|
1. Why Leveraging China-Based Molecules is Hot
Breanna highlighted that leveraging China-based molecules is gaining traction due to significant scientific advancements in Asia, particularly in China. She emphasized the flexibility and cost-effectiveness of conducting early Phase 1 trials in China, especially for complex therapies like T-cell engagers (TCE) and cell therapies. Unlike in the U.S., China offers a more favorable environment with high unmet medical needs and lower capital requirements. Moreover, partnerships between China-based biotech companies and U.S. investors could help build a robust pipeline for global drug development.
PengPeng added a business perspective, noting that although the Chinese biotech stock market has not fully recovered compared to the U.S., Chinese companies hold valuable assets. However, they often lack the resources to fully realize their global potential without external funding and partnerships. The pipeline gaps in many U.S. pharma companies further drive investment and collaboration opportunities between the two markets.
Weiyong pointed out that while it is still rare for Chinese biotech firms to generate entirely novel targets, they excel in bispecific antibodies and antibody-drug conjugates (ADCs), which benefit from novel combinations of validated targets and technology. He stressed that if Chinese companies can generate U.S. clinical data, it would significantly boost the value of their assets. The current NewCo trend could fulfill this need by facilitating collaboration with U.S. investors and experienced management teams, thereby validating Chinese assets through global clinical trials. As Breanna confirmed, multinational corporations would rather pay a premium for a de-risked asset with proof-of-concept data from a global trial.
2. Dynamics of NewCo Formation
The discussion then moved to the typical dynamics involved in forming a NewCo. Breanna shared her experience in deal-making, stressing the importance of building strong syndicates with substantial financial backing to support drug development. Successful NewCos require a solid management team, strong investor relationships, and a structure that preserves equity for the founding company. She emphasized that partnering with experienced Chinese VCs is essential for navigating cross-border complexities in biotech ventures.
Leon underscored the importance of a strong management track record and a relationship-driven approach to securing investments. PengPeng outlined the four pillars of a successful NewCo: choosing the right field (e.g., obesity and ADCs are currently high-potential areas), identifying the right asset, assembling a talented team, and building a syndicate of U.S. investors who understand the global market and can support the commercialization of innovative drugs.
Weiyong noted that Chinese pharma companies with innovative assets would likely favor a NewCo approach if backed by a capable team or reputable U.S. investors, as both can help pave the way to success. Since Chinese companies are still relatively new to the NewCo model, they will likely appreciate U.S. investors or teams shouldering much of the groundwork in establishing a NewCo.
3. Geopolitics and its Impact on Biotech
The conversation then shifted to the geopolitical factors affecting the biotech sector. Breanna pointed out that the COVID-19 pandemic exposed the U.S.'s reliance on foreign supply chains, prompting a push for greater domestic self-reliance in biotech through policies like the Biosecure Act. However, she noted that these developments do not significantly affect innovation in China. She also suggested that bipartisan support for biosecurity in the U.S. means that election outcomes are unlikely to alter this trend, a sentiment echoed by the panel.
PengPeng added that, although geopolitical tensions are ongoing, they have not affected the core value of biotech. She noted that Chinese companies are increasingly securing licensing deals and that China has become the second-largest innovation hub globally. MNCs are less concerned about where innovation originates and more focused on the potential of the assets. Additionally, she has observed firsthand the growing interest from U.S. investors in Chinese biotech assets."
Breanna concluded by emphasizing that global science is interconnected, and fostering relationships between U.S. and Chinese investors will be essential for future biotech innovations.
4. Challenges in Establishing NewCos and Leveraging China Data
During the Q&A session, participants discussed the challenges of establishing a NewCo, particularly in coordinating between China and the U.S. PengPeng stressed the importance of preparing for a long-term relationship between the Chinese company and U.S. investors, as generating the necessary global data for potential exits can take several years.
Education and a thorough understanding of both markets are essential. The panelists pointed out that Chinese biotech companies often lack a global perspective when developing assets and may overlook key factors such as clinical trial design and long-term asset management. Weiyong emphasized the need for U.S. investors to visit China, engage with local teams, and build trust in the quality of data generated in China. Overcoming language and cultural barriers will also be crucial for fostering deeper collaboration between U.S. and Chinese biotech sectors.
Conclusion
The discussion highlighted China's growing importance in the global biotech landscape. The ability to leverage China-based molecules, attract global investors, and navigate geopolitical challenges presents new opportunities for innovation and collaboration. However, the success of these ventures will depend on strong partnerships, the generation of U.S. clinical data, and a deep understanding of the unique dynamics in both markets. – Jiamin Zhuo
| 
