Innovative drugs have always been the jewel in the crown of pharmaceutical research and development, and biomedical companies have successively landed on the capital market, making China's innovative drug research and development show a spark of sparks gradually becoming a fire.
In the Shanghai Zhangjiang Biomedical Base, known as the "Zhangjiang Medicine Valley", there are a number of innovative enterprises in the field of biotechnology and modern pharmaceutical industry, and Hua Ling Pharmaceutical is one of them.
In 2016, Shanghai took the lead in launching the reform of the drug marketing authorization holder system in the country, and Hua Ling Pharmaceutical became the first batch of crab eaters in the drug marketing authorization holder system; since the implementation of the new version of the Drug Administration Law on December 1, 2019, Hua Ling is also the first batch of biotechnology companies to obtain the Drug Production License.
In September 2018, Hua Ling Pharmaceutical officially landed on the Hong Kong stock market, becoming the third unprofitable biopharmaceutical enterprise to be listed after the new listing rules of the Hong Kong Stock Exchange. At present, the company's innovative drug for diabetes treatment, Dozaglia Edin, has completed two Phase III registered clinical studies, and NDA is imminent.
Founded in 2010 in Pudong, Shanghai, Dr. Chen Li, founder and chairman of the company, was the chief scientific officer of Roche R&D China Co., Ltd., with more than 20 years of experience in new drug R&D innovation and management. In 2020, as a representative of biomedical entrepreneurs, Chen Li participated in the celebration of the 30th anniversary of Pudong's development and opening up.
Recently, the 21st Century Business Herald reporter exclusively interviewed Chen Li, who has a lot of feelings about the development of innovative drugs in China in the past 20 years and the changes in the investment and financing environment of biopharmaceutical companies.
21st century: At present, the company's fastest progress in the research of drugs is the innovative drug Dozagliaetin for diabetes treatment, why did you choose the track of diabetes?
Chen Li: There are 460 million people with diabetes worldwide, and the number in China is 120 million. But China's diabetes diagnosis rate is less than 60%, of which less than 70% are treated, less than 40% are treated and able to control blood sugar, and the result of diabetes not being effectively treated is the emergence of complications. In other words, diabetes is currently a disease with a problem with the diagnosis of treatment, and even if you receive treatment, there may be no way to control the development of the disease, so that the incidence of eye disease, kidney disease and other complications in diabetics is 20-40%. So poor blood sugar control is not a small thing.
At the same time, because the drug development cycle of diabetes is very long, the risk is particularly large, drug development is usually 10 years, 1 billion US dollars, and diabetes may be 5 years, 500 million on this basis, the development risk is high, so many multinational companies, including Roche, Novartis, etc. have stopped the research on innovative drugs for diabetes. But China is the world's diabetes power, and Chinese population is 30 percent more susceptible to diabetes than Caucasians. Diabetes is therefore a major threat to the economic development of our country, so we launched a research program in Dozaglia Eiten.
21st Century: What is dozagliatin innovative compared to other diabetes drugs? How is the listing schedule arranged?
Chen Li: Dozaglia Edin developed new drugs from the core mechanism of automatic regulation of blood glucose in the human body. Human blood sugar regulation is like the temperature regulation of the room, human blood sugar through the blood glucose sensor, sensing the rise in blood sugar after a meal or a decrease in blood sugar after activity, thereby secreting insulin and storing the sugar eaten in. Or turn on glucosacil, allow the liver to synthesize sugar, and keep blood sugar in a stable state. The blood glucose abnormalities in these diabetic patients are directly related to the severe damage to the function of glucose kinase in the blood glucose sensor. The scientific research work to study glucokinase as a blood glucose sensor to regulate human blood glucose homeostasis was initiated 50 years ago by Professor Franz Matschinsky, who proposed the core position of glucokinase in the middle of blood glucose homeostasis, as a blood glucose sensor to regulate human blood sugar.
In the past 10 years, Hua Ling Pharmaceutical has developed Dozaglia Edin, realized the scientific theory of homeostasis regulation of blood glucose, transformed into corresponding research techniques, determined the development path and scheme of this drug through phase I and Phase II clinical research, and established a series of technologies and patents for blood glucose sensor regulation. On this basis, after the phase III clinical study, two phase III clinical studies were successfully completed last year, and Dozaglia Edin is about to be listed as an innovative drug, achieving innovation from theory to new drugs, that is, a breakthrough of 0 to 1.
In terms of patient availability, Dozar has been shown in clinical studies to be very practical in patients with unmedicated diabetes at the beginning, with a very fast efficacy while addressing the core causes of type 2 diabetes, insulin resistance and β cellular decline. These are all characteristics of the fundamental treatment of diabetes.
