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China Cross-Border Life Science Deals Get 2021 Off to a Fast Start

publication date: Mar 16, 2021
 | 
author/source: Richard Daverman, PhD

Just two months into 2021 and it already looks as though the momentum from 2020's record-setting levels of China life science activity continues into the new year. According to data compiled by ChinaBio® Group, most 2020 metrics for China life science doubled their 2019 results -- more partnerships, more investing, more drug development. Despite the disruptions of the COVID-19 pandemic, more companies found a way to forge new initiatives and advance their assets. The first few months of 2021 show the sector could equal or improve on its strong 2020 results. 

Cross-Border Partnerships 

Consider the area of partnerships for example, which is timely given that the 2021 ChinaBio® Partnering Forum is scheduled for May 10-14 in Shanghai, a hybrid event offering both in-person participation in Shanghai and digital participation globally. (For more information on the event, please see the website.) 

In 2020, China life science announced $30.6 billion in partnership agreements. The sector has already announced over $6 billion in new partnerships deals during the first two months of 2021. Two of these are cross-border relationships that have a value of more than $1 billion each: Beijing's BeiGene out-licensed ex-China rights for its PD-1 therapy to Novartis in a $2.2 billion deal, and Shanghai Junshi Bio partnered US-Canada rights for its China-approved PD-1 drug to Coherus Bio in a $1.1 billion agreement (Coherus is a California company dedicated to bringing affordable immunotherapies to US patients).  

Close behind, Shanghai's Inmagene acquired global rights to four novel immunology candidates from Chi-Med in an all-China deal with potential value of $920 million. Although this agreement isn't cross-border, global rights to the assets may have significant value in the future. 

These three transactions are tent-pole events -- outside the norm in value, representing most of 2021's total biopharma partnership deal value in China to date. The PD-1 deals show that global biopharmas are willing to make large commitments for state-of-the-art, China developed drug candidates that address "hot" markets. Innovative China-developed biologic drugs have become very attractive assets for global development. 

Of course, not every 2021 China partnership deal is worth $1 billion. Other substantial cross-border deals include: 

  • Zhongmei Huadong Pharma formed a $180 million partnership with Provention Bio of New Jersey to develop a bispecific drug targeting B cell surface proteins for lupus;
  • BeiGene in-licensed greater China rights to a novel immunotherapy -- based on tumor necrosis factor receptor 2 antagonist antibodies -- from Boston Immune Technology in a $126 million deal;
  • Shanghai Elpiscience acquired China rights to an anti-VEGFxDLL4 bispecific for solid tumor cancers from California's TRIGR Therapeutics in a $117 million agreement; and
  • Qilu Pharma of Jinan formed a $235 million collaboration to develop and commercialize an immunotherapy in China that was developed by San Diego's Cend Therapeutics.

VC/PE Investing

VC and PE investment in China life science also posted strong results in early 2021. So far, 27 financings have raised nearly $2.5 billion in fresh capital to support young China biopharmas. In 2020, VC/PE firms invested $28.5 billion in China life science, double the previous year's total. 

Among the many 2021 investments announced so far, some prominent cross-border deals include the following: 

  • ABclonal Biotechnology, a Massachusetts life science tools and services company, completed a $93 million Series C financing led by two China investors, Sequoia Capital China and LYFE Capital;
  • Ascletis Pharma of Hangzhou participated in the $80 million crossover funding of its partner on a NASH treatment, Sagimet Biosciences of the Bay Area; and
  • Cullgen, a San Diego biotech developing a targeted protein degradation technology, raised $50 million from an international syndicate including China investors 3E Bioventures Capital and South China Venture Capital.

IPOs 

On the IPO front, investors have eagerly snapped up initial offerings from China life science companies so far in 2021. A strong IPO market provides attractive exits for investors, and globally, the "IPO window" has been wide open to life science companies over the past few years. A total of five life science IPOs have been completed in China, raising $1.1 billion on China life science's three favorite exchanges: Hong Kong, the Shanghai STAR Exchange and NASDAQ in the US

It's been almost three years since Hong Kong opened its exchange to pre-revenue biopharmas, an experiment that allowed young life science companies to tap public markets for much-needed cash. The effect on young biopharmas has been profound. In fact, the success of Hong Kong's initiative forced Shanghai to implement the STAR Exchange, an imitation focused on China high tech companies that proves the concept is viable. 

In 2020, IPOs for China life science companies raised $23.3 billion. Although the 2021 IPO results aren't huge so far -- IPOs sometimes get off to a slow start in the early part of the year -- the initial trading results of 2021's IPOs show impressive first-day gains:   

  • New Horizon Health staged a $263 million IPO on the Hong Kong Exchange to support its early cancer screening tests; the stock tripled in trading, giving the company a market cap of $4.3 billion;
  • Shanghai Microport Cardioflow, a spinout from China medical device maker Microport, completed a $324 million IPO in Hong Kong for its transcatheter aortic valve implantation portfolio; it climbed 59% above its IPO price;
  • APT Medical staged a $191 million IPO on the Shanghai STAR Exchange for its cardiovascular catheter devices, rising 245% in its first trading session;
  • Gracell Biotech of Suzhou completed a $209 million NASDAQ IPO for its quick-to-manufacture and off-the-shelf CAR-T candidates; it traded 38% higher, giving Gracell a market cap of $1.7 billion; and
  • Adagene, a Suzhou immunoncology biopharma, completed a $140 million NASDAQ IPO and climbed 56% higher to a $1 billion valuation.

There always seems to be big demand for IPOs in China. With first-day performances like these, the demand should be even stronger in 2021. 

Conclusion 

China continues to serve life science companies around the world in two major ways: it is a growing source of novel drug candidates and capital, and it also offers the world's second largest pharmaceutical market. Since 2015, most measures of life science activity have increased three to five times in value, with cross-border agreements representing sizable portions of each category. Given the early results of 2021, cross-border partnering and investing in the life sciences could provide still more upside surprises.  

Disclosure: ChinaBio® Group is the organizer for the ChinaBio® Partnering Forum to be held in Shanghai and online from May 10-14.  (See www.ChinaBIo2021.com for more information).

 

 

 

 

 

 

 

 


 

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