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The Week in Review: Good Week for China BioPharma Investment
On another front, LEAD Therapeutics of San Bruno, CA announced a $17 million Series A financing (see story). LEAD will conduct the majority of its pre-clinical operations in China, under the direction of its US-based staff. LEAD is already working with China-based CROs, but it expects to announce a strategic relationship with a China CRO under which LEAD will have the exclusive services of between 20 and 30 researchers. LEAD already has two early-stage projects underway. An infectious disease initiative began in June, and another program in oncology is just getting started.
As for IPOs, there was a very successful China-IPO last week in an industry that is related (however tangentially) to biophama – retail pharmacies (see story). China Nepstar (NYSE: NPD), though it is the largest chain of China pharmacies, is still small by American-chain standards, commanding less than 0.5% of the total market. Nevertheless, in a New York Stock Exchange IPO, investors put down a total of $334 million to own a piece of China Nepstar. Traditional measures of pricing (price times revenue and price/earnings) would have termed the asking price expensive. But potential is more important than historical measures. Even in difficult market conditions last week, the IPO priced at a substantial 30% to the proposed range. If nothing else, the IPO showed that investors are not going to shun investments in China at the first sign of global uncertainty.
In terms of already public companies, two China biotechs reported Q3 results with impressive year-over-year increases. However, the numbers in each case were in line with expectations, so the shares of the companies sold off after the announcements as the markets registered their disappointment in the lack of an upside surprise. The companies involved, Tongjitang Chinese Medicine (NYSE: TCM) (see story) and Simcere Phamaceuticals (NYSE: SCR) (see story), are both companies that completed their IPOs earlier this year.
And finally, the Dutch maker of diagnostic tests, Qiagen (NSDQ: QGEN), reported early – and positive – results from a clinical trial conducted in China for its FastHPV Test (see story). The test is a low-cost test for HPV designed for use in areas of the world that have few healthcare resources. The trial enrolled 2,500 women who live in rural areas of China. Qiagen will use the results from the test to seek market approval of the FastHPV test in China and India in 2008.