Unfortunately, the ChinaBio Stock Index participated – fully – in the October stock market unpleasantness. The CB Index, made up of 15 US-listed biopharma companies whose primary business is in China, fell from 1079 at the beginning of the month to close at 772, a drop of 305 points or 28%. Since early August, when the CB Index hit a high of 1502, the index has been cut almost in half. There is a morsel of good news in all of this. A strong final week prevented the figures from looking even worse. On Monday afternoon, the CBT Index closed at 664, its low point for the cycle. From there, it rallied 16% in the four sessions that closed out the month. This comparatively small rise may not provide a lot of consolation, but higher prices allow hope that perhaps better times lie ahead.
Last week, we took advantage of the Grand Opening of PharmaLegacy Laboratories’ new facility in Shanghai’s ZhangJiang Hi-Tech Park to talk to the young company (see story). A CRO, PharmaLegacy specializes in a single pre-clinical area: pharmacology services, with expertise in the areas of oncology, bone, orthopedics, inflammation, immune disease, and PD/PK. In an exclusive interview with ChinaBio Today, CEO Darren Ji, PhD said PharmaLegacy is “a specialty shop that offers one-stop shopping in pharmacology. It is the largest dedicated China pharmacology lab in scale and scope for preclinical services, offering animal-based pharmacology and preliminary toxicity studies.” In the article, Ji further elaborated on how PharmaLegacy came into being, its offerings to the China biopharma community, and the fulfilling challenge of entrepreneurship.
Last week, we also presented the second installment of our three-part ongoing series on proposed changes in China patent laws. The third proposal, which was released just after the Olympics last August, contains the government’s latest thinking on how to alter IP regulations to encourage innovation in China. In this section, authors Charles C. Liu, PhD, JD, and Jeanne J. Liu discuss three topics: (1) Crossover of Invention and Utility Model, (2) Design Patents, and (3) Patent Infringement and Limited Exceptions (see story).
In individual company news, Sundia MediTech announced that it placed sixteenth in the Deloitte Technology Fast 50 China list (see story). It was the second year in a row that CRO Sundia was given the Fast 50 award. As a Fast 50 winner, Sundia will automatically be put in contention for the Deloitte Fast 500 Asia Pacific competition. The Fast 50 list is awarded on the basis of five-year growth in revenues. Last summer, Sundia was made a member of Zero2IPO’s Venture 50 group, also for the second time. The Venture 50 list is awarded to those companies expected to provide the greatest return on investment.
China Sky One Medical (OTCPK:CSKI) maintained its steady stream of announcements with two news releases last week. First off, the company said it received SFDA approval for two new products: sodium ferulate by injection, a TCM indicated for cardiovascular disease, and Doxofylline by injection, a bronchodilator for asthma and bronchitis (see story). China Sky One expects the two products to eventually add a combined $1.5 million to its annual revenues. Marketing should begin in early 2009, according to the company.
China Sky One’s second release contained news that it paid 10 million RMB ($1.5 million) to obtain control of a proprietary breast lesion drug from Harbin Medical University (see story). The drug, which China Sky One and Harbin developed jointly, has completed its Phase I trial. In the more than 10,000 patients enrolled in the test, the drug was 100% effective with an 89% curability rate. China Sky One said that final SFDA approval for the drug is about two to three years in the future. With its three new products, China Sky One is expanding out of its traditional portfolio of externally applied OTC products.
China Pharma Holdings (NYSEMKT:CPHI) was approved by the SFDA to begin clinical trials of a novel antibiotic combination formula, which the company expects to begin in November (see story). China Pharma describes the new product as a third generation Cephalosporin antibiotic combined with a bacterial-enzyme inhibitor. Clinical trials of the product will take two years. China Pharma expects the drug will provide new ammunition in the fight against antibiotic-resistant strains of hospital-acquired infections.
Tianyin Pharmaceutical (NYSEMKT:TPI) will spend $3 million of its $12.1 million in cash to buy back its own shares (see story). Management said the company is cash-flow positive, and it has enough cash, even with the buyback, to finish construction of its solid-dose manufacturing plant without raising additional capital. The announcement provided a huge boost for Tianyin’s share price, which jumped 54 cents to $1.74, a 45% increase, after the week. However, the stock gave up much of the advance later in the week. Tianyin closed on Friday afternoon at $1.40. Because the company has only 2.5 million shares in the public float, a $3 million buyback could reduce the float by 60% or more.
Shengtai Pharmaceutical (OTCPK:SGTI) has reorganized its international sales teams in an effort to increase ex-China sales of its pharmaceutical grade glucose products (see story). The company said it already has customers in 70 countries, but according to SEC documents, Shengtai realized just 17% of its pharmaceutical product revenues from foreign countries in fiscal 2008 (ended June 30). Shengtai has added its capacity to produce pharmaceutical grade glucose, raising its annual product capability by a factor of three to approximately 180,000 tons. In 2008, Shengtai Pharmaceutical’s earnings were kept in check by constraints on its glucose production. Now, with its new manufacturing plant, it can expand its markets.
China Medical Technologies (CMED) told investors it would release a preliminary Q2 (ended September 30, 2008) financial report on November 18, but a full announcement, including a discussion with analysts, will wait another month until December 18 (see story). As reason for the delay, the company said it must determine the value of tangible and intangible assets involved in its eye popping $345 million acquisition of a new diagnostic test, the HPV-DNA Chip and SPR-based Analysis System.
Following the collapse of its JV with WuXi PharmaTech (NYSE:WX), Covance (NYSE:CVD) will build its own China CRO facilities, but the company does not feel any great pressure to get the job done quickly (see story). The reason? China’s current cost advantage will soon disappear, as wages for scientists in China approach those in the west, according to Joe Herring, CEO of Covance. Covance does $1.5 billion worth of CRO business around the world. Apparently, it does not feel as though it is losing a great deal of contracts to its China-based competitors. Covance has one preclinical lab open in Shanghai, and it expects to open a second in 2011. Covance says it is not in a hurry to expand in China, but will grow along with the market.