China Biotech in Review: Deals and Earnings

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 |  Includes: BAX, BJGP, CAXG, CKUN, CSKI, SCR
by: ChinaBio Today

Earnings reports were still rolling in last week in the world of China life science, but the pace slowed down from the previous week’s avalanche. Last week, the news about the everyday business of the sector, the announcements that speak of growth – new facilities, deals, etc. – moved back into the forefront.

Innovation was a theme as we profiled GeneHarbor (Hong Kong) Technologies, a company dedicated to the discovery of novel enzymes (see story). “Our major product is enzymes, but we are different from most other enzyme companies because we are primarily an R&D company, not a manufacturing company. We discover new enzymes for new applications,” said Jun Wang, PhD, Chairman and CEO of the company, in an exclusive interview with ChinaBio Today.

CROs also made their share of news. The Hamner Institutes for Health Sciences, a US-headquartered non-profit research organization positioned between industry and academia, formed a US-China biopharma bridge. By signing on with China Medical City, the biopharma park in Taizhou, Hamner established the Hamner-China Medical City Institute for International Drug Development (see story). Newsummit Biopharma, a partner in China Medical City, will take up residence in the Hamner’s Bioscience accelerator in North Carolina. Newsummit combines the features of a CRO with those of a technology development company.

Kleiner Perkins Caufield & Byers will invest $15 million of venture capital into Jinsite Science and Technology (Nanjing) Co Ltd, a CRO that is the China subsidiary of a US-based CRO, GenScript Corporation (see story). Founded in 2004, Jinsite offers outsourced biological and pharmaceutical research. Like its parent GenScript, the company says it is a one-stop shop for all outsourcing tasks, from gene discovery to target identification and validation.

XenoBiotic Laboratories (XBL), a CRO headquartered in New Jersey, announced it will open its new China laboratory this summer, the company’s first facility in China (see story). XenoBiotic focuses on metabolism and bioanalytical services. The new lab, located in Nanjing and called XBL-China, is a 36,000 square foot facility that includes a 12,000 square foot vivarium. A formal open house will be held in October.

Deals in other segments of China biopharma also made news last week. Simcere Pharmaceutical Group (NYSE: SCR) will acquire 35% of Shanghai Celgen Bio-Pharmaceutical Co., Ltd. for 140 million RMB ($20.6 million), a company that focuses on research and production of therapeutic antibodies (see story). At the same time, the company released a disappointing Q1 financial report: revenues were $64.8 million, a 12% increase from the year earlier, but $5 million less than the average analyst forecast. Net income was $7.1 million, a 57% decrease from 2008.

China Sky One Medical (NSDQ: CSKI) has begun a $10 million cooperative effort with Taiwan Golden Biotechnology Corporation to develop a novel cancer drug, Antroquinonol (see story). The drug is a stronger version of a TCM used in Taiwan; it will be tested as a treatment for liver and lung cancer. The two companies will develop the drug jointly, though China Sky One will have exclusive sales rights for mainland China.

Baxter International (NYSE: BAX) unveiled a plan to spend 1 billion RMB ($147 million) over the next three years to upgrade factories in Guangzhou, Suzhou, Tianjin and Shanghai (see story). The company positioned the investment as a response to China’s demand for high-quality medical instruments.

In earnings news, BMP Sunstone Corporation (NSDQ: BJGP) said revenues more than doubled in Q1, rising to $39.3 million (see story). The company closed its acquisition of Sunstone Pharma in mid-February last year, helping the comparison. Profits have traditionally been a problem for BMP. In Q1, the company reported $3 million in non-GAAP net income, but a GAAP loss of $2 million.

China Shenghuo Pharmaceutical Holdings (NYSE Amex Equities: KUN) reported revenues rose 23% in to $6.8 million (see story). The numbers raised cash flow to $890,000, but the company reported a net operating loss of $2.9 million, much higher than the $850,000 loss incurred in the same period in 2008.

China Aoxing Pharmaceutical (OTC:CAXG) announced revenues increased 85% to $1.6 million in the most recent quarter, largely because of an acquisition (see story). China Aoxing said its operating loss in Q3 was $700,000 in Q3, about half that of the year-earlier period.

Disclosure: none.