Week In Review: Shanghai Pharma Bids In Cardinal China's $1.5 Billion Auction

Includes: CAH, CASI, CBPO
by: ChinaBio Today

Deals and Financings

Shanghai Pharma (SHA: 601607) and FountainVest Partners, a China private equity fund, have submitted second-round bids for Cardinal China's (NYSE: CAH) drug distribution operations. According to a Bloomberg article, the two entities are part of a smaller group of still-interested bidders that also includes Warburg Pincus of the US and PAG Asia Capital, a China/Asia investor. Cardinal China's operations are expected to draw bids in the $1-$1.5 billion range, though Cardinal may keep its China operations if it doesn't receive a suitable bid.

China Biologic Products (NASDAQ:CBPO), a plasma company headquartered in Beijing, will acquire an 80% interest in TianXinFu (Beijing) Medical Appliance in an all-stock deal worth $536 million. According to China Biologic, TianXinFu is China's largest maker of biomaterial scaffolds, which aid new tissue regeneration and organ repair. China Biologic will issue 5.5 million shares to PW Medtech (HK: 1358) to pay for the acquisition. Its stock price fell almost 15% after the deal was announced.

CASI Pharmaceuticals (NASDAQ:CASI), a US-China biopharma listed in the US, raised $23.3 million in a private placement. The company sold nearly 8 million shares at a price of $3 each, including a warrant to buy 0.2 shares at $3 apiece. CASI's previous close was $3.62. Following the announcement, the stock is trading at $2.77, a 24% drop. CASI, which is headquartered in Maryland with a Beijing R&D operation, in-licensed China rights to a portfolio of three drugs from Spectrum Pharma in exchange for a 20% CASI stake in 2014. The company is currently working to obtain China approval of the drugs.

Suzhou's Innovent Biologics will use a proprietary H2L2 transgenic mouse platform owned by Harbour Biomed of Shanghai to discover new mAbs. Innovent, which already has 13 biologic candidates in development, will have multi-year licensing rights to the H2L2 platform for several projects. Harbour will receive an upfront payment, fees and milestones as well as royalties based on net sales, though specific financial details were not disclosed. Harbour was formed in late 2016, when the company raised $50 million in initial capital and acquired Harbour Antibodies BV, a Dutch company with two transgenic mouse platforms.

Gentris Corporation, a US company focused on the use of genomic biomarkers in clinical studies, signed a MOU to form a biomarker collaboration with the Shanghai Institutes of Preventative Medicine. The collaboration's goal is to discover new biomarkers. It will develop translational research and epidemiological projects based on pharmacogenomics and provide clinical sample banking, which are services that Gentris provides to US patients for clinical trials and genomic biomarker programs.

Government and Regulatory

China's State Council issued a broad directive aimed at speeding up China's drug/device approval process, including using foreign trial data for approvals. The directive is a big boost for foreign pharmas that want to bring their drugs to China. In May, the CFDA released Draft Circulars (Numbers 52-55) that outlined the same changes, which were opened to a 30-day comment period. Although this is not the first time these changes have been made public, the official State Council statement means the proposals have been accepted and will be implemented.

Trials and Approvals

Samsung BioLogics (KRX: 207940), a Korean biologics CMO, received US FDA approval to produce an antibody drug substance at its second plant. The second facility, currently Samsung's largest, was completed in March 2016. Samsung has a larger $740 million third plant scheduled to complete its construction by the end of this year. The company has two divisions: a biologics CMO and Bioepis, a joint venture with Biogen (NASDAQ:BIIB) that makes biosimilars. In 2016, Samsung completed a $2 billion IPO in South Korea.

Generon, a Shanghai innovative biopharma, has forged a Special Protocol Assessment with the US FDA for the design of a second Phase III trial of its lead candidate. Gereron believes F-627 (benegrastim), a second-generation recombinant human granulocyte colony-stimulating factor dimer, has best-in-class potential to treat chemotherapy-induced neutropenia. The company is also testing a first-in-class recombinant human interleukin-22 as a treatment for graft-vs-host disease and acute alcoholic hepatitis.

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