Last week in China biotech, the spotlight centered on two themes: partnerships and financial reports. In a major step forward for partnering, our sister organization, ChinaBio Accelerator, announced that it, together with EBD Group, will host the first life science partnering conference to take place in China (see story). The ChinaBio Partnering Forum will be held in Shanghai on June 23-24, 2009. The event will bring China developers of early stage technology together with global biopharmas and other investors. The goal is to explore licensing and collaboration opportunities. More than 400 attendees from around the world are expected to attend.
Further showing that partnership is hot, Dutch life science company Royal DSM [AMS: DSM] announced it would make a very significant $110 million investment into North China Pharmaceutical Group Corporation Ltd. (SHA: 600812), a state-owned entity (see story). The investment will establish three joint ventures, two in the area of anti-infectives, and a third to build a vitamin C production facility. After the investment, Royal DSM will own 10% of NCPC Group Co. DSM will hold a 51% stake in the anti-infective JVs, while its interest in the vitamin C production JV will be 30%.
In a partnership where a China biopharma reaches out to the west, Nanjing Chuanbo Biotech Ltd. established a subsidiary named Signalway Antibody (SAB) UK Co. in New Castle, UK (see story). SAB is seeking to set up a JV with two regional organizations: Cels (Centre of Excellence for Life Sciences) and North East Proteome Analysis Facility (NEPAF). The JV will develop diagnostic tests for personalized medicine by combining Chuanbo’s antibody expertise with British chip-making skill. Nanjing Chuanbo received local government support to set up the UK subsidiary.
BioDuro and AstraZeneca (NYSE: AZN) held a signing ceremony in Beijing this week to formalize their new collaboration (see story). BioDuro is a CRO based in the US, though its operations are entirely in Beijing. BioDuro will optimize discovery research for respiratory and inflammation indications. The company will provide integrated research services in the areas of discovery chemistry, discovery biology, ADMET, and DMPK services. BioDuro offers end-to-end medicinal chemistry services, either from its team of 580 or through affiliations with partners. AstraZeneca produced revenues of more than $31 billion last year from its portfolio of pharmaceuticals.
Bayer HealthCare AG of Germany [Frankfurt: SCH] has signed a collaboration agreement with Beijing’s Tsinghua University (see story). The two entities will establish the Bayer-Tsinghua Research Center of Innovative Drug Discovery. Their goal is to find new drugs in a broad range of research areas, including oncology, women’s health, diagnostic imaging, and cardiology Serving as Director will be Yigong Shi, PhD, a renowned structural biologist with expertise in protein X-ray crystallography and a focus on apoptosis. Dr. Shi is currently Director of the Department of Biological Sciences and Biotechnology and Vice Dean of the Institute of Biomedicine of Tsinghua University.
Moving on to the second major theme of the week – financial reports – BMP Sunstone Corporation (NSDQ: BJGP) announced its 2008 revenues climbed 350% higher to $114.9 million (see story). BMP attributed the spectacular rise to a $65.7 million revenue boost from its $125 million Sunstone acquisition, which closed in February of 2008. The Sunstone acquisition had the effect of transforming BMP from a drug distribution company into a combined pharmaceutical/distribution enterprise with substantially higher margins. However, profitability remains a problem for BMP Sunstone. The company reported non-GAAP net income was $7.2 million, a big improvement from a net loss of $9.0 million in 2007, though BMP Sunstone still reported a GAAP net loss of $3.4 million in 2008.
China Pharma Holdings (CPHI) said its 2008 revenues climbed 54% to $51 million (see story). Net income (excluding foreign exchange) rose 39% to $17.8 million, producing a net margin of 35%. Net income would have been even better, but the company’s tax rate rose from zero in 2007 to 9% in 2008. Unfortunately, increasing accounts receivable numbers have been the price for expanding China Pharma’s top line so quickly. The company said it ended 2008 with $15.9 million in accounts receivable, a sizable increase from $5.4 million a year earlier.
The least impressive financial report of the week belonged to Tongjitang Chinese Medicines Company (NYSE: TCM), which reported that revenues dropped 36% in Q4 to 115 million RMB ($16.9 million) (see story). For the full year 2008, revenues were down 24% to 451 million RMB ($66.1 million). In Q4, the company took $14.5 million in writedowns from its two acquisitions, Guizhou LLF and Qinghai Pulante. These charges put net income into negative territory at a loss of 79 million RMB ($11.6 million). Without the charges, EBITDA was a positive 23 million RMB ($3.4 million).