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WuXi AppTec – "Every Client is a Partner"
ChinaBio® recently had a chance to talk with Richard Soll, PhD, Senior Vice President of Integrated Services, Head of Corporate Alliances at WuXi AppTec, China’s largest contract research organization. The subject was WuXi’s business strategy with a special focus on partnering. Although WuXi has various program structures in place for its clients, Dr. Soll stressed that all of their relationships are based on partnerships: “Every deal is a form of partnership, no matter how large or small it is.” he said.
ChinaBio: How do you approach clients and tell them what WuXi AppTec can do for them? How do you position WuXi’s strengths?
Dr. Soll: We are constantly talking to customers and potential clients in terms of understanding what their problems are. Everybody has issues to be solved. Whether they’re a pharma company or a biotech company, they tend to have an organization that is pretty virtual in nature, with very little infrastructure, so there is a clear need to outsource and have access to expertise. We bring a lot of value to our customers there.
For pharma companies looking for new models of drug discovery, to tackle the hurdles they face in terms of productivity, we represent solutions to several problems and allow them to become more productive in what they are doing. So we are constantly talking to customers, whether they are a business unit head or a business development type.
ChinaBio: Is most of WuXi’s work done on a fee-for-service basis?
Dr. Soll: Yes, the vast majority of our work is done as fee-for-service, whether it is done on an FTE cash and carry approach or very transactional, which is centered around a single project like manufacturing jobs, which would be focused on a specific objective and a deliverable.
But it’s very fair to say that we have been taking on additional business opportunities in several forms. One is in the context of risk sharing, particularly in the discovery unit. For the most part, that comprises a reduced rate FTE coupled with performance based milestones. That’s a typical model that is being used by our discovery unit.
We installed a new business unit last year called the Early Success Sharing Partnerships model which is run out of the United States by Joe Vacca, who was a VP in chemistry at Merck. [The Early Success Partnership is focused on early innovation and novel research from academic centers and early-stage biotech, using success-sharing partnership models - Ed.] He joined us to start this model. It takes on a limited number of programs. You have to make investments ultimately to make that happen.
In addition, there are also different kinds of business arrangements that I can’t discuss which present significant upside for WuXi. Joe’s responsibility is to bring the programs he runs to early milestones. And he has several deals under his belt currently.
There’s another form of partnership that we have embarked upon and which requires significant investment. We have entered two joint ventures to date. One is MedImmune in the biologic space, and the other is with PRA for doing clinical trials in China. Both of them bring particular expertise to the table for WuXi that will benefit our organization and bring our local knowledge to the JV partners for working in China.
And another thing I should point out is that we have a venture fund, which has made four investments that are now in the public domain: Hua Medicine; Novira, a US based hepatitis company founded by 5AM; Foundation Medicine, which is involved in diagnostics and sequencing, and just last week, there was an announcement of a new pharmaceutical company getting off the ground, Syros, and we were an investor in that. Syros was backed by Flagship, Arch and Fidelity. And usually when we make an investment, we get a preferred supplier arrangement as well as driving the innovation.
Also, I should point out that in terms of investment, it is absolutely imperative to invest and reinvest in our core technology platforms. Toward that end, we did the acquisition of Med-Key, a clinical organization, back in 2011. That was one of the earliest events for our clinical development group, which had been growing organically. And we also had two announcements in the area of technology, with Open Monoclonal Technology of California, for making fully humanized antibodies first with rat models and then with mouse models. So we are making investments that enhance our capabilities. So that goes directly to the platforms we are building.
And then in terms of further enhancing capabilities, in areas that we think are of value, we did the Abgent acquisition, which is a biologics reagents company, also in 2011.
ChinaBio: In 2011, you announced that you would be opening a dedicated service facility for work with BMS. Is that a partnership arrangement?
Dr. Soll: We view all of these business deals, whether they are FTE or fee-for-service or investment opportunities, as partnership models. They each have their own different forms of business arrangement, but our goal, our ultimate mission here, is to provide the open access platforms we are building, it really is about making them available to anybody who wants to discover and develop medicines to benefit patients. If a person has an idea and they want to explore it at WuXi, we want to make them successful. And we view every deal as a form of partnership, no matter how big or small it may be.
So the deal that we have with BMS is indeed a deal where they have a facility at WuXi, it is staffed with our people and they have some oversight. For us, that is a partnership model based on FTEs.
MedImmune is different because that is a joint venture where both MedImmune and WuXi have a 50-50 partnership. But all of these are regarded as partnerships on our end.
ChinaBio: Over the last 12 years, Wuxi has continued to add one service after another. Are you complete in the pre-clinical areas? Will you continue adding services or do you have everything you need?
Dr. Soll: There are certain core technologies we have. Do we have everything? No. We have to continuously build capability and add competencies and add depth into the organization. Technologies change over time and we have to build on that and bring in state-of-the-art technologies. As an example, our manufacturing facility brought in flow cell chemistries to further enhance their technology platforms in the chemistry space. So we always have to make investments and it’s very fair to say that today we invest at about 16% of our revenues. We are doing that in terms of investment into infrastructure as well as CapEx. And there are always specialty areas that we have to build on. So it requires constant evaluation of what is needed and what our partners need when we make those investments.
ChinaBio: Is the partnership area something you will expand in the future?
Dr. Soll: So let’s talk about partnership. We view every relationship as a partnership. We want to make our partners successful in what they are doing. And there’s a good reason for that. If they are successful, the likelihood that they will come back and do additional business with WuXi goes up significantly. So we want to be able to bring the best to the table for our partners.
These partnerships have various business structures. In terms of actual investments, that is a very selective process. In the discovery space, where we have done the most risk sharing to date, the investment takes the form of a reduced FTE coupled with a performance milestone.
For every partnership we take along those lines, an analysis is done on how risky it is on our end. And it is fair to say that regardless of the nature of the investment or when it comes to make some level of investment, there is always an analysis of risk. The financial component on our end is not unlimited, so we can only take on a certain number of deals. We are trying to pick out the best science. And we want to be sure we have the capability of executing the science for our partners and that we are taking on investments that will potentially yield results or bring significant value for unmet medical needs. Good science is driving a lot of the investments.
ChinaBio: Wuxi has been doing some very innovative things, including biologics. How does this fit into your plans?
Dr. Soll: Biologics is a terrific opportunity for a company like WuXi. The industry from a pharma company perspective has anywhere from one-third to 50% of their pipeline. In a biologics company, it’s likely to be 100%. So there’s a vast opportunity to drive a biologics service. That’s not only for novels but also for biosimilars.
In China the number of biologics is pretty low. So the opportunity is very high for bringing a biologic therapeutic into China. The other thing is when you look at a platform like WuXi where you can help partners globally, the opportunity becomes “how can we set up a biologics platform that would serve the world?”
Chris Chen [PhD, Senior Vice President and CTO, Biologics Services] has set up a discovery and manufacturing biologics platform that serves the world, a “China for the world” approach. It also meets the regulatory requirements in China so that it serves a China strategy as well. It’s uniquely positioned so that we can meet multiple regulatory authority requirements in a single facility. That forms the basis for growth in the biologic space.
Lately, we have been working on this JV with MedImmune, which has been going extremely well, and the WuXi folks are going to be responsible for the manufacture, the clinical development and all the regulatory requirements for a long-acting IL-6 antagonist. It’s all about building the best biologic capabilities in China to serve Medimmune for China development and to serve others for the world.
Along the lines of serving others, we also did a collaboration with TaiMed [of Taiwan]. That company is developing an HIV viral-entry inhibitor that is a biologic. We are going to manufacture the global clinical supplies for the mid and late stage trials for that organization. And the biologics group in general has been working on quite a number of manufacturing projects that are equally split between novels and biosimilars. There are a dozen-plus programs going on now and on top of that there is a strong emphasis on doing biologics discovery work with our partners as well. That has been part of the OMT technology acquisition that I mentioned earlier.
ChinaBio: What about the clinical side. Are you where you want to be there?
Dr. Soll: There is a long history in the clinical group because we bought Med-Key, which has been running for several years and has run many tens of clinical trials. Med-Key is kind of a local organization that has run a lot of Phase IV trials. More than half of their business came from that, and there was also some Phase III work. So there was very little work in the early stages, Phase I and II.
If you are familiar with the regulatory area, you know that China has a very conservative regulatory environment for a drug that is novel. It takes a long time for the IND submission. What we want to be able to do is to grow the early clinical business, especially in the diseases that can be addressed from a regional perspective, so we’re working with a pharmaceutical company right now, a multinational, that has a strong focal point on Asian diseases. We are getting pretty close to submitting an IND for that. And that will likely occur ex-China first, and then bring it back in China for PRC approval. The IND should be submitted over the next few weeks.
Now we look at the Joint Venture with PRA as being very important because PRA is a global organization with little presence in China. They want to have local knowledge from a trusted partner. We have a core clinical group of about 120 people. That became a very good marriage, and that is still in a ramp-up mode, so it is too soon to talk about in any detail. But we look at this as a terrific opportunity for several things. PRA is a well-experienced organization in running clinical trials globally, so that will add significant value to our organization.
Through Jane Lin’s [MD, MPH. Vice President, Regulatory Affairs and Clinical Development] organization at WuXi, she and her team are very familiar with the Chinese regulatory authority. Jane and her team have brought tens of products through the clinical process and the regulatory process to the China market. That represents for PRA the local knowledge that we are talking about.
ChinaBio: Can you explain why the MedImmune relationship was set up as a JV? What are the criteria that move you to set up a JV with company?
Dr. Soll: The JV brings a lot of attributes to a relationship. When a foreign company wants to come to China, you need a local partner and a JV gives a strong local presence. A JV also means there is an exceptional level of commitment by both partners. So for example, if you just do a service contract, the partner is only contracting out for the service (even though we at WuXi are giving all of our energy and attention to the project). But at the end of the project, the partner can just pick up and move on. The JV concept brings a strong commitment on both sides, because each side has to invest to make it happen.
And just to end with the vision for WuXi. Our vision is to create platforms so that anyone who wants to explore an idea can come and use the platform in their most effective way to push their idea and innovation and that’s really the basis of it. We are always being asked, “Why don’t you become a pharma company?” But that’s not who we are. For us, it’s about being able to enable innovation across the board. We think it’s a very important mission.
ChinaBio: Rich, thanks for your time. You have given us a lot of information and insight into WuXi Apptec.