China Biotech Gets Off to a Slow Start for 2009

Jan.11.09 | About: ONYX Pharmaceuticals, (ONXX)

The aftereffects of the holiday season made themselves felt this past week in a greatly constricted news flow from the China biopharma. Although the stories were smaller in number, some of them were, nevertheless, truly significant.

Chief among these was the announcement that Singapore biotech S*BIO optioned its two leading drug candidates to Onyx Pharmaceuticals (NASDAQ:ONXX) for up to $550 million (see story). That’s a big deal in any set of market conditions, but especially heartening in times of economic downturn. As an upfront payment, S*Bio will receive $25 million in a combination of cash and equity investment. The agreement gives Onyx the right to exercise its options for S*BIO’s JAK2 inhibitors, SB1518 and SB1578, at certain predetermined development points. Each drug will be optioned separately. Should the option be exercised, Onyx will have an exclusive license for all indications for the specific drug in the US, Canada and Europe. The ultimate value of $550 million will consist of equity purchase, option and license fees, and development and sales milestone payments. If the drugs reach commercialization, S*Bio will receive up to double digit royalties on sales. S*BIO was established in 2000 as a joint venture between The Singapore Economic Development Board Investments and Chiron Corporation. Subsequently, in 2006, Chiron was acquired by Novartis (NYSE:NVS). S*Bio was founded on the premise of using Chiron’s genomic and drug discovery technologies.

Although nobody is really bragging about the current state of VC investing, Forma Therapeutics of Cambridge, MA closed a $25 million venture round (see story). The company will use the cash to further its goal of developing new drugs for cancer. Forma focuses on new targets based on the genetic findings of the Cancer Genome Atlas Project. The company has a significant China connection because it established a laboratory in Beijing, run by Yigong Shi, PhD, a molecular biologist who is Chair of the School of Medicine at Tsinghua University. A structural biologist, Dr. Shi is an expert on apoptosis (cell death) and has determined the crystal structure of several critical apoptotic proteins. Forma also has labs in Branford, CT and Singapore, in addition to its operation in Cambridge, MA.

e-Therapeutics [AIM: ETX], a British software firm offering a computational biotechnology platform, opened an office in Nanjing that will allow the company to collaborate with biopharmas in China (see story). The company’s software models the interactions of a given compound, predicting the degree to which it will bind with the body’s proteins. It can be used in drug discovery programs to predict efficacy as well as unwanted interactions. The office is not the company’s first China initiative. In September 2008, e-Therapeutics announced a partnership with Nanjing KeyGen Biotech. Co. Limited, a company that has developed 1400 reagents for life science research in the fields of cell biology, molecular biology and protein research. The partnership was formed to combine e-Therapeutics’ computational platform with the cell-culture facilities of KeyGen. KeyGen KeyGen is a subsidiary of the Nanjiing Medical Group (SHA: 600713).

In new product news, Q-Med AB [STO: QMED], a Swedish biotech/medical device company, obtained registration approval in China for Restylane, its dermal filler (see story). The company will follow up with an application for sales approval, which Q-Med expects will allow launch of the product within six months. Restylane is a hyaluronic acid injection product, the first to be approved for use in China. Q-Med focuses its business on manufacturing and selling medical implants, using its patented technology NASHA to produce stabilized non-animal hyaluronic acid.

Disclosure: none.