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Deals and Financings

Shanghai Fosun Pharma (SHA: 600196; HK: 2196) priced its Hong Kong IPO at the bottom of the announced price range, giving the transaction a value of $512 million - it was expected to raise $600 million. The price is a 13% discount from the shares on the Shanghai exchange. Fosun has said it will spent half of the proceeds on M&A transactions. If the underwriters' overallotment is exercised, the IPO will raise an additional $76.7 million.

AstraZeneca (NYSE: AZN) signed a $150 million deal with Ironwood Pharma (NSDQ: IRWD) of the US to co-develop and co-commercialize Ironwood's novel constipation treatment in China (see story). Linaclotide, a guanylate cyclase-C (GC-C) agonist, was approved by the US FDA in August to treat chronic idiopathic constipation and irritable bowel syndrome with constipation (IBS-C) in adults. In May, Ironwood announced a Phase III trial of the drug in China.

MicuRx Pharma, a US-China clinical-stage biopharma, formed a JV with Shanghai Zhangjiang Biomedical Industry Venture Capital. Shanghai Zhangjiang invested 60 million RMB ($9.6 million) in the JV, and MicuRx contributed China rights to its lead antibiotic candidate. MRX-I is a novel, oral oxazolidinone antibiotic that is designed to be effective against antibiotic-resistant infections. MicuRx, which located its China facilities in Zhangjiang Park, will use the money to fund China Phase II and III clinical trials of MRX-I. MicuRx presented at ChinaBio®'s first Investor Forum, held in 2007.

BG Medicine (NSDQ: BGMD), a US maker of cardiac diagnostic tests, signed a deal with Kindstar Diagnostics allowing Kindstar to offer BGM's galectin-3 testing services in China (see story). Kindstar is the largest diagnostic testing lab in China. In the US, the BGM Galectin-3® test has been approved in the US to help assess the prognosis of patients with chronic heart failure.

As China's major metropolitan areas become more competitive, US medical device makers are turning their attention to the second and third tier cities (see story). For Medtronic (NYSE: MDT), the changed emphasis drove the company to purchase Kanghui Holdings (NYSE: KH), a China device company, because of Kanghui's well-established sales connections in smaller cities and rural areas. GE Healthcare (NYSE: GE) is following a different route: developing primary care products for smaller basic care providers.

LifeTech Scientific (HK: 8122), previously known as a China maker of cardiovascular medical devices, has joined with Broncus Technologies of the US to form a partnership that will commercialize Broncus' LungPoint® Navigation System in China. The system enables physicians to plan bronchoscopic procedures, and then navigate to precise locations in the lungs to diagnose and treat lung cancers. The partnership is also being joined by DiNova Venture Partners of Shanghai and Themes Investment Partners of Hong Kong. Last week, Medtronic (NYSE: MDT) announced that it would pay $66 million to acquire a 26% stake in LifeTech.

News and Analysis

The second annual ChinaBio® Leadership Retreat concluded a successful invitation-only summit, focusing on the agenda "Rethinking China: A New Strategic Approach." The meeting was attended by more than 120 senior executives from global life science companies, China's leading biotechs and venture capital firms. The two-day event was held October 22-23 at the Sheraton Four Points hotel in the Taicang New Development Zone, just outside of Shanghai.

Disclosure: none.

Source: China Biotech In Review: U.S. Medical Device Makers Turn Attention To 2nd And 3rd Tier Cities