Week In Review: New Shanghai Hi-Tech Exchange To IPO Pre-Revenue Companies

Summary

• The Shanghai Stock Exchange's new Technology Innovation Board will allow still-unprofitable hi-tech companies - including biopharmas - to IPO on the exchange, though each IPOing company must have a valuation of at least $600 million to qualify.
• China Medical System, a Shenzhen company that makes and distributes drugs in China, offered $11 million for a 77% stake in Midatech Pharma of the UK.
• Hua Medicine of Shanghai has dosed the first patient in a US Phase I/II trial of its oral type 2 diabetes candidate, dorzagliatin. It will be tested as a monotherapy and in combination with sitagliptin, Merck's DPP-4 drug, Januvia.

Government and Regulatory

The Shanghai Stock Exchange's new Technology Innovation Board will allow still-unprofitable hi-tech companies - including biopharmas - to IPO on the exchange, though each IPOing company must have a valuation of at least $600 million to qualify. Also, biopharmas must target a significant market with approval for at least a Phase II clinical trial of one innovative new drug. China regulators will examine company filings to validate the descriptions of the companies, but they will not exercise any further control over IPOs on the new board.

Deals and Financings

China's Qiming Venture Partners announced plans to raise $250 million for its second US dollar healthcare fund, aimed at investing in US early-stage life science companies. One year ago, Qiming closed its first US Healthcare Fund at $120 million, part of a larger $1.4 billion fundraising that also included two all-sectors funds. Qiming has invested in nearly 80 life science companies, including AmoyDx, TigerMed, Gan & Lee, Frontage and Zai Lab.

Lyndra Therapeutics of Boston raised $55 million in a Series B financing to support its ultra-long-release drug delivery technology. The round was led by Polaris Partners, an early backer of Lyndra, and it was joined by several new investors including HOPU Investments, a Beijing private equity firm, and the Gates Foundation, plus Gilead Sciences (GILD), Invus and Orient Life. Lyndra plans to file an IND for a Phase II trial of a long-acting schizophrenia pill this year.

Health Hope Technology, a Beijing AI healthcare company, completed a $15 million Series A financing led by CITIC Bank International and joined by Renai Capital. Founded in 2014, Health Hope has now raised close to $150 million. The company's ego1.0 system focuses on health management, while ego2.0 offers deeper medical knowledge that includes guided consultation, inquiry, disease detection, diagnosis, treatment, execution and follow-up. The company uses the majority of AI technologies to provide its services.

China Medical System (HK: 0867), a Shenzhen company that makes and distributes drugs in China, offered $11 million for a 77% stake in Midatech Pharma (MTP) of the UK. Midatech is a drug delivery company. CMS will have China rights to two Midatech candidates, MTD201 and MTX110, along with rights to any other drugs it develops in the next three years. As part of the agreement, CMS will agree to not pursue a hostile Midatech takeover. Midatech shareholders must approve the share sale.

Advent International, a Boston-based private equity investor, will make a majority investment in BioDuro. BioDuro is a US-China CRO with facilities in San Diego, Beijing and Shanghai. The exact size of the investment was not disclosed. BioDuro was formed in 2005 as a Beijing-based CRO with headquarters in San Diego. In 2009, the China operations were acquired by PPD, the global CRO, for $73 million. It became an independent entity once again in 2015, acquired by its original owners. It then merged with Formex, a San Diego API formulation, development and cGMP manufacturing company.

Shanghai's I-Mab Biopharma signed a memorandum of understanding with Bio-Cancer Treatment International of Hong Kong to collaborate on developing BCT's arginine depletion therapy in autoimmune diseases and cancers. As part of the work, the two companies will develop biomarkers for arginine and other immunologic targets in the tumor microenvironment for cancer immunotherapy. I-Mab will establish a translational medicine lab in Hong Kong to advance the project.

Trials and Approvals

Hua Medicine (HK: 2552) of Shanghai has dosed the first patient in a US Phase I/II trial of its oral type 2 diabetes candidate, dorzagliatin. Dorzagliatin is a small molecule fourth-gen glucokinase activator. It will be tested as a monotherapy and in combination with sitagliptin, Merck's (MRK) DPP-4 drug, Januvia. Hua believes dorzagliatin will control progression of the disease in some subsets of T2D patients. The company has over 600 T2D patients enrolled in China Phase III dorzagliatin clinical trials.

Suzhou's Innovent Biologics (HK: 01801) reported that the NMPA accepted the company's filing of an NDA for its biosimilar to bevacizumab (Avastin). After scoring approvals for two drugs in late 2018 - Tyvyt, a PD-1 drug, and IBI-303, a biosimilar to arthritis treatment Humira - the company has announced three China acceptances of NDA filings in a month. The Avastin biosimilar acceptance is based on clinical data from two clinical studies comparing IBI-305 to the reference drug. Innovent develops novel drugs for oncology, autoimmune and other diseases.

CStone Pharma of Suzhou said China's NMPA approved its clinical trial application for a China Phase I trial of BLU-554 (CS3008), an inhibitor of fibroblast growth factor receptor 4 (FGFR4). In June 2018, CStone in-licensed rights to CS3008 from Blueprint Medicines of Boston in a three-drug, $386 million deal. The trial is part of a global Phase I trial for BLU-554 in patients with advanced hepatocellular carcinoma (HCC) who haven't previously been treated with a tyrosine kinase inhibitor.

Shanghai's CARsgen Therapeutics announced that China's NMPA cleared the IND for its CAR-T treatment aimed at GPC3-positive solid tumors. The company, which is focused on CAR-T drug development, claims its CAR-T candidate is the first to be cleared in China for solid tumor cancers. Glypican-3 (GPC3) is overexpressed in liver cancer, which will be a target of the candidate, along with squamous lung cancer. CARsgen expects to start a similar US trial by the end of 2019. The company now has five CAR-T therapies in trials.

I-Mab Biopharma of Suzhou nabbed its third US IND approval to start clinical trials of an innovative drug this month. The two-year-old company was OK'd to begin tests of its fully human anti-CD47 mAb (TJC4), which it discovered and developed itself. Previously, I-Mab was approved to begin trials of a CD73 antibody in patients with solid tumors and a humanized immunoglobulin for autoimmune and inflammatory diseases. I-Mab plans to start Phase I/Ib clinical trials of its newest approved candidate, TJC4, in patients with solid tumors and lymphoma as a monotherapy and in combination therapies.

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Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors