Biotech in China is built brick-by-brick, but more money would help, BeiGene's Oyler says

Print 17 March 2015
EJ Lane / FeircePharmaAsia

Chemistry and now world-class biology are joining hands in China in ways that will have a profound impact on biotechnology startups and established companies. But it is still early days for many and more money from venture capitalists or other funding sources is welcome, said John Oyler, co-founder and CEO of BeiGene and holder of the same title at his previous venture, BioDuro, which was sold to PPD.

Oyler has built a business on the premise that a mix of world-class chemistry in China and more than a few shooting stars returning from places like Stanford, MIT, Harvard, Merck ($MRK), Novartis ($NVS), Incyte ($INCY), GlaxoSmithKline ($GSK), San Francisco, San Diego, or Boston will usher in an era of world-class drug discovery that will go far beyond in-licensing compounds for hopes of a better path to China FDA approval.

"We saw with Betapharm and Chipscreen though that there are unique models to develop good drugs locally and get approval," Oyler said in a phone interview with FiercePharmaAsia.

"Those are unique models--best in-class China--but the aim of course for BeiGene is always to have strong, globally best-in-class hypothesis and supporting preclinical data to develop best-in-class therapies for the world."

"We see that there are definitely drugs with biotechs with novel clinical paths, have solid data, and might make it. But the fact is that no truly innovative, non-revenue biotech in China has ever gone public. That's going to change--before they did not have the full R&D package and for a non-revenue organization reliant on R&D that means time. And time is money in biotech. But now we see it coming together--so I think that's going to happen."

Beta Pharma's first major breakthrough came in 2002 with the synthesis of a novel EGFR tyrosine kinase inhibitor, Icotinib, for which it partnered with investors to pursue development in China. In 2011, the CFDA granted Icotinib HCl marketing approval under the brand name Conmana, which has gained over a third of the market share in lung cancer therapies, with over 27,000 patients treated.

In April last year, Chinese biotech Chipscreen Biosciences achieved its primary endpoint in a pivotal, registration Phase II CHIPEL trial of an orally active benzamide type of Class I-selective histone deacetylase and was granted an accelerated review by the China FDA. The trials however were relative small with 31 patients in Phase I and 83 in Phase II.

These efforts capture Oyler's attention for obvious industry reasons, but also because of the company's own progress in the past year on the oncology front.

BeiGene secured CNY 450 million ($75 million) with anti-PD-1 and anti-PD-L1 antibodies in pre-clinical study that are planned for clinical stage as early as the second quarter of 2015.

This puts the company in a potential league in immuno-oncology monoclonal antibodies research occupied by Bristol-Myers Squibb ($BMY) anti-PD-1 immune checkpoint inhibitor Opdivo (nivolumab), which won the first approval in Japan and obtained a breakthrough status from the U.S. FDA. As well, Merck's ($MRK) Keytruda (pembralizumab) won U.S. approval for advanced melanoma.

Others targets include PD-ligand 1, for which AstraZeneca ($AZN) is conducting trials for MED14736 and Roche's ($RHHBY) Genentech for MPD3280A.

The company has also set its sights on three small molecules in Phase I, BGB-283, a second generation BRAF and EGFR inhibitor, BGB-290, a PARP inhibitor and BGB3111, a highly selective BTK inhibitor.

The first two assets are outlicensed to Merck Serono, which BeiGene has since obtained the milestone payment of $5 million in May and $9 million in September.

Oyler said oncology obviously has high need in China, particularly in lung and gastric cancers, but that a strong biology team had to be formed to build new models for these diseases.

"We hire globally--returnees from the U.S. and with deep experience. But it's hard and that's something you need to do--very high-caliber biology and clinical teams. However the chemistry has been excellent in China for some time. That's how (NYSE-listed) WuXi (PharmaTech) started out--synthetic chemistry and the CRO company I built, BioDuro, relied on excellent chemistry."

He also gave a shout-out to Hutchison China MediTech, based in Hong Kong with a sizeable group of research staff in Shanghai, which expects to file for its first drug approval next year for what it said would be the first modern drug from China since artemisinin was developed in the 1970s to treat malaria.

Oyler also noted Lilly Asian Ventures has been a persistent and excellent backer in China for early-stage biotechs.

In the Hutchison case, the first would be one of two drugs to be submitted in 2016, fruquintinib in partnership with Eli Lilly ($LLY) for treating colorectal and lung cancers, and savolitinib, developed with AstraZeneca for kidney and gastric cancers.

But Oyler emphasized "there are many small companies biotech companies doing discovery work. Small groups of researchers trying to build a biotech."

"Of course there are in-license deals with efforts to get a virtual company in China that may lead to earlier regulatory approval. But in-license has its own issues--data already gathered may need to be redone or drug substance and drug product may need to be remanufactured locally along with other issues to meet regulatory requirements."

"So it may be easier in some ways to start preclinical. BeiGene for example has chosen to do its own R&D and to focus globally. But local firms may turn to in-license products sometimes with good results."

BeiGene uses patient derived biopsy models and immuno-oncology models and immuno-oncology models.

Oyler has already mentioned looking at a public listing on the Nasdaq, possibly this year, but was not declarative on any schedule.

"Yes we've looked at NASDAQ and public funding and hope to go that route--no timeframe. But we know that would be unique for now--because there are many small companies in biotech here that cannot get capital."

More importantly for Oyler are the prospects for any oncology drugs produce locally to jibe with the way public reimbursement is evolving in China, making them accessible and affordable.

"According to McKinsey, China's total pharma market is $160 billion, and in 10 years may be $320 billion--that's 14% a year--not a small market. But that's not all--the aim is to go global from here. That's why our team is here and working like crazy--for the discovery and innovation because there are major breakthroughs in cancer that will have huge impact and with this disruption, BeiGene a little-known company in China can excel and become a major global player."

He then cited the potential scale.

"Two provinces--Jiangsu and Zhejiang--are moving to partially reimburse some of these innovative drugs because they are working. These provinces alone are equivalent to 35% of the U.S. population," he said.

"Cancer is major focus because as an area of public policy there is a lot to be done--education, access to new medicines, how hospitals and doctors work to diagnose - this takes time, but the need and the benefit is there."

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