China’s Hengrui In-Licenses AMD Antibody Program From X-Body Biosciences

Hengrui becomes the first Chinese manufacturer to in-license an early stage MAb from a Western biopharma as it looks to develop an age-related macular degeneration therapy that could compete with Novartis/Roche’s Lucentis and Bayer/Regeneron’s Eylea.

BEIJING and WASHINGTON – In a novel deal, Jiangsu Hengrui Medicine Co. Ltd. will develop and commercialize an antibody program generated from X-Body Biosciences’ antibody platform for age-related macular degeneration, the companies announced April 4. It is the first time a Chinese manufacturer has in-licensed an early stage monoclonal antibody from a Western biopharma, according to Hengrui.

Under terms of the deal, Hengrui will fund and lead all preclinical and clinical development and commercialization efforts in China, including Taiwan, Macao, and Hong Kong, and X-Body will retain rights in the rest of the world. X-Body, based in Waltham, Massachusetts, will receive an undisclosed upfront payment, as well as clinical, regulatory and commercialization milestones. Further financial details were not disclosed.

While common in the West, an upfront payment is more unusual in China, and underscores Hengrui’s interest in the antibody program. It is also a recognition that Chinese pharmas may need to adopt new business practices as they look to capture global opportunities.

X-Body CEO Julius Knowles told PharmAsia News that the companies were introduced in San Francisco during the annual JP Morgan Healthcare Conference in January, and that he sees Hengrui as one of the most innovative companies in China, and a perfect match.

The chemistry between the two companies was almost immediate, disclosed Hengrui VP of Business Development Mike Lu. The deal was inked in less than six months, and the uniqueness and promising prospect of the product caught the eyes of the Lianyungang, Jiangsu-based company, according to Liu.

“We will take the lead in product development, while combining X-Body’s research capacity. So the synergy will help expedite the process,” Liu said in an interview.

Three-Part Business Model

Founded in 2008, X-Body Biosciences has developed a platform for generating MAb therapies using fully human libraries and deep sequencing. “We leverage our capabilities in live cell selections, diverse VH libraries and deep sequencing for these efforts,” Knowles said.

The three main components of the company’s business model are drug development, target discovery and collaborative drug discovery on challenging membrane proteins such as G-protein coupled receptors (GPCRs) and ion channels.

“The first is exemplified by our collaboration with Hengrui, where we have now partnered our program targeting AMD, and where we are excited about their deep strengths in preclinical and clinical development,” Knowles explained.

“The second is exemplified by collaboration with Tanabe [Tanabe Seiyaku Co. Ltd.], which is focused around target discovery, by generating antibodies that selectively target diseased instead of healthy cells, in this case focused around inflammation. An internal effort in target discovery in oncology is currently underway.”

“The third is collaborative drug discovery where we are creating antibodies against challenging membrane targets, such as GPCRs and ion channels. We have seen remarkable initial success against these targets, and will look for a few select partners with strengths in drug development as partners for this effort,” he said.

Hengrui is X-Body’s first Chinese partner, and Knowles said he was pleased to see the technology go to China while still retaining rights in the rest of the world. The partnership went off without a hitch, and is an important step in validating the capabilities of the company’s platform, he said, adding that if the program goes well, he would be interested in partnering on more programs with Hengrui.

The CEO was formerly head, platforms, strategic alliances for Novartis AG, where he led a team responsible for creating technology-based and drug discovery collaborations, forging several strategic alliances with biotech companies. He also founded specialty pharmaceutical company Novalar Pharmaceuticals Inc.

Hengrui Hunts For Biologics China Rights

Established in 1970, Hengrui took off in the last decade via a strategy concentrated on oncology, surgical anesthetics and contract imaging products. The oncology segment alone accounts for half of the company’s revenues, while anesthetics make up more than 20%.

Not surprisingly, Hengrui has been hit hard by recent rounds of price cuts on oncology drugs enforced by China’s National Development and Reform Commission. The retail price of best-selling oxaliplatin (Eloxatin) was cut by 38%, more than the market expectation. Price cuts for docetaxel (Taxotere), irinotecan (Campto) and letrozole (Femara) were slightly above 20%. The four drugs account for 45% of Hengrui sales, said Morgan Stanley analyst Bin Li in a September 2012 note to investors (Also see "Bristol’s Taxol, Sanofi’s Taxotere Among Latest Victims Of China Price Cuts" - Scrip, 19 Sep, 2012.).

Looking for new sources of revenue, Hengrui has been on a quest for innovative drug candidates, particularly products with large growth potential such as biologics. In early 2012, the company set up a team dedicated to biologics product development, and one year later, the team has grown from a dozen employees to more than 100. It also has a pilot underway for a 500-liter cell culture tank, Liu said.

