Deals and Financings
Following a bidding war, Hong Kong private equity firm PAG will pay $540 million to acquire a 58% stake in Hisun BioRay, a biologics company with a focus in autoimmune and oncology drugs. It is the largest private equity deal in China biopharma this year, according to the companies. BioRay is the biologics subsidiary of Zhejiang Hisun Pharma (SHA:600267), a company that specializes in generic drugs and APIs. BioRay already markets an autoimmune treatment in China and is developing 10 other biologics.
Quan Capital, a Shanghai healthcare venture firm, closed its second fund with $275 million in commitments, according to media reports. In 2018, Quan announced it would begin fundraising for second fund with a $300 million target, one year after it closed its $150 million initial fund. Quan is very closely allied with Zai Lab (NASDAQ:ZLAB). Samantha Du, PhD, heads both companies and other members of Zai's senior management are also part of Quan's team. Quan seeks venture and growth investments in disruptive companies globally and in China.
Temasek, Singapore's sovereign wealth fund, and Beijing's Hillhouse Capital Group will acquire a 2% stake in Aier Eye Hospital Group (SHZ:300015) for $259 million. The shares will be sold by Aier Medical Investment Group and the company's controlling shareholder, Bang Chen, the Chairman/Founder of Aier. Aier Medical Investment Group buys properties in urban areas, which it leases to the hospital group. Aier offers lasik surgeries plus other ophthalmic and optometry services from hospitals in China and around the world.
Just Medical, a Tianjin orthopedics device company, closed a $14.5 million A funding round, led by BioVenture. Just Medical, which traces its history back to 1980, offers hip and knee replacements plus trauma and spine fixation devices. It focuses on materials sciences and uses 3D printing for its high-end hip prosthesis. The company will use the proceeds to continue product development and hire additional staff. The A round participants also included Boyi Investment Fund, Huajin Fund, LYFE Capital, and Fangyuan Fund.
Meditool Shanghai Enterprise received an investment led by Evonik Venture Capital, the venture arm of Evonik, a German chemical company, to support Meditool's 3D-printing technology for neuro and spine surgery implants. The investment was said to be in the "high single digits of millions of Euros." The Meditool implants are 3D printed with a high-performance polymer supplied by Evonik called Polyetheretherketone (PEEK). Meditool says the technology offers faster recovery for patients and fewer post-op problems for doctors.
Beijing Chunlizhengda Medical Instruments (HK:1858) partnered with Germany's Syntellix to import Syntellix's innovative magnesium alloy orthopedic implants into China. Chunli will make milestone payments to Syntellix for revenues that are greater than $110 million over five years. Syntellix's magnesium alloy orthopedic products are bioabsorbable. Besides marketing and distribution, the agreement includes China R&D, academic projects and training activities. Both companies are confident that China sales will top the $110 million minimum.
Immunotech Biopharm of Beijing has released its initial prospectus for a Hong Kong IPO, an offering expected to raise up to $200 million. The company's lead product, EAL, consists of autologous CD8+ T cells activated and expanded ex vivo. EAL is currently being tested in a China Phase II trial in patients with post-surgical liver cancer. Immunotech, which hopes EAL will be ready for a 2021 launch, is also working on pre-clinical development of nine CAR-T candidates.
BrightGene Bio-Medical of Suzhou said the Shanghai Stock Exchange has accepted its filing for a STAR Board IPO. The company expects to raise $50 million in the offering. BrightGene focuses on innovative drugs along with difficult-to-make generic drug APIs and finished drugs. It is developing immunoncology treatments and orally available GLP-1RA peptides for type 2 diabetes. Earlier this year, BrightGene completed an $80 million pre-IPO funding led by Sequoia China.
Novartis (NYSE:NVS) has sold its Suzhou API manufacturing campus to Zhejiang Jiuzhou Pharma (SHA:603456) for $110.5 million (see story). In 2009, Novartis completed construction of the plant after investing $250 million. At the time, the company was moving its API production to China to lower costs. Jiuzhou will continue the plant's operations of supplying APIs to Novartis. The buildings on the campus include a Technical Center that originally developed small amounts of APIs for Novartis' clinical trials.
WuXi AppTec (OTCPK:WUXAY) (SHA:603259) (HK: 2359) has launched DELight, a novel DNA Encoded Library (DEL) package that offers cost-effective, self-service hit finding services (see story). The service allows any researcher to access WuXi's DNA-encoded library of more than 8 billion compounds. WuXi provides a DELight kit, complete with instruction manuals. Researchers use the kit to complete affinity selection with only a minimum amount of assay development and without disclosing target information, and then return the sample to WuXi.
Trials and Approvals
AstraZeneca (NYSE:AZN) announced China approval for Tagrisso (osimertinib) as a first-line treatment for non-small cell lung cancer (NSCLC) in patients with EGFR exon 19 deletions or exon 21 (L858R) substitutions (see story). In a Phase III trial, Tagrisso increased progression-free survival to 18.9 months, an improvement over 10.2 months for standard EGFR drugs. About 30-40% of China NSCLC patients have EGFR mutations, an unusually high number. Previously, Tagrisso was approved in China as a second-line treatment for a similar group of patients.
Hutchison China MediTech (Chi-Med) [AIM:HCM] (NASDAQ:HCM) has started a global Phase I/Ib trial of HMPL-689, the company's oral small molecule phosphoinositide-3 kinase delta isoform (PI3Kδ) inhibitor, enrolling patients with relapsed or refractory lymphoma. Chi-Med dosed the first patient on August 26, 2019 in the US. The lymphoma trial will run in parallel to a similar China Phase I/Ib trial that tests HMPL-689 in a broad range of hematological cancers. Chi-Med says the candidate is highly selective and potent.
Shanghai's CARsgen Therapeutics was granted US orphan drug designation for its fully human anti-BCMA (B Cell Maturation Antigen) CAR-T cell therapy as a multiple myeloma treatment. The company was approved to start US trials of the candidate in June 2019 and China trials in early 2019. In the Phase I China trial, CARsgen administered CT053 to 24 heavily pre-treated patients: 70.8% showed a complete response and no patient experienced cytokine release syndrome (CRS) higher than grade 2. Founded in 2014, CARsgen focuses on CAR-T drug development.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.