In China biopharma news last week, there were two items of broad significance and a host of company-specific announcements. The pace of growth in China biopharma seems to be picking up, as the industry lives up to the often used term “China Speed.”
Perhaps the report with the most far-reaching significance was a story about the as-yet unannounced 11 billion RMB ($1.5 billion) initiative of China’s government to stimulate a native innovative drug sector (see story). China’s cabinet, the State Council, is reported to have approved the program in late December, but has not made any formal declarations about the plan so far.
According to the latest rumors, the program will be formally announced in March. The money, which will be dispensed in addition to current programs, will be spent over 15 years at roughly the rate of about $100 million per year: 4 billion RMB ($548 million) over the next five years and 7 billion RMB ($966 million) in the following 10 years.
ChinaBio Today also continued its four-part coverage of proposed changes in the Chinese patent system, another story with broad significance (see story). This article, written by Dr. Charles C. Liu, Partner of the Unitalen firm, and Jeanne J. Liu, declares that innovative companies will be “profoundly touched” by the proposed alterations in patent law and practice. In this second of four installments, the authors discuss the specific topics of "Design Patents," and "Division Applications."
Last week, the ranks of China biopharmas that trade on US exchanges was increased by one, as Chengdu Tianyin Pharmaceutical Co. Ltd. used a reverse merger with VisCorp (OTC:VSCO) to make its debut as public company (see story). At the same time, Chengdu Tianyin closed a $10.2 million private placement. As a revenue-producer, Tianyin Pharmaceutical Co., as the new company will be known, is no slouch. In fiscal 2007 (which ended on June 30), the company made a $4.2 million profit on revenues of $20.4 million. Tianyin currently markets 34 products and has another 51 awaiting approval from the SFDA.
Two CROs announced that they closed additional venture capital rounds last week. Sundia MediTech Company, a Shanghai-based CRO, completed a B series (see story). According to Sundia officials, the fund raising was facilitated by the highly successful IPO of WuXi PharmaTech (NYSE:WX) last summer. Because that offering was so warmly received, China CROs suddenly became very visible and desirable. Sundia had some publicity of its own: the company was ranked number 16 on the respected Venture 50 list, a ranking of the most promising investment opportunities in China put together by investment house Zero2IPO. Last year, Sundia merged with fellow Shanghai CRO, United PharmaTech.
A second CRO, Bridge Laboratories, headquartered in the US, but with its original pre-clinical lab in Beijing, closed $18 million in a third round (see story). Bridge will use the money to expand its Beijing toxicology lab, and to make acquisitions. The latest round brings Bridge’s totally funding to $57 million. Investors in the Series C include the previous investors in the Series B funding and several new global investors, including Granite Global Ventures [GGV]. Granite Global will put one of its Shanghai-based founders on Bridge’s board.
Benda Pharmaceutical (OTC:BPMA) will seek to migrate from the OTC Bulletin Board to the American Stock Exchange (see story) . The company has also established a relationship with CRT Capital Group LLC to explore strategic alternatives, including M&A, joint venture, divestiture, spin-off, financing or other capital market transactions, a companion initiative to the AMEX listing. In April 2007, Benda bought a 60% share of SiBiono and its gene therapy cancer drug Gendicine. Part of the deal sent 2.2 million unregistered shares to SiBiono owners. Benda promised the investors that the shares would be registered on the NASDAQ or AMEX and that they would have a price of $3.60 each by mid-2008. Otherwise, Benda has to buy the shares back from the shareholders at $3.60. Because Benda is languishing below $1 per share, it will also need to find some cash.
Access Pharma (OTCQB:ACCP-OLD) out-licensed the China rights to MuGard, its oral mucositis product, to RHEI Pharma (see story). RHEI, which is based in the US, is in the business of taking proprietary medications to China, shepherding them through the SFDA approval process, and then distributing them. If MuGar is granted approval, RHEI will manufacture the product in China and, hopefully, then distribute MuGard throughout Southeast Asia.
China Biologic Products (NASDAQ:CBPO) was awarded a relatively small provincial grant of 1.5 million RMB ($200,000) that it will use to upgrade its plasma production facilities (see story). In 2007, plasma-based drugs have seen huge run-ups in prices because the supply of raw plasma was curtailed when regulators found tainted supply. The Shandong Provincial government bestowed the grant on China Biologic as part of their Double Hundred project. The project is meant to encourage technologically innovative industries. In the first nine months of 2007, China Biologic produced a profit of $7.6 million on revenues of $25.4 million.
And also last week in ChinaBio Today, we reviewed the success of the ChinaBio Investor Forum, put together in just six weeks, but a major success despite its short gestation period (see story). Early state biotech companies presented their stories to leading VCs, and some deals have already been struck. “China Speed” is the term used to describe the sometimes near-miraculous velocity at which things get done in China, and the ChinaBio Investor Forum showed that “China Speed” is no myth: it's a fact.