Gene Therapy and Anti-Aging Treatments on Top of China Biopharma Agenda

An often-repeated theme about China biopharma revolves around its rapidly increasing sophistication. From its beginnings as a low-cost provider of standard pharmaceuticals, China has quickly become a site for locating FDA-acceptable clinical trials, and from there, on to developing innovative drugs. Examples of all of these facets of China biopharma made the news last week. At the top of the of innovation spectrum, two China biopharmas made announcements about gene therapy drugs. Sunway Biotech of Shanghai reached an agreement with Genzyme (NSDQ: GENZ) to co-develop in China an experimental gene therapy drug that aids the growth of blood vessels (see story). Sunway will sponsor clinical trials in which Ad2/HIF-1a is given to patients with peripheral arterial disease. Genzyme will continue to sponsor trials for the drug in Europe and the US (trials that are already underway).

Sunway is no stranger to the field of gene therapy. It introduced a gene therapy treatment for cancer, Oncorine, in China last November. H101 is a genetically-modified type-five adenovirus that can selectively replicate inside tumor cells with dysfunctional p53 genes, killing them and stopping the spread of the cancer. Aida Pharmaceuticals (OTCBB: AIDA) provided an update on a second gene therapy cancer drug, Rh-Apo2L (see story ). A broad spectrum genetic agent that induces apoptosis (cell death), the drug is in the middle of its Phase II trials.

Among other comments, Aida said the company is building a facility that will be able to produce 80 million doses of Rh-Apo2L each year. Aida will decide in the Phase II trials which cancer types will be the focus of late-stage tests. Aida acquired majority control of Rh-Apo2L when it brought its ownership of Shanghai Qiaer Biotechnology up to 77.5% in August 2006. Aida expects Rh-Apo2L to produce $75 million of sales annually.

On the CRO (contract research organization) front, a large investment showed that the sector remains very interesting to western financiers. A private equity firm not known for its interest in biopharma (or China for that matter) bought a substantial part of a China CRO, probably hoping to duplicate the very successful IPO of WuXi PharmaTech (NYSE: WX). TPG (formerly Texas Pacific Group) invested more than $30 million in ChemPartner, a CRO based in Shanghai (see story).

Although details are not known, it is estimated that TPG received 20% to 25% of the equity of ShangPharma, the parent of ChemPartner. ShangPharm also has a division that provides CRO services exclusively to Lilly (NYSE: LLY.) Since its founding in 2003, ChemPartner has grown to employ more than 250 scientists. As a low-cost center for manufacturing, China still remains active, as news from AstraZeneca (NYSE: AZN) showed. The giant biopharma announced it would begin purchasing Lactam, a key ingredient used to make Seroquel, its atypical schizophrenia drug that had revenues of $3.4 billion last year, from contract manufacturers in China (see story).

AstraZeneca is outsourcing much of its manufacturing operations as a way to cut costs.

And finally, on the domestic front, AMDL (AMEX: ADL) announced that one of its China subsidiaries, JJB, began marketing a new injectable anti-aging skin care product in China (see story). The injectable treatment contains human placental histosolution [HPH]. Using the brand name Goodnak, the product will be the first of a full line of cosmetic products. The product will be sold through high-end beauty salons, plastic surgery hospitals and medical cosmetology institutions. AMDL expects the product to produce up to $24 million of revenue in its first year.