China Biotech In Review: SFDA Drug Approvals Drop In 2011

Includes: BAXS, TPI
by: ChinaBio Today

Government and Regulatory

In 2011, the SFDA issued fewer drug approvals and allowed a smaller number of clinical trials than the year earlier. On the other hand, the agency received a larger number of applications for drug registration. In total, the SFDA approved 718 drug registrations last year, a reduction of 29% from the year earlier. In addition, the agency approved 621 applications to begin clinical trials, a decline of 32% from 2010. However, the 3620 applications for drug registrations were up 18% over 2010.

Deals and Financings

LoneStar Heart of California has raised up to $20 million in a milestone-based equity financing, which the company will use to support clinical development its lead product, Algisyl-LVR. The product, considered a medical device, is a biopolymer that is implanted into the left ventricle wall of the heart to treat advanced heart failure. The financing was led by Themes Investment Partners, a Hong Kong PE fund focused on China markets. The capital will be used to conduct clinical trials in Europe (already underway), followed by China.

Fosun Pharmaceutical's (SHA: 600196) $600 million Hong Kong IPO is being marketed to potential investors as a value play, a way of investing in a large portfolio of China pharma companies at a discount. Here's the pitch: Fosun owns 32% of China's largest drug distributor, Sinopharm (HK: 1099), a stake that is worth $2.6 billion. That equals 80% of Fosun's total market capitalization - currently $3.3 billion. For a relatively small $600 million in value over and above Sinopharm, investors get Fosun's drug production business and its stakes in a variety of China pharma companies. That, say the investment bankers, means investors are getting a discounted deal.

TranS1 Inc. (NSDQ: TSON) of the US has struck a distribution deal with Beijing Jiade Sunshine for its spinal implants in mainland China (see story). TranS1 makes minimally invasive products that treat degenerative spine conditions affecting the lower lumbar region. Included in the deal are the company's AxiaLIF® devices, which are already registered with the SFDA. TranS1's remaining instrumentation is expected to gain registration in Q4 of 2012.

Cephasonics, a Silicon Valley medical device company, signed an agreement with Excelpoint Systems of Hong Kong to distribute its ultrasound components to medical device makers in China. Cephasonics says its products allow device makers to provide ultrasound machines that have higher performance, require lower power and offer a quicker time-to-market. Excelpoint markets to electronics manufacturers in China and the Asia-Pacific region.

Company News

Tianyin Pharmaceuticals (AMEX: TPI) reported that its new production facility, which will cost $25 million, is on track to be completed early next year (see story). Tianyin was forced to move two of its plants by the Chengdu municipal government, which designates particular areas for specific industries. Tianyin will combine its pre-extraction and formulation operations into a single facility with 30% greater capacity. However, the large capital expenditure comes at a bad time for Tianyin.

Disclosure: none.