China Biotech in Review: The Flight to Fight Off the Flu

Showing that it can organize itself to meet a potential health emergency, China expeditiously tested, approved, produced and began stockpiling H1N1 flu vaccine last week. The swine flu strain, which began appearing late in last winter’s flu season, seemed to carry a greater incidence of death than most variants of the disease. Accordingly, the health establishment moved quickly to combat an as-yet-to-appear major outbreak. No one wants to appear lax against a threat that afforded authorities a chance to prepare.

Sinovac Biotech (SVA) was one of the main beneficiaries of the threat. On Monday, the company reported a panel of experts recommended approval of the product (see story). The SFDA followed on Thursday by granting a production license and approval for Panflu.1 (see story). As expected, the agency SFDA approved the single-injection administration of the vaccine as sufficient to provide immunogenicity.

On Friday, China announced an order for 7.3 million doses of H1N1 flu vaccine from two domestic manufacturers: 3.3 million doses from Sinovac and another 4 million from Hualan Biological Engineering (whose approval closely followed Sinovac’s) (see story). Also, China granted emergency approval for Relenza (zanamivir), a GlaxoSmithKline (NYSE: GSK) drug that is both a prophylaxis and treatment for influenza A and B. Simcere (NYSE: SCR) owns the exclusive right to market Relenza in China.

All of this news caused Sinovac’s shares to soar. After closing out the previous week at $6.30 per share, Sinovac ended last week’s trading at $9.14, an increase of $2.80 or 45%. On Monday, it briefly hit a high of $12.50, a record price for the stock.

There was other news in China life science last week, apart from the fight to combat flu, including developments in the CRO sector. Twenty CROs in Guangzhou formed a regional consortium, the Guangzhou Biotech Outsourcing Alliance (GZBO), to promote cooperation among the members (see story). GZBO hopes to build an integrated full-service infrastructure in Guangzhou and coordinate efforts for international business development. GZBO also signed a cooperation agreement with Beijing CROs.

Sundia MediTech Company, the Shanghai CRO based in Zhangjiang Hi-Tech Park, was given the Highest Growth Potential Award by the park last week (see story). The award was made as part of the park's 10th anniversary celebration of "Focus on Zhangjiang,” which put all the city’s resources, complete with support from the central Chinese government, behind a move aimed at making Zhangjiang Park the center of technology innovation in the country. Sundia and the Zhangjiang Park are cooperating in an incubator-like arrangement to bring young biopharmas to the park.

China Aoxing Pharmaceutical Company (CAXG.OB), which specializes in the strictly regulated sector of narcotic and pain medications, submitted its application for SFDA approval of Codeine Phosphate, an oral solution for the treatment of moderate to severe cough (see story). China Aoxing expects to launch this product in China in 2010, assuming the regulatory review goes well.

Sinopharm Holdings, a joint venture between China National Pharmaceutical Group (SHA: 600511) and Fosun International (HK: 0656), is making progress on its planned $1 billion IPO in Hong Kong (see story). The company announced it has found eight “cornerstone” investors who will together buy 20% of the offering. In exchange for a guaranteed number of shares, the investors pledged to hold their shares for an unspecified period.

And finally, China Medical (NSDQ: CMED) made a disappointing earnings announcement (see story). After growing steadily for the past few years, the company is facing a variety of problems: it had to fight off charges of inaccurate financial reports, lower prices for its ECLIA in vitro diagnostic tests, and acknowledge flattening revenues for its FISH platform. In addition, the buyer of its HIFU tumor therapy business wants a $15 million rebate, because the SFDA has stopped sales of the device until the company completes an additional clinical trial.

Disclosure: none.

Comments

[Alphameister:]

Sold my holdings of SVA too early, but continue to hold a less richly priced play on the Chinese flu treatment market through Tianyin Pharma (TPI), which recently received SFDA approval of its new anti-flu medication.

Sep 06 10:12 AM

[Mayascribe:]

ChinaBio: Thanks for the article. A significant % of my e-trading poirtfolio recently has swung into gold and swung in and out of H1N1 stocks. In One Eye's H1N1 Instablog (the previous Insta on H1N1) I list about 20 H1N1 stocks, links provided.

Alphameister: Thanks for the Tianyin Pharma (TPI) tip. I'll add TPI to that list.

Again, the running H1N1 Instablog(s) kept by One Eye are listed in the previous thread, not the current one.

Sep 06 03:51 PM

[einstein p ...:]

Was watching the news ---- or what now passes for the news last night --- and they recommended doing nothing more for swine flu than you would for any flu. The initial order for SVA wasn't huge if you consider the population of China, so you have to question whether or not the stock is valid. Given the past history of management, I decided it best to take cash out with a short profit.

Sep 09 05:05 PM