Biotech (NYSE Alternext US: SVA) (北京科兴生物制品有限公司) (see story). Previously, the SFDA approved Panflu for humans aged 18 to 60 as a protective vaccine against the H5N1 virus. To speed up deployment of the vaccine, the SFDA has begun “simultaneous inspections” of the product, a process in which Sinovac and the SFDA check newly produced vaccine at the same time.

Shengtai Pharmaceutical (OTCBB: SGTI) reported disappointing results for its Q2, which ended December 31, 2008, though the problems were not with its pharmaceutical business (see story). The company recorded $14.8 million in revenue, a drop of 41%, because of a large decline in sales of its cornstarch business, which it sells to food processors. Sales of its other major product, pharmaceutical grade glucose, actually climbed 13% to $9.3 million. Shengtai curtailed production of cornstarch because the market price declined so low. The company believes China’s healthcare reform will boost the use of pharmaceutical grade glucose, and Shengtai has tripled its capacity to produce the product.

And finally, China Bio-Immunity (OTCBB: CHHB) announced its China operating subsidiary has recovered most of the rabies vaccine that contained an unapproved adjuvant (see story). Last year, Dalian Jingang-Andi Bio-products Co. (JGAD) of Dalian City Liaoning Province produced 360,200 doses of the vaccine. 321,800 have been recovered as part of a recall operation. So far, no adverse effects have been reported in connection with use of the product. More than 90% of China Bio-Immunity’s revenue is produced by the rabies vaccine, and all company operations have been closed since January 14.

Disclosure: none.

 


 

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