China Biotech Week in Review: New Investments in Life Science

by: ChinaBio Today

It was a busy week in China life science. No fewer than five companies announced significant financial deals Monday-Friday, and an equal number of companies reported progress – new relationships, production or insurance approvals, earnings gains – in their business plans.

BioMarin Pharmaceutical (NSDQ: BMRN) of Novato, California, will acquire LEAD Therapeutics of San Bruno, California and Shanghai (see story). LEAD Therapeutics is a drug discovery company that has a strategic relationship with CRO ShangPharma. ShangPharma has a scientific staff dedicated to doing LEAD’s chemistry work, and it has made an investment in ShangPharma. BioMarin will pay $18 million upfront and an additional $11 million when LEAD’s key compound files for IND. The deal could ultimately be worth $96 million with milestones.

Tongjitang Chinese Medicines (NYSE: TCM), a company focused on modernized TCM products, has set up a joint venture to acquire Guiyang Liquor Factory, a state-owned company, for 121 million RMB ($17.7 million) in cash (see story). Tongjitang, which owns 95% of the joint venture, will pay its share of the consideration in full by February 2010. Though the company is said to be profitable, its revenues in 2008 were only 19 million RMB ($2.8 million).

Zhejiang Hisun Pharmaceutical Co. [SHA: 600267] revealed that it will make a $10 million investment in Sagent Pharma, a relatively new company headquartered near Chicago, Illinois (see story). The company will purchase 7 million shares at $1.40 each in privately held Sagent, equivalent to a 4.5% stake. Zhejiang Hisun will presumably join Sagent’s global network, which includes 20 partners, over 60 facilities and access to 1,400 R&D employees worldwide.

Sanofi-Aventis (NYSE: SNY) announced a new consumer healthcare joint venture with Minsheng Pharmaceutical that will produce vitamins and mineral supplements (see story). Minsheng already manufactures China’s best selling product in the sector: 21-Super Vita multivitamin-multimineral tablets. Although financial details were not disclosed, Sanofi-Aventis did say it would own a majority stake in the JV.

China Medicine Corp. (OTCPK:CHME) announced it closed a previously announced private placement that raised $69.6 million from One Equity Partners, the private equity investment arm of JPMorgan Chase & Co (see story). The size and structure of the deal have not changed since it was originally announced, one month ago, though China Medicine did add that the net proceeds of the funding will be $66.5 million.

Achillion Pharmaceuticals (NSDQ: ACHN) out-licensed the China rights for elvucitabine, to GCA Therapeutics of New Jersey (see story). Elvucitabine is a nucleoside reverse transcriptase inhibitor (NRTI) for the treatment of both hepatitis B virus (HBV) and human immunodeficiency virus (HIV). GCAT has a China JV with Tianjing Institute of Pharmaceutical Research, which will be responsible for developing and commercializing the drug in China, Hong Kong and Taiwan.

Response Biomedical (OTCPK:RPBIF) signed up a second partner to market its diagnostic products in China (see story). Guangzhou Wondfo Biotech Co., Ltd. (Wondfo) in China will sell Response Biomedical’s cardiac offerings as private label products. O&D Biotech Co. will continue to market the same diagnostic tests as co-branded RAMP products on both the RAMP and RAMP 200 Readers.

Sinobiopharma, Inc. (OTC:SNBP) reported its most important product, the skeletal muscle relaxant KuTai (Cisatracurium Besylate), is now covered by China’s major insurance plan, the National Basic Medical Insurance (see story). The company recently reported that KuTai accounts for 96% of its revenues.

NeoStem (NBS) reported its China subsidiary, Suzhou Erye Pharma, was approved by the SFDA to begin manufacturing two penicillin products at the company’s new facility (see story). The new plant will allow Eyre to increase production of solvent crystallization sterile penicillin by 50% and freeze-dried raw sterile penicillin by 100%. In the past, these two products have generated 20% of Erye's revenues.

Huifeng Bio-Pharmaceutical Technology (OTC:HFGB) reported it expects 2009 revenues to be between $13 million and $14 million, about 30% better than last year (see story). Net income is forecast to be as much as $3 million. The big news is that Huifeng predicts 2010’s revenues will be in a range between $20 million and $25 million, an increase of 50% or more.

And finally, China will implement its reform plan for public hospitals by establishing pilot programs that move away from the profit motive, which has been the business plan of hospitals for the past years (see story). The programs will be spread across the country, with at least one located in each province, autonomous region and municipality. Unfortunately, details of the reform plan remain sketchy.

Disclosure: none.