China Biotech In Review: WuXi PharmaTech Reports Another Year Of Steadily Increasing Growth

Includes: ENMD, WX
by: ChinaBio Today

Deals and Financings

Sinopharm Holdings (HK: 01099), one of China's big-three drug distributors, will issue $640 million five-year corporate bonds on the Shanghai Stock Exchange. The purpose? The company declared only a not-particularly-specific need to "replenish working capital." Can we expect the transaction to spark a new round of M&A activity in China's highly fragmented drug distribution system?

Shanghai Fosun Pharma (SHA: 600196; HK: 02196) will buy $22.4 million of Series D preferred shares in Saladax Biomedical, a US maker of diagnostic assays. Also, Fosun will have the right to distribute Saladax products in mainland China. Saladax produces the MyCare family of oncology assays, which allows doctors to optimize dosing of specific medicines despite individual differences in absorption and clearance.

EntreMed (NSDQ: ENMD), a US biotech with strong China connections, raised $10.7 million from two China-specific institutional investment funds: Kleiner Perkins Caufield Byers China Fund II LP and IDG-Accel China Growth Fund III LP (see story). EntreMed will use the money to conduct clinical trials of its lead oncology drug candidate, ENMD-2076. In January, EntreMed filed an application with the SFDA to begin China trials of the drug in patients with triple-negative breast cancer.

Viva Biotech, a Shanghai pre-clinical CRO, formed a partnership with Addex Therapeutics of Switzerland. The two companies will develop oral small molecule adenosine 2A receptor (A2AR) positive allosteric modulators (PAMs), with Viva adding its structural biology services to the PAMs discovered by proprietary Addex technologies. The PAMs are intended to treat inflammatory diseases.

China National Biotec Group announced a research collaboration with Riboxx Pharmaceuticals GmbH, a German biopharma. The two companies will evaluate the combination of Riboxxim, which is a TLR3 agonist from Riboxx, and a CNBG antigen as a treatment for an infectious disease. Riboxx characterized the disease as one of the world's deadliest, but did not name it. Riboxxim is an immune system modulator.

WuXi PharmaTech (NYSE: WX) signed a second agreement with Open Monoclonal Technology, a California company that produces transgenic animals for development of human therapeutic antibodies (see story). Under the new agreement, WuXi's clients using OMT's OmniRat and OmniMouse technologies will have the option of developing their products either for global markets or regionally in China, Japan, Korea or other Asian territories. If a client secures rights only in Asia (or some part of Asia), the global rights will remain with OMT.

Sun Yat-sen University and its hospitals will collaborate with Johns Hopkins University to develop China's next-generation clinical investigators. The two academic medical institutions will create a platform for exchanges among clinical and translational investigators, research professionals and administrators in both the US and China. The goal is to build a world-class research infrastructure in China.

Government and Regulatory

China may soon give the SFDA power to regulate the nation's food supply. Presently, the SFDA has power over drugs, medical devices, cosmetics and health foods. China has suffered through several confidence-shattering food safety scandals in recent years, ranging from gutter oil to tainted milk. The reorganization will put responsibility for food safety in one ministry, rather than the confusing system currently in place that spreads jurisdiction into thirteen different agencies. In addition, the new organization will report directly to the State Council. In 2008, the SFDA was made part of the Ministry of Health.

Company News

WuXi PharmaTech reported another year of steadily increasing growth for 2012, something it seems to do with metronomic regularity (see story). In 2012, the company's net revenues rose 23% to just under $500 million and earnings (GAAP) climbed 7% to $86.6 million. WuXi's mainstay business, China-based laboratory services, led the charge, rising almost 27% to $293 million. Manufacturing revenues increased 22.5% to $117 million, and US laboratory services were up 12% to $90 million.

Disclosure: none.