China Biotech in Review: Deals, Developments and Financials

by: ChinaBio Today

Stories about new deals, drug development and financial news showed that China biophama continued its evolution last week. Phynova (OTC:PHNVY) was a prominent example. The UK-based botanical drug company announced that it has adopted a more China-centric focus (see story). Traditionally, the company has always had a connection to China; it owns a 45% share in Botanic Century Beijing Ltd, a drug development company, and its previous business plan called for the use of TCM formulations as a basis for drugs that addressed unmet medical needs in the west. Now, the company will concentrate its attention on China, with an emphasis on the China market, China drugs and China acquisitions. Phynova’s lead drug is PYN 17, which is based on a TCM with known anti-inflammatory and anti-fibrotic properties. The drug is being developed as a treatment for the symptoms of chronic hepatitis C. It has successfully completed safety and tolerability tests in Phase I/II trials while exhibiting anti-inflammatory tendencies in hepatitis patients. Phynova is planning a Phase II proof of concept trial for PYN 17, but the company is low on cash. Phynova did not disclose whether it will continue to pursue approval of PYN 17 in the west under its new business plan.

Crown Bioscience announced that it will build a second China-located CRO facility in Taicang City, Jiangsu Province (see story). Crown Bioscience is based in Silicon Valley, though its labs are in Beijing and Indianapolis, Indiana. Taicang City, for its part, is actively seeking to attract CROs. One of the attractions of the area is lower wages as Taicang hasn’t experienced the same wage inflation as the major biopharma centers of Shanghai and Beijing. In the last two years, Crown Bioscience has been building a web of CRO relationships, most notably with Chemizon. Like Crown, Chemizon has its headquarters in the US, though its operations are in South Korea and Beijing. In April of this year, Chemizon participated in Crown’s B funding round.

The Dutch diagnostics company Qiagen (NASDAQ:QGEN) announced a deal with the Chinese Academy of Sciences [CAS]. The two entities will work together to develop new molecular tests that will determine the safety of food (see story). Operations will be housed in the Institute of Nutritional Sciences [INS], Shanghai Institute of Biological Sciences [SIBS] in the Xuhui district. Qiagen will equip the collaboration with instruments and consumables while CAS will provide the physical space and researchers. Researchers will use QIAplex multiplex assays, which allow highly sensitive molecular tests for up to 50 different food-borne pathogens to be incorporated in a single run.

In terms of drug development, 3SBio (NASDAQ:SSRX) announced that it has filed for SFDA approval of a high-dose, 36,000 IU formulation of EPIAO for the treatment of anemia resulting from chemotherapy (see story). The big advantage of the new formulation is that it requires only once-weekly administration, an easier regimen than the three-times per week administration of the more common 10,000 IU injections. Unlike 3SBio’s other formulations of EPO, this one would be exclusive to the company. Comparative tests of the two formulations showed equal results in terms of both efficacy and tolerability.

Sinovac Biotech (NASDAQ:SVA) said it would start work on developing a vaccine for human hand, foot and mouth disease, a childhood disease that is caused by human enterovirus 71 (EV71) (see story). To develop the vaccine, Sinovac will collaborate with the CDC of China, which will supply the company with epidemiology studies of recent outbreak areas. Currently, there is neither a specific treatment nor a vaccine for enterovirus infections. Sinovac noted that China has suffered from at least one HFMD epidemic each year since 1988. An epidemic in Fuyang City earlier this year caused 22 deaths.

On the financial front, China Pharma Holdings (NYSEMKT:CPHI) now says its Q3 results “could” show a positive cash flow, a follow-up to its report last week that the company expects a 40% increase in revenue during the period (see story). The company says new collection policies are starting to have a positive effect. As we have reported, China Pharma is growing and profitable, but its increasing Accounts Receivable numbers have kept the company from truly prospering. The large increase in AR effectively cancels its profits and caused the company to seek additional financing earlier this year.

China Sky One Medical (OTCPK:CSKI) increased its full-year 2008 revenue and income guidance (see story). The company upped its expectations for 2008 revenue by 9%, rising from $82 million to $89 million. Net income is now predicted to jump 5% higher. Instead of $26.3 million, the company expects to earn approximately $27.5 million. China Sky One’s gross margin was the only negative in its latest guidance. The company said gross margins are expected to equal 77%, a decline from the previous expectation of 78.5%.

Tianyin Pharmaceutical (TYNP.OB), which specializes in modernized versions of traditional Chinese medicines, has been approved to list is shares on the American Stock Exchange (see story). It will migrate from the OTC Bulletin Board on or before October 3, 2008 and trade under the ticker symbol TPI. Although Tianyin Pharma is currently trading under the $3 minimum price per share required for most AMEX sets of listing criteria , the company was able to qualify under alternate standards.

A new China trade organization, one that will provide a voice for the excipient industry, was announced last week (see story). Excipients are the inactive substances that stabilize and help deliver the active ingredients in pharmaceuticals. The International Pharmaceutical Excipients Council [IPEC] China, made up of members of the China excipient industry, was formed at a critical time for the industry. In 2005, the SFDA proposed a draft of regulations that treated excipients much like APIs, requiring clinical study data, drug master file data and GMP certificates. These regulations were much more rigorous than those in force in the rest of the world. After protests, the SFDA backed off their proposals and put off establishing any new rules until 2008. IPEC China hopes to have a set of regulations in place by the end of 2008. 

And there was also news last week about the baby formula scandal, a problem whose severity continues to increase. According to new findings, the first complaints about the tainted baby formula in China began to surface as far back as December 2007, almost ten months ago (see story). Previously, it was thought the first problems were noticed in May. No formula was recalled until September 11. The new discovery means the coverup has been going on for six months longer than anyone previously thought, with the implication that safety regulation remains a major problem in China.

Disclosure: none.