We are currently preparing the application materials for marketing authorization and preparing to submit them to the China Food and Drug Administration around April this year, hoping that the State Administration can give priority to review and let one of the world's first innovative drugs enter the market as soon as possible.
21st Century: How to Predict Doza's Business Prospects?
Chen Li: The incidence of diabetes in China is 10%, and new diabetics appear every year, which is a batch. The other group is diabetics who eat enough metformin and still have ineffective treatment, which is also a huge market. At the same time we are preparing to develop and combine insulin. In other words, for patients who have not been used in the early stage, this drug is very good; in the middle of the metformin use failure (patients), this is another first choice when combining the drug; in addition, in patients who need insulin in the later stage, plus this drug, can effectively control hypoglycemia and reduce the amount of insulin.
At present, the country is promoting the graded diagnosis and treatment of diabetes and hypertension, diabetes detection is very convenient, I estimate that if Doza can be listed at the end of this year or early next year, the diabetes detection rate can be 60-70%. As mentioned earlier, assuming that the number of diabetics in China is 120 million, which is equivalent to nearly 80 million confirmed cases, even if 10% of the 80 million diabetics use this drug, it is a huge market.
21st Century: Doza is about to go public, what preparations has the company made for the follow-up commercial operation?
Chen Li: In terms of sales operations, we reached a cooperation agreement with Bayer Pharma last year, and Bayer will help Hua Ling Pharmaceutical promote it in the market. Bayer is a deep practitioner in the field of diabetes in China, and the product they developed, Bai TangPing, is the product with the highest single drug sales in China, once the highest annual sales of nearly 8 billion yuan, in the past decade, the total sales reached 40 billion yuan. Their products have been sold in more than 13,000 hospitals and more than 10,000 pharmacies. That is, they have a very good team and also have very good doctors and industry relations. Hua Ling Pharmaceutical is a focus on scientific research and innovation of the enterprise, we want to establish our own sales team and quickly promote among Chinese patients is time-consuming, through the cooperation with Bayer, can make Chinese patients benefit from this world's first innovative drug faster.
In terms of production capacity, Hua Ling adheres to the model of joint innovation sharing and win-win, and when we develop new drugs, a large amount of R&D investment is given to cro companies, including productive CMOs, clinical research CRO, basic research CRO and so on. But in fact, the existing cMO service capabilities have not been able to meet our expected sales and market demand, so Hua Ling also decided to establish its own pharmaceutical production plant in the future, and is currently stepping up this pace to find landing places in different regions, which is a more critical step. Last year, we established a cooperation with Ruibo Pharmaceutical, a subsidiary of Jiuzhou Pharmaceutical Company, to help us do the production of APIs, and now our raw material production is made by WuXi AppTec. Then we need to build 2-3 API production bases in case of unexpected factors, including irresistible natural factors such as earthquakes, which are also currently in the layout.
After the product is listed in China, it will lay out three roads to go to sea, one is a developed country in Europe, the United States and Japan, one is a "Belt and Road" country, and the other is a Southeast Asian country.
21st century: Hua Ling Pharmaceutical is one of the first batch of drug marketing authorization holders (mah) pilot units in Shanghai, this system is the highlight of deepening the reform of the drug regulatory system, what do you think can be further improved in this system?
Chen Li: I think the most difficult thing is whether the company itself can assume the responsibility of the listing authorization holder.
As a biomedical industry, our products are related to the life and health of patients, so in any country, the production, research and development, and sales of drugs, its legal entity, that is, the marketing authorization holder, must bear legal responsibility for the entire life cycle of this drug, which is an international consensus. In the early stage of China's pharmaceutical development, we were in a state of lack of medical treatment and medicine. In recent years, we have been able to break the card neck technology, be able to make me-too drugs, have marketed products abroad, and can also develop new drugs with patents at home.
Around 2015, the Shanghai government and enterprises found that in the middle of the environment of new drug innovation, some systems of original drug supervision could not adapt to the development of innovative drugs, so they put forward the concept of drug marketing authorization holders and promoted the implementation of relevant systems. The quality and safety control of a drug from development and marketing to production and sales requires a systematic management system and relevant departments and a group of people with management experience to achieve the corresponding level. The marketing authorization holder system was first piloted, and later written into the new version of the Drug Administration Law, and now it has become a condition that must be met for the clinical declaration of new drugs. In the whole process, many companies have not really experienced how to do a good job as a drug marketing authorization holder.
21st century: After so many years of development of China's innovative drugs, what are the shortcomings compared with foreign countries?
