China biopharma deals rise with Summit, Merck | Global News Avenue

A little-known biotech company shocked the biopharmaceutical industry last spring Announce “Unprecedented” Achievement: Its experimental cancer drugs look better than MerckKeytruda in clinical trials. company, Summit Therapeuticsobtained a drug license from Chinese company Akeso Inc.

In October, a group of life science investors announced They let it go Created a $400 million company called Kailera Therapeutics, which will develop experimental obesity drugs purchased from Chinese company Jiangsu Hengrui Pharmaceuticals.

Then within a few days in December, Merck revealed that it would license potential competitors to obtain Summit’s drugs and separate experimental obesity drugs, both from Chinese companies.

Suddenly, American companies are competing to find drugs in China. Last year, nearly 30% of large pharmaceutical companies involved Chinese companies in the upfront deals with at least $50 million, rather than 20% of the previous year, and only involved Chinese companies in five years, according to DealForma.

“This is really amazing for me,” said Chen Yu, founder and managing partner of cross-border fund TCGX. “That’s amazing.”

Yu said that 20 years ago, few biopharmaceutical companies were interested in China because they thought it was a small market. His former company, Vivo Capital, pioneered the concept of bringing American medicines to the Chinese market.

Today, the movement is moving in the opposite direction. He never imagined the spread that was happening now.

Investors and industry insiders offer some reasons for this trend: Chinese companies create better molecules than ever before — and more. They can start testing these compounds in humans sooner rather than the business model that American buyers come up with basically importing drugs through license transactions. China’s venture capital has also dried up, forcing biotech companies to reach deals.

One thing that all these people in the industry agree on? This trend has not disappeared.

What is unclear is what development means for the U.S. biotech sector.

Some believe that if big pharma companies can find promising drugs in China, it will be terrible for U.S. startups. Others believe that competition makes everyone better and that American companies will eventually receive the rewards of bringing drugs to market. Either way, the influx can reshape the landscape of the U.S. biopharmaceutical industry.

“It’s a watershed moment in the pharmaceutical industry, ‘we really don’t need to buy biotech for us,'” said Tim Opler, managing director of Stifel’s Global Healthcare Group. , We will purchase perfect biotech assets through a licensing agreement with Chinese companies. ”

Bain Capital Life Sciences began to make China a priority in 2018, said Adam Koppel, a partner at the fund. The private equity firm saw the Chinese government and life sciences industry, doing its best to focus on the development of imitators and fast travelers from its history, which mimicked leading drugs to create new chemicals that China could export to the rest of the world .

Since then, Bain has reached six biopharmaceutical deals in China. It purchased an experimental asthma drug from Hengrui in 2023, Together, it launched a company called Aiolos with a Series A funding round of $245 million. Three months later, GSK acquired the company for $1.4 billion.

Koppel has seen more large pharmaceutical companies increasingly satisfied with Chinese medicines as they work with more people and see their results. Buyers give up partly because they worry that China’s data does not represent the global population and U.S. regulators will not accept it.

“When they see assets, they see things that succeed, and ultimately, as things are approved and used in the market, I think that concern will be less.”

When Summit Therapeutics said last year its experimental cancer drug beat Merck’s huge obstacle keytruda in a head-to-head study, the narrative was on display. Summit’s trial was conducted only in China, which has led to question whether the results will continue elsewhere.

When Summit’s leaders were buying drugs that could be developed, they believed it was a focus in China, as co-CEO Bob Duggan read more about new drugs from the country. But this is the end of 2022, and the FDA has just rejected some applications for drugs studied only in China, including drugs from Eli Lilly.

When the summit announced that cancer drugs were being licensed Summit’s co-CEO and President Maky Zanganeh said Ivonescimab from Akeso questioned how Summit knew the FDA would never accept the deal.

“Suddenly after us, a lot of people opened their eyes,” she said.

Ivonescimab has conducted early research and is conducting late-stage trials in China when Summit reached a licensing agreement. Summit is now conducting three global phase 3 trials to meet the FDA’s desire to conduct research in a variety of populations.

Summit strategies may become more common. One of the draws to the deal with Chinese biotech companies is that they can find molecules that have already been researched at a lower level than the U.S., so U.S. businesses know what they are getting and may potentially spend it. Less money.

Gilead Andrew Dickinson, the company’s chief financial officer, told CNBC that it is spending a lot of time in China looking for assets like in the United States and Europe. Gilead saw a “substantial shift” in the quality and quantity of assets developed in China and provided a “substantial shift” to U.S. biopharmaceuticals.

“The transformation over the past five years has been real and impressive,” Dickinson said.

This helps more Chinese companies now need to close deals. According to data provided by TCGX YU, the risky fund raised by China’s biotech industry has peaked at $1 billion from its peak of $6.3 billion in 2021.

“Why are we going to do any early development in the United States?” you said. “Why don’t we get a clinical proof of concept in China and then bring it to the U.S. for expensive clinical development, and when we really know what the drug does? I think this could be a very revolutionary new way to change in our industry Be more efficient.”

According to your requirements, this is an opportunity or risk to the U.S. biopharmaceutical industry. Some people, such as Yu, see it as a way to reduce the price of prescription drugs. Others worry that it could put American companies in trouble if Merck and other large pharmaceutical companies take advantage of China’s licensed assets by acquiring U.S. startups.

Merck announces that it will receive experimental obesity drugs from China Hansoh, up to $2 billion, U.S. company stock Viking Therapy Plunged 18%. The Vikings are seen as a acquisition target as it is developing drugs in the hot obesity space, and suddenly it seems that a possible suitor has chosen to spend money elsewhere.

When China’s DeepSeek announced that it had created a model as good as American companies, people saw similarities in what was happening in the field of artificial intelligence.

Donald Trump or the president of U.S. policymakers can see similar trends in biotech as threats and interventions that block these transactions, and you call it a “brushstroke” risk. Last year, lawmakers floated the Bioprotection Act, which would restrict U.S. companies from working with Chinese contract manufacturers.

Washington has embraced Trade protectionist policies in other competitive areas such as artificial intelligence and semiconductors. Probably extending to life sciences.

“The deeper message from DeepSeek is that we have competition in general high-tech science, and in addition, China is investing heavily to develop scientific assets,” said Stifel’s Oppler.

In other words: Race in biopharmaceuticals is underway.