Last week, a Q3 review of venture capital/private equity investing in China showed robust activity in all sectors, including biopharma. In the quarterly report of VC/PE investing from Zero2IPO, the figures were up in almost every metric, including the number of investments, the amount of investments and the number of exits (see story). Biopharma took its share in all categories. Only fund raising was below the levels of Q2, and that area has been notoriously volatile. So far this year, fund raising was anemic in Q1 and bloated in Q2. Q3 reverted to the rising trendline established in 2006. 

Later in the week, a look at the official policy on foreign investment (contained in Circular 10) revealed that China continues to favor high-tech industries as a preferred sector for investment – and biopharma remains one of the high-tech industries singled out as a preferred target for investment from outside China (see story). For biopharma, the lists of preferred/restricted/prohibited areas of investment were not greatly changed from the previous Circular, which had been in effect since 2004. High on the list are novel compounds, the products of breakthrough research. That’s not a particular surprise – everybody wants those drugs. But the emphasis shows the government is continuing to support the growth of China biopharma as an equal to Western pharma, instead of an industry that copies their drugs.

On the drug development front, China Aoxing Pharmaceutical Company (OTCBB: CAXG), taking advantage of its experience with addictive drugs, was granted a license by the SFDA to develop a maintenance treatment for opioid dependence (see story). The treatment, which has been available in the US since 2002, combines buprenorphine and naloxone into a single sublingual tablet. The buprenorphine acts as a partial opioid agonist. It causes the usual euphoria of an opioid, but to a lesser extent than heroin or methadone, which are full opioid agonists. Though low, the effect is sufficient to prevent withdrawal symptoms. At moderate doses, the effects of buprenorphine plateau, a feature that works to discourage the overuse of the drug. Naloxone is added to the compound to discourage the diversion of the medication to street sale as an IV drug. As its business plan, China Aoxing aims to bring narcotic/pain drugs that are available in the west to China. Nevertheless, the company’s balance sheet continues to show low levels of liquidity. 

GNI Ltd (TOKYO: 2160) received permission from the SFDA to begin human clinical trials of F351, the company’s novel treatment for liver fibrosis/cirrhosis (see story). Shanghai Genomics, the China-based affiliate of GNI, will conduct the Phase I clinical trial of F351. Two weeks ago, the SFDA issued a patent to Shanghai Genomics for the drug. GNI pioneers the use of gene networks, delineating them through reverse engineering. The gene networks are analyzed to infer cause-and-effect relationships between the many signaling molecules within cells, whose interactions are visualized at the expression level. GNI says the process makes drug discovery more efficient. A truly international company, GNI is headquartered in Tokyo, but R&D is carried out in Fukuoka (Japan), Cambridge (UK) and China. It has an intellectual property office in San Jose, California, and its clinical trial operations are carried out through Shanghai Genomics, which is located in the Zhangjiang Hi-Tech Park. 

And finally, Genesis Pharmaceuticals Enterprises, Inc. (OTCBB: GTEC) announced a collaboration with The Institute of Microbiology, Chinese Academy of Sciences (IMCAS) (see story). Genesis and IMCAS will work on manufacturing problems of molecules. Genesis will fund the undertaking and receive the right to purchase any products that come out of the partnership. Recently, Genesis announced pro forma revenues and earnings from the most recent quarter that were down 8% from the year earlier because the company had to shut its manufacturing line for five weeks. On October 1, Genesis was formed in a reverse merger that made a public company of Laiyang Jiangbo Pharmaceuticals Co.



Disclosure: none.