China Biotech in Review: Innovation Dominates the News

 |  Includes: CAXG, CKUN, CRXL, CSKI
by: ChinaBio Today

The theme of innovation dominated the China biopharma news last week. Most significantly, Thomson Reuters predicted that China will be the world's leading technology innovator by 2012 (see story). The company looked at trends in patent filings (and patent awards) and extrapolated the trends forward to make the prediction. Currently, China occupies the number three spot. However, in terms of growth, it far outpaces its rivals. During the period 2002-2007, China's patent filings grew at an annual rate of 34%. Next best was the U.S. at a paltry 13%. But even the U.S.'s performance is better than Japan's, which actually dropped at an average of 3% per year. Thomson Reuters' report credited China's central government policies for advancing the country's economy beyond its traditional focus on agriculture and manufacturing.

Proof of innovation was evident at the 4th ChinaBio Investor Forum, held in Beijing on December 11 and 12, 2008 (see story). Two presenting companies at the Forum received prestigious "Most Promising Company" awards. Selected by a panel of venture capitalists actively investing in the China biotech industry, Fountain Medical Development Ltd. won the award in the services category, and ProteLight Pharmaceutical & Biotechnology Co., Ltd won the drug development category. Fountain Medical Development is one of only a handful of clinical contract research organizations (CROs) in China that has demonstrated global clinical trial experience. ProteLight Pharmaceutical & Biotechnology, together with its U.S. collaboration partner, BioAMPs International LLC, own the worldwide rights to a proprietary antimicrobial peptide for the treatment of systemic infectious disease, especially drug-resistant varieties.

Moving on to the subject of innovation rewarded - also known as product approvals - China Aoxing Pharmaceutical Company (OTC:CAXG) was awarded an SFDA production license for Paracetamol (acetaminophen) and Caffeine Tablets, a treatment for mild to moderate pain (see story). Although the new product will be marketed as an OTC drug, it is considered a controlled substance by the SFDA. China Aoxing is one of a relatively few companies that is licensed to manufacture narcotic and controlled substance pain medication drugs in China. China Aoxing said the company will launch the product in early 2009, once it receives GMP certification.

Dutch biopharma Crucell (NASDAQ:CRXL) reported that the SFDA released its hepatitis B vaccine Hepavax-Gene for registration and quality control in China (see story). According to Crucell, Hepavax-Gene offers two advantages over competing products: its production is based on Crucell's hansenula polymorpha patented technology, a protein expression platform, and the vaccine is completely free of the mercury-based compound thiomersal. In many countries, thiomersal is being phased out from vaccines given to children because of potentially adverse effects. For Crucell, Hepavax-Gene is a critical product to the company's China financial viability. The company said it "will contribute significantly to the sustainability of our Chinese operations."

China Sky One Medical (OTCPK:CSKI) said that its newly acquired subsidiary, Peng Lai Jin Chuang Pharmaceutical Company, received approval from the SFDA to begin producing two new drugs (see story). Tinea Liniment is a TCM that treats various skin fungal infections, and Skincare Cream is a traditional Chinese medicine intended for the treatment of skin diseases such as acne, bottle nose, chromophytosis and vitiligo.

As the story above underscores, China Sky One is a tornado of activity, acquiring companies and bringing out new products at a pace unmatched in China biopharma. It seems to make announcements of approvals almost weekly, or at least several per month. Last week, The China Perspective published an interview with Mr. Yan-qing Liu, CEO of China Sky One Medical, an interview that reinforced the company-in-a-hurry theme. Nevertheless, despite its success, the stock remains priced very low relative to its prospects, probably due to the worldwide economic crisis. Using Mr. Lui's latest interview as an excuse, we took a deeper look at the growing portfolio of China Sky One products and its very deep pipeline (see story).

RHEI Pharmaceuticals has begun the final China clinical trial for Tibozole, a locally active antifungal with low dose miconazole in a patented mucoadhesive system (see story). Tibozole will attempt to approve its efficacy as a treatment for oral candidiasis, a condition that affects immuno-compromised patients with HIV/AIDS and cancer patients undergoing chemotherapy. RHEI, a venture-backed company, has offices in the US and Belgium, but its operations are in China. The company's business plan is to license the China rights to drugs, which it then brings through the SFDA approval process and markets in China. It has a sales force numbering 110 employees who market directly to China hospitals.

BioDuro, a CRO headquartered in San Diego, CA, but with its laboratories in Beijing, China, announced that it has been awarded full accreditation from the Association for Assessment and Accreditation of Laboratory Animal Care International ((AAALAC)) (see story). The same accreditation has been given to the labs of the National Center for Safety Evaluation of Drugs (NCSED), with whom BioDuro has an exclusive collaboration. BioDuro, which established its Beijing lab in 2005, now has 550 employees on site. Through its relationship with NCSED, BioDuro is able to provide integrated research services from discovery to first-in-human. The NCSED facility has been operational since 2000, under the leadership of Li Bo, MD, PhD.

Cook Medical, a privately owned medical device company located in Bloomington IN, will open a combined distribution and customer service center in Shanghai (see story). The 50 million RMB ($7.3 million) center will serve as Cook Medical's base for its operations in China and Southeast Asia. By improving service to its customers, Cook Medical expects to increase its penetration of the China and Southeast Asia markets. Cook anticipates that the service complex will open early next year. The company offers an extensive portfolio of medical devices in a variety of fields.

China Shenghuo Pharmaceutical Holdings (KUN) has resumed trading (see story). The company's stock was suspended from trading in late August because China Shenghuo was late in filing its financial statements. The company was forced to restate its previous reports when it discovered falsified records, which caused the delay. Thus far in 2008, China Shenghuo is reporting that revenues are higher by 43% at $21.4 million. Unfortunately, expenses are rising faster than revenues, leaving the company with a net loss of $2.2 million. At the same point in 2007, the company reported positive earnings of $3.7 million or 19 cents per share. In its first week of resumed trading, China Shenghuo's shares lost more than half their value, falling $1.04 (55%) to $.85.

Disclosure: none.