China Biotech Weekly Review

Bringing together people interested in early-stage China biomedical companies, the ChinaBio Investor Forum took place in Shanghai on July 7-8 (see story). The Forum is the only such event devoted to China’s early-stage biomedical sector. Greg B. Scott, President of ChinaBio Accelerator, the organizer of the event, declared it a success, pointing out that more than 250 attendees were able to gain insights from 24 speakers, including venture capitalists, entrepreneurs and big pharma executives. In addition, 21 early-stage companies took advantage of the Forum to present their stories to the almost 80 venture capitalists who attended.

Two of the presenting companies were honored with the "Most Promising Companies" award at the event (see story), an award bestowed by a panel of venture capitalists. The winning companies were Shenogen Pharma Group of Beijing, and Beyond Diagnostics Inc., based in Shanghai. Shenogen Pharma is developing small molecule drugs for breast cancer and obesity, based on a novel estrogen receptor, ER-36. The receptor was discovered by one of its founders. Beyond Diagnostics is developing a new generation of chemluminescent assays and integrated analyzers for clinical and hospital laboratories. Their high throughput instrument, which has been approved by the SFDA, is expected to be on the market by the end of this year.

Both companies illustrated the trend in China toward the development of innovative technologies. The “Most Promising Company” award was sponsored by Unitalen Attorneys at Law, a prominent IP law firm in China. The next ChinaBio Investor Forum is scheduled to be held in Suzhou on August 28-29.

At the Investor Forum, GlaxoSmithKline Plc (GSK) announced its plans to double its China-based R&D staff in the next year (see story). Currently, the company employs 170 people in its Shanghai R&D facility. By the end of 2008, it will have 200 employees on staff, and then the company will has the goal of 350 staff members within a year.

In financing news last week, American Oriental Bioengineering (AOB) placed $115 million of convertible notes (see story). The notes, due 2015, were privately placed with a 5% coupon and a conversion price of $9.29, a 15% premium. As an unusual part of the refinancing, American Oriental said that $30 million of the proceeds would be spent to buy back its own shares. The purpose of the buyback was to counteract the dilutive effects of the offering and prevent a fall in the company’s stock. As part of the buyback, a third party would conduct derivative transactions. American Oriental has been active in M&A as a means of building its business. It promised more transactions in the future. Before the refinancing, American Oriental had $159 million in cash, so it now has an even more considerable war chest with which to do deals.

Bio-Bridge Science, Inc. (BGES.OB) netted $2.8 million in a private placement, later raised to $4.3 million, which it will use to further development of its AIDS vaccine technology in China (see story). The majority of the investment came from two of its directors. With headquarters in Oak Brook, IL, the company operates from its Beijing facilities. Bio-Bridge has been building up a vaccine-supporting business through M&A. 

Commonwealth Biotechnologies (CBTE) and Venturepharm Laboratories [HKEX: 8225] became more closely entwined as Commonwealth exercised a $1 million put option with Venturepharm (see story). Commonwealth will use the new capital to build out the facilities of the Commonwealth-Venturepharm JV, which will house Commonwealth’s Exelgen and Mimotopes subsidiaries. In their JV, Commonwealth combines its expertise with early stage drug discovery technologies, while Venturepharm adds experience with contract manufacturing and clinical trial services.

In the last deal-related item this week, AMDL (ADL) signed a letter of intent to acquire a China-based drug distributor, Sichuan ZhiTong Pharmaceutical, Ltd. [SZP] (see story). SZP has been distributing an anti-emetic drug, Domperidone, for AMDL since late last year. The price of the acquisition has not yet been determined: a third-party evaluator will determine a fair valuation. 

In company news, the Shanghai-based CRO Sundia MediTech was once again named to the list of the 50 best companies for investment in China in 2008 (see story). To assemble the annual list, investment firm Zero2IPO chooses 150 candidates from over 900 nominated companies, based on expected investment return. A panel of 51 VCs makes the final choices. Sundia has been busy in its short history, establishing relationships with other CROs. It has also completed two rounds of venture capital. 

Bayer AG established the goal of increasing its China revenues by more than 20% per year over the next five years (see story). Analysts expect the China healthcare market to grow by 20% each year, and Bayer feels it can outperform the market. 

Helicon Group [ASX: HCG] of Australia received SFDA approval for ReCell, a skin regeneration concept and device (see story). The device harvests a patient’s own skin cells to treat burns and wounds. Helicon says that its technology is easier to work with than the current standard of care, epithelial autographs, which produce sheets of skin in a lab. The ReCell product also takes less time to culture. Helicon will import the product into China for Avita Medical [ASX: AVH], which developed it.

China Sky One Medical (CSY) received production approval for three injected products, including a propyl gallate injection for the treatment of acute cerebral infarction, coronary heart disease, thrombosis, dysmenorrheal and nephropathy (see story). China Sky One, which expects to launch its propyl gallate injection product in August, forecasts it will produce Q4 revenues of $3 million. Keeping up the barrage of announcements about its development activity, China Sky One also announced it has 11 drugs currently in clinical trials (see story). The trials will last about six months each. Assuming the tests are successful, China Sky One will submit the drugs to the SFDA in early 2009.

Disclosure: none.

Comments

[User 26785]

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