China Biopharma News from a Holiday Week

Includes: CYIG, SNBP, SVA, TPI
by: ChinaBio Today

Last week, the Lunar New Year holiday pretty much shut down business in China. But the festivities could not completely curtail news from individual China-based biopharma companies, which released items showing their continuing growth, including news of deals, developments and financial results.

On the deal front, NovaMed Pharmaceuticals signed a $5 million licensing and distribution agreement with Orexo [STO: ORX] that gives NovaMed the right to seek approval in China for Abstral, Orexo´s drug for breakthrough cancer pain (see story). If the drug is approved, NovaMed will distribute Orexo in China. NovaMed already has a sizeable portfolio of cancer drugs. In June 2008, the company agreed to distribute six of Pfizer’s (NYSE: PFE) cancer drugs. Abstral is a fast-dissolving tablet for sub-lingual administration of fentanyl, intended for the management of breakthrough cancer pain in patients who are already receiving opioid analgesics.

Tianyin Pharmaceutical (NYSEMKT:TPI) will begin its previously announced $3 million stock repurchase program (see story). Originally, the program was supposed to be completed by the end of January, but the program has been extended until the end of June. Tianyin’s shares are currently trading for $1.45. $3 million worth of the company’s stock would be approximately 2 million shares. Tianyin says its public float numbers only 1 million shares. Tianyin will accomplish the share buyback through a combination of purchases in the open market and negotiated transactions with existing shareholders. Because the company has 15.7 million shares outstanding, a 2 million share reduction takes more than 12% out of circulation.

Sinovac Biotech (NASDAQ:SVA) will extend its vaccine expertise into the veterinary market with a rabies vaccine (see story). The company’s subsidiary, Tangshan Yian Biological Engineering Co., Ltd, was granted approval by China's Ministry of Agriculture to begin field trials of its inactivated animal rabies vaccine. At present, Sinovac’s main product is Healive®, a human vaccine for hepatitis B. Without being specific, Sinovac said that the rabies vaccine was the first of “a number of products” now in the animal health development pipeline. Sinovac expects the rabies field trials will take nine months to complete, making a launch of the rabies vaccine possible in 2010.

Two China biopharmas announced strong results from their most recent quarters. Releasing preliminary figures, China YCT International Group (OTCQB:CYIG) reported that Q3 (ended December 31) revenues surged 60% higher to $8.6 million (see story). Net income rose even more: it climbed 126% to $2.2 million. Through its subsidiary Shandong Spring Pharmaceutical Co., China YCT International manufactures and distributes 38 ginkgo based products in China. Nine-month numbers for China YCT were also strong.

Sinobiopharma (OTC:SNBP) also reported much improved results from its wholly owned (and only) operating subsidiary, Dong Ying China, for the six-month period ended November 30, 2008 (see story). The most positive item in the report was the company’s revenues, which jumped 220% to $1.9 million. Almost all of the company’s sales came from Cisatracurium Besylate, a skeletal muscle relaxant, which contributed $1.8 million to Sinobiopharma’s coffers. Because of a $1 million charge for stock-based compensation, net income was negative by $200,000. Sinobiopharma said the huge charge was due to the company’s recent reverse merger.

Moving to news on broader themes, a report indicated the market for cancer drugs in China grew 22% in 2007, totaling 25.5 billion RMB ($3.6 billion) (see story). In 2006, the total outlay for cancer drugs increased by “only” 11%, in part because of a government crackdown on bribery in the supply chain. The compound annual growth rate for cancer drugs in 2003-5 was also 22%. There is definitely a need for cancer drugs in China because the disease was the leading cause of death in both urban and rural areas. One million people in China are newly diagnosed with cancer each year.

Unfortunately, last week’s health-related news stories show that the threat of a bird flu epidemic still exists. So far in 2009, six individuals in China have contracted the deadly H5N1 strain of bird flu; five of them have died (see story). The sixth man, a 29-year-old individual from southwestern Guizhou province, surnamed Zhou, remains in critical, though stable condition. He had visited live-poultry markets prior to falling ill. Of the 250 deaths from bird flu deaths recorded since 2003, 22 of them have occurred in China. The good news is that each case remains isolated: no human-to-human transfer of the virus has been observed to date.

And finally, we published our second of three installments on China’s newly enacted, and soon-to-be-effective, revision of its patent statutes and administrative rules (see story). The most recent revision has been under consideration for almost four years and involved three separate draft proposals. Here, Dr. Charles Liu of Unitalen Law covers the topics Design Patents, Limited Exceptions from Infringement, and Damages and Injunctive Relief, and Patent Counterfeiting.

Disclosure: none.