“We plan to build up our biologics manufacturing capability in two to three years,” he said, adding that the company is actively looking for in-licensing opportunities.

One area of focus is age-related macular degeneration, a growing medical condition in China. Each year an estimated 300,000 patients are diagnosed with AMD, a major cause of blindness and severe vision loss in people over 50.

“We have to communicate with U.S. companies about the reality in China, that companies are unwilling to pay a large sum upfront.” – Hengrui’s Mike Lu

China is also a fast-aging society, and the population over 60 is estimated to grow to 400 million by 2050, from the current 170 million.

Looking to tap into the huge potential for AMD treatment in China, Novartis won Chinese regulatory approval last year for its market-leading vascular endothelial growth factor inhibitor Lucentis (ranibizumab), which was developed by Roche (Also see "After Januvia And Onglyza, Novartis Launches Galvus In China; Lucentis Receives SFDA Nod" - Scrip, 19 Jan, 2012.).

The top competitor to Lucentis in the U.S. is Eylea (aflibercept) from Regeneron Pharmaceuticals, which has more convenient dosing – bimonthly injections rather than monthly – and a lower price (Also see "Challenging Lucentis: Eylea’s Early Progress Prompts $250 Mil.-$300 Mil. Sales Forecast For 2012" - Pink Sheet, 16 Feb, 2012.). Regeneron and partner Bayer AG are currently conducting a Phase III trial for Eylea in China and plan to co-market the drug (Also see "Bayer, Regeneron Begin China Phase III Trial Of ‘Wet’ AMD Drug" - Scrip, 29 Nov, 2011.).

Hengrui said its new MAb can complement both therapies, but it may take up to seven years for the drug to reach the Chinese market even if there are no hiccups along the way.

Meanwhile, the company is also quickly gaining attention in China with its overseas ambitions. Chinese analysts have compared the company’s business model to how Takeda Pharmaceutical Co. Ltd. got started in Japan (Also see "Jiangsu Hengrui Shifts From Generic Supplier To Innovative Company; Analysts See Shades Of Takeda In Transformation" - Scrip, 7 Jun, 2011.).

Licensing Terms Reflect China Reality

In a “going global” move, Chinese active ingredient and generics manufacturers are eager to snatch up innovative products and venture out to the global market.

However, the in-licensing activity so far has been sparse except for a few late-stage development agreements, and Chinese firms have learned hard lessons about drug development risks.

Zhejiang Hisun Pharmaceutical Co. Ltd., for example, recently agreed to pay $5 million upfront for an option to secure exclusive rights for ThermoDox (doxorubicin) from Celsion Corp. in the greater China territory. However, the deal blew up just eight days later, after a Phase III study showed that ThermoDox did not meet its primary endpoint (Also see "A Quick Take: Celsion’s ThermoDox Phase III Failure Deals Blow To China’s Hisun" - Scrip, 1 Feb, 2013.).

“We have to communicate with U.S. companies about the reality in China, that companies are unwilling to pay a large sum upfront,” noted Liu, adding that eight out of 10 companies probably wouldn’t even consider paying an upfront fee.

However, following international practices also means that Chinese companies have to pay something upfront, if they are serious about securing the rights, Liu added. In the case with X-Body, Liu said the company agreed to an undisclosed upfront, plus milestones and sales royalties.

The milestones can also be flexible, Liu explained. The number doesn’t necessarily follow common milestone payments, but in the range, he emphasized.

On top of the AMD indication, Hengrui also secured some broader indications for the MAb, Liu said.

Hengrui invests roughly $100 million in R&D annually and has seen revenue grow 25% over the past several years. Hengrui's products and R&D span oncology/hematology, anesthesiology, cardiovascular and metabolic diseases, ophthalmology, and inflammation. It was the first Chinese company to win approval in the U.S. for an injectable generic product (Also see "Hengrui Of China Gets U.S. Approval For Generic Of Pfizer’s Camptosar" - Scrip, 20 Dec, 2011.).

Hengrui has an R&D center in Shanghai. It also has two API manufacturing factories, two dosage form manufacturing campuses and three R&D centers. The company has more than 4,000 employees and an annual production capacity of 1.5 billion tablets, 100 million injections, 10 million large volume parenteral injections, 10 million oral solutions, 100 million capsules, and 80 tons of API.

"It is an important part of our corporate strategy to partner with biotechs around the world that could provide interesting molecules for us to develop and commercialize, and we are excited to take on board the first of hopefully many development programs from X-BODY," said Hengrui’s global R&D President Lianshan Zhang.

[Editor’s note: This story was contributed by PharmAsia News, which provides daily coverage of the Asia biopharmaceutical industry and regulatory policies. To learn more, sign up for a free trial – no credit card needed.]