China Biotech Week in Review: Deals and Transactions, Trials and Approvals

Includes: HAIN, MR, SVA, WX
by: ChinaBio Today

At the recent ChinaBio Partnering Forum, three scientists were selected to receive ChinaBio’s Most Promising Technology Award, based on their novel life science research. The Partnering Forum, held May 11-13 in Beijing, was built around the theme “Capturing Innovation.” The Forum featured an Innovation Showcase where 29 China life science invited researchers presented their novel projects. Out of this highly qualified group, the three winners were selected. Each has completed early research on novel drugs: two seek better treatments for cancer and one is aimed at patients with hyperlipidemia.

Deals and Transactions

Hutchison China MediTech [AIM: CHM] formally announced it is forming a JV with Hain Celestial Group (NSDQ: HAIN) that will enter the Chinese infant-formula milk powder market (see story). The goal is a premium-priced, organic product; Hain is a US-based producer of natural and organic food products. The project has been in the works for two years: the JV was originally announced in 2009.

The Institute of Biophysics, a division of the Chinese Academy of Sciences, announced a neuroimaging collaboration with the University of Pennsylvania. The two institutions will set up a joint Center of Excellence in Brain Mapping to carry out collaborative research and education in neuroimaging. Also, CAS Vice President Li Jiayang and Penn President Amy Gutmann signed an MOU to establish a cooperative research relationship and to facilitate international exchange of ideas between the two institutions.

Trials and Approvals

Sinovac Biotech (NSDQ: SVA) reported positive results from a Phase I trial of its vaccine for human enterovirus 71 (EV71), the virus that causes Hand, Foot, and Mouth Disease (see story). Sinovac needs to expand its portfolio of vaccines to regain profitability. The company prospered in 2009-10 on its H1N1 flu vaccine, but those revenues have disappeared as Chinese consumers became afraid of vaccine-borne illnesses. Sinovac also announced recently that it is moving closer to production of an animal rabies vaccine.

Company Results

Sinocom Pharma announced a 21% increase in revenues during its first quarter 2011, reaching $30.2 million. Net income increased 13% to $6.1 million. The results, which are solidly positive, have an added significance because Sinocom recently announced it would make an IPO on the Nasdaq Global Market, and the current report may constitute investors’ last read on the company’s condition before the transaction.

Hainan Honz Pharmaceutical (SHE: 300086) announced its net income for the first half of 2011 will fall around 50%. The company has watched its stock price drop precipitously after its major product, Ruizhiqing, has been blamed for as many as seven deaths. Recently, the SFDA prohibited the use of the drug in children under 12. The drug is thought to cause liver damage and has been banned in many of the countries in which it was approved.

Earnings reports from Q1 are showing that, among China life science enterprises listed in the US, companies have almost uniformly reported higher revenues (see story). Net income has also risen, though usually by a lower percentage. The two largest companies in the group, Mindray Medical (NYSE: MR) and WuXi PharmaTech (NYSE: WX), continue to impress with strong gains. Price/Earnings ratios are lower than they were a few years ago, ranging from 31 down to a lowly 1.4. We give snapshots of the sixteen companies that have released reports so far this month.

Company News

BeiGene, Ltd., the Beijing startup focused on developing oncology drugs, announced it has hired seasoned veterans to head two critical positions: Clinical Research and Regulatory Affairs. Both individuals are returnees with extensive work history in the US. Although senior-level returnees are common in discovery and development positions, these later-stage appointments show China’s drug development is maturing as startups move to make top-flight appointments for clinical and regulatory work.

Disclosure: none.