Chen Li: We must say it from three aspects. First, China's pharmaceutical industry is only in the 40 years of reform and opening up, 40 years we have solved several problems, one is to solve the problem of hungry stomach, that is, the production of generic drugs, before we even can not do generic drugs, to solve the problem of hunger at the same time, China's ability to produce and supervise drugs has initially reached the international level. The second is the breakthrough of existing foreign technologies and patents, solving the problem of card neck, establishing its own patents, and developing its own products, whether it is pd-1 in the field of tumors, or pp-4 and sglt-2 in the field of diabetes, the development of drugs that have been listed abroad in China has reached the corresponding level.
What is missing in China right now? Compared with the U.S. innovation system, it is the world's first innovative drug. 40-50% of the world's first innovative drugs are first listed in the United States, and 40% of the new drugs listed in the United States each year account for 40%, but our world's first innovative drugs are still relatively small.
21st century: At present, investment in the domestic biomedical field is very hot, especially after the opening of the science and technology innovation board, biomedical enterprises are sought after by the market. How do you see investment and financing trends in this area?
Chen Li: The research and development of the past 10 years, represented by Hua Ling, has actually led Chinese investors to pay attention to biomedicine. After 2016, Chinese institutions investing in biomedicine mushroomed. Up to now, there may be more venture capitalists in biomedicine than in Chinese biopharmaceutical companies, which makes the entire biomedical industry have a good investment and financing cycle system.
Investment in the biomedical industry is divided into three stages, the first is the angel start-up stage, which is generally invested by professionals for the first money. Then introduce venture capitalists, major funds, etc. to inject capital. After the final listing, early investors can exit, and the market will invest further, so that this product can be further developed and listed, production and sales, and realize the entire value development. The entire cycle can take 10-15 years. One of the most important points is whether the early investors can play with you for 10 years or 15 years, and whether these new investors can see clearly in which investment cycle they can get a market value increase.
Hua Ling wants to develop 1 to 10 in the future, and these major expansions must have a good financing platform, which is why the company is considering listing. I think that if there is no batch of biomedical companies to list in Hong Kong, the science and technology innovation board may not be opened so fast, and the support for the innovative pharmaceutical industry will not go so fast.
21st Century: Why did you choose to list in Hong Kong, China? How do you view the company's performance in the secondary market?
Chen Li: We also did a corresponding roadshow and communication in the United States, and in the process, Hong Kong launched the opportunity for unprofitable biomedical companies to go public. We had two ideas at the time, first, Hua Ling Pharmaceutical is a Chinese company, the daily work is in the daytime, the United States is at night, which is a problem for investors. Second, in the future development, Hong Kong's economic advantages and financial advantages can provide capital advantages to mainland enterprises. And at that time Chinese mainland did not allow unprofitable companies to go public. At the same time, from the perspective of hua ling's capital structure, 80% of the investors are investors or investment institutions in Europe and the United States, and they are more recognized by Hong Kong's management system and legal environment. Overall, under the circumstances at the time, going to Hong Kong was a better option.
But I personally feel that Hong Kong's understanding of biomedicine may be 5 years later than that of the mainland. Around 2010, the biomedical industry environment in the mainland has undergone major changes, and many government policies have been formulated around pharmaceutical innovation. The cro environment and policy environment of the mainland are very good. For example, in the current science and technology innovation board, everyone is particularly enthusiastic about biomedicine and innovation, and the market awareness and value recognition of these companies are very high. Hong Kong may also need some education, because the main drugs in Hong Kong are imported or generic drugs, and we also need to further promote the theory of innovative life science drugs to these investors, and gradually expand the promotion of the investment environment in the entire Asia-Pacific region, including Hong Kong.
In addition, many friends do not understand Hua Ling Pharmaceutical, they will ask why you do not make more products, why do not buy a piece of land to build a factory? I think that to be the world's first innovative drug, we must strictly deepen the formulation of research programs, develop a drug, and require us to do a good job wholeheartedly, while managing many uncertain factors.
In fact, we have established the next 10 product development opportunities, and when Dozagliaetine goes to market, we will immediately start clinical development of these products. We did some early clinical trial development in the U.S. and will continue these trials this year. The product pipeline has also been laid out, and in the future, the product pipeline will be named after the product and listed separately, so that friends can know at a glance that Hua Ling Pharmaceutical is a series of products and a combination of fists. It should be noted that we do innovative drugs, either 0 or 1, is not a success probability problem, not 100 pipelines will be able to make 10, and there is a problem of whether the product can sell money.
21st Century: If the company is listed one year later, will it choose the Science and Technology Innovation Board? Or will you consider returning a share now?
Chen Li: Now it seems that the financial environment in the mainland is very friendly to innovative pharmaceutical companies, and I think listing on the Science and Technology Innovation Board should be a good choice.
Under consideration (back a).
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