Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Analysis-China's biotech sector comes of age with big licensing deals, global ambitions

Stock Markets Sep 16, 2021 00:15
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: People walk past a booth of biotech company Beigene at the 2021 China International Fair for Trade in Services (CIFTIS) in Beijing, China September 3, 2021. REUTERS/Florence Lo

By Farah Master

HONG KONG (Reuters) - If investors in China's biotech industry needed one more sign that the sector is coming of age, then a major licensing deal RemeGen Co Ltd struck last month with Seattle-based Seagen Inc fits the bill.

The agreement to co-develop cancer treatments using a RemeGen antibody drug conjugate is regarded as one of the biggest of its kind between a Chinese biotech and a Western firm. It provides for up to $2.4 billion in milestone payments, in addition to $200 million upfront as well as royalties if approved.

It is also at least the fifth out-licensing deal potentially worth more than $1 billion clinched by a Chinese biotech. Nearly all were signed in the past year, underscoring China's still small but growing role in developing innovative cancer drugs that will be used worldwide.

"China is clearly already an important and integral part of the global biopharma industry, not a separate ecosystem," said Franck Le Deu, senior partner at consultancy McKinsey in Hong Kong.

China's government has made cancer treatments a top priority for the industry. The world's most populous nation last year accounted for 30% of cancer deaths globally and 24% of newly diagnosed cases, according to one study.

Supportive policies for the sector over the past five years are also now bearing fruit and Western firms have come knocking at Chinese biotech doors.

For Seagen, the RemeGen deal will allow it to directly challenge breast cancer treatments from Roche Holding (SIX:ROG) and AstraZeneca/Daiichi Sankyo. The antibody also shows promise in tackling bladder and stomach tumours.

Other notable deals include a Novartis AG agreement worth up to $2.2 billion for a BeiGene Ltd drug. The two are co-developing an antibody similar to Keytruda from Merck and Opdivo from Bristol-Myers Squibb (NYSE:BMY) which help the immune system attack several different types of cancer and which have reaped billions of dollars in sales.

AbbVie (NYSE:ABBV) has also partnered with I-Mab to co-develop a monoclonal antibody for several types of cancer in a deal worth up to $1.9 billion.

FLOURISHING ON FUNDING

Chinese biotechs have proliferated in a relatively short amount of time - a key catalyst being the return of overseas-trained Chinese scientists, dubbed "sea turtles", that began a decade ago and who have become increasingly attracted by domestic opportunities as the government pushes to develop the industry.

More recently, China in 2017 and 2018 aligned regulatory standards with international norms, rapidly speeding up the review system for new drugs. The sector also has seen a surge in funding after Hong Kong's stock exchange changed its rules in 2018 to allow listings of biotechs that have yet to earn revenue.

Success in the West is still fledgling - just three drugs developed in China which include BeiGene's Brukinsa for a type of non-Hodgkin's lymphoma - have been approved by the U.S. FDA.

Investors are also concerned about frothy valuations and it remains unclear how many firms will succeed due to the lengthy process of drug discovery and the massive costs involved. That said, there appears to be more than enough funding to propel the industry.

"We are looking at a turning point because of the capital supply and the regulatory approval regime," said Simone Song, founding partner of healthcare venture capital fund ORI Capital.

Nineteen Chinese biotechs made their trading debuts last year, mostly in Hong Kong, raising a combined $5.2 billion, up from 13 raising around $2 billion in 2019, Refinitiv data shows. So far this year, 20 have listed, raising $4.6 billion and the Hong Kong bourse has flagged nearly 30 more in the pipeline.

According to McKinsey's Le Deu, the combined market value of Chinese biotechs listed in Hong Kong, on Shanghai's STAR board and on the Nasdaq was some $180 billion as of May, which compares to just $1 billion in 2016.

GLOBAL AMBITIONS

The number of large out-licensing pacts for Chinese biotechs is only set to grow, industry experts say.

I-Mab, Innovent Biologics, Junshi Biosciences and Legend Biotech are likely candidates for further licensing deals with Western firms, said Morningstar analyst Jay Lee, citing their existing partnerships and pipeline assets.

I-Mab says it is seeking strategic partners to help develop and commercialise its products, while Legend said it is open to collaboration. Junshi and Innovent did not respond to requests for comment.

Legend was in 2017 one of the first Chinese biotechs to win an out-licensing deal with a major Western pharmaceutical firm. Its CAR-T bone marrow cancer drug co-developed with Johnson & Johnson (NYSE:JNJ) is set to be reviewed by the FDA in November.

Though few in number, the more established Chinese biotechs have even bigger ambitions.

BeiGene, which is 20.5% owned by Amgen Inc (NASDAQ:AMGN) and valued at $34 billion, out-licenses some products but built its own U.S. and European sales teams for Brukinsa. It has also announced it will build a new R&D and manufacturing centre in New Jersey.

"We are really trying to brand ourselves as a global company...we just happen to have labs right now in China," said Angus Grant, BeiGene's chief business executive.

Hutchmed, the first Chinese company to have an in-house innovative cancer drug unconditionally approved in China, is not planning to partner in the United States or at home now that it has grown, said Chief Executive Christian Hogg.

"We have got around $1.2 billion in cash on our balance sheets, we have got the capabilities, resources, financial and organisational resources to pretty much do whatever we want to do outside of China," he said.

Analysis-China's biotech sector comes of age with big licensing deals, global ambitions
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email