Taiwan Liposome Company- Ahead of the Pack

Aug. 07, 2010 9:32 PM ET
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Chimera Research Group provides completely independent and actionable investment and trading ideas backed by comprehensive fundamental research and analysis for listed companies in the biotech and pharmaceutical sectors. Our coverage primarily focuses on early stage companies with impending FDA and/or clinical trial catalysts. Our coverage may also include mid-to-large cap biopharma companies where there exists specific catalysts. Where appropriate, our recommended trade and investment ideas incorporate the use of simple to more complex option strategies. Our coverage universe is continuously updated and includes research and trade/investment ideas for the Top 10 up-and-coming catalysts that represent the best opportunities for traders and investors. The biopharmaceutical sector offers significant opportunities to generate big returns yet can be risky and difficult to navigate.
Biotechnology is an emerging industry in Taiwan. After the country’s immense success in high tech, the government is searching for another engine of economic growth. There are now at least five science research parks and as of 2004, at least 238 biotechnology companies. Perhaps due, in part to Taiwan’s roots in computer sciences and manufacturing, a large number of these biotechs focus on genomics, bioinformatics, and pharmaceutical manufacturing. The industry is beginning to mature and companies are increasingly focused on working toward drug development. A couple, like AndroScience and TaiGen Biotechnology have some early stage pre-clinical compounds. A DPP-IV inhibitor for diabetes was recently hailed in the Asian press as the first novel drug to enter clinical trials on the island nation and is being developed by a consortium of six biotechnology companies. With a combination of homegrown scientists and repatriated talent, Taiwan is hoping to become a global biotechnology hub.

All About Liposomes
As the name suggests, Taiwan Liposome Company (TLC) is focused on liposomal technology; its goal is to use the technology as the core of their drug development. Its main operations are in Taipei, Taiwan, with a small unit in South San Francisco. TLC is a small privately held company founded in 1997 by Dr. Keelung Hong, an expert on liposomes, with 20 years research background at UCSF. An initial funding round of NT$27 million allowed the company to test and bring their version of liposomal doxorubicin (Lipo-Dox) to market in 2002 in Taiwan and other Asian countries, proving the viability of their technology. Lipo-Dox was soon licensed to TTY Biopharm for distribution and now has sales of over NT$220 million.

In a 2006 interview, TLC’s General
Manager, George Yeh, described his company’s strategy as one based on a platform technology rather than product based. He believes their technology allows for the cost-effective development of drugs that can efficiently fulfill the needs of both TLC and other pharmaceutical companies.

Product lifecycle management is a mainstay of drug development today, but has become increasingly important as blockbuster drugs lose patent protection, with nothing fill in behind them. TLC’s technology has the potential to play an important role in lifecycle management. It can extend a product’s patent life through the enhancement of its performance- by reducing a drug’s toxicity, improving its stability, targeting its delivery. These improvements can be made possible by converting existing drugs into TLC’s proprietary liposomal formulation.

Cutting Edge Information “Defending brand revenue - Pharmaceutical life cycle management planning” June 2005, the authors compared the value creation of product reformulation to other lifecycle management strategies and found product reformulation to be more cost effective than all other strategies other than patent litigation. 

An alternate use for TLC’s technology follows in the path of their first product, Lipo-Dox, where their liposomal technology was used to reformulate an off-patent drug and bring it to market with minimal testing while enjoying additional patent protection. With this blueprint, the company has developed a pipeline of reformulated generics. Along with these generics, they have also ventured into the development of novel drugs.

Developmental Products
Lead product ProFlo is a new Prostaglandin E1 emulsion formulation for the treatment of Peripheral Arterial Disease (PAD), Diabetic neuropathy, and Ulcers. It has the biological activity of Liple, but with a longer shelf life, sustained release, and targeted delivery. It is now going through regulatory approval.

Other reformulations include AmBiL, a generic form of AmBisome, and Doxisome, a generic of Doxil. Branded sales of the latter two drugs are about $800 million. Both AmBiL and Doxisome are in bioequivalence testing.

The company is developing a novel compound, Lipotecan, a modified version of topotecan in a liposomal formulation. It is the first new drug from Taiwan to be developed in the US and is currently in a dose-escalating Phase I study. Data presented this past ASCO showed prolonged stable disease in 5 of 32 patients with advanced solid malignancies. The best response appeared in a patient with
sorafenib-refractory hepatocellular carcinoma. The authors indicated they intend to pursue further study of the drug in this indication as a result.

Finances and Future Plans
TLC set its sights on building an international presence early on, partnering with South San Francisco based Hermes Biosciences in 2003 (since acquired by Merrimack Pharmaceuticals) to develop liposomal vinorelbine (NanoVNB) for cancer. NanoVNB is being tested in Taiwan in Phase II. Of note, Hermes Biosciences was also a liposome technology company with roots at UCSF.

In 2006, TLC had been considering an initial public offering in the US as a way to raise cash and their international profile, but changing markets have made biotech IPOs here incredibly difficult. They are now setting their sights on a Taiwan listing sometime next year. Being acquired by another pharmaceutical company was also considered as a way for investors to obtain a return on their investments.

TLC completed its fifth financing round in July 2009 with participation from
Burrill & Company, YFY Biotech Management Company, TaiAn Technologies Eminent VC, and Boston Life Science Venture Corp. This strong list of backers is a showcase to TLC’s leading position in a highly competitive industry. So even without a US IPO, this influx of cash now allows the organization to continue with its plans for expansion. A representative from Burrill & Company now sits on the company’s board.
Exchange rates as of 8/6/2010 (1 US dollar = 31.765 Taiwan dollars)

Disclosure: No Position

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