China offers alternative gateway for experimental drugs

from Nature Biotechnology

Hepeng Jia¹ and Jim Kling²

¹ Beijing
² Bellingham, Washington.

Several experimental biologic drugs that failed in the US and Europe have been recently approved in China.

Pioneering biotech treatments approved by the SFDA may be more efficacious than traditional Chinese medicines, but have yet to prove themselves on the world stage GOH CHAI HIN/AFP/Getty Images/NewsCom

Several experimental biologic drugs pioneered by Western biotech companies that failed to reach the US or European markets have recently been approved in China. Some argue that China could prove a useful testing ground from which to launch experimental therapies into the West. Others argue that it will take more than a flexible regulatory regime to kickstart Chinese biotech startup activity or convince foreign biotech companies to carry out testing in China.

Last November, the Beijing-based Chinese State Food and Drug Administration (SFDA) approved H101, the first oncolytic virus to be commercialized, developed by Shanghai Sunway Biotech. This treatment is the third experimental biologic drug approved by SFDA in the past 28 months: on September 12, angiogenic inhibitor Endostar (recombinant human endostatin) developed by Medgenn, based in Yantai, Shandong Province was approved for non-small cell lung cancer; and, before that, in October 2003, Shenzhen Gentech SiBiono's Gendicine (adenoviral serotype 5 mediated delivery of a human P53 gene) was approved for head and neck cancer, the first gene therapy to be commercialized anywhere (Table 1).

What these drugs have in common is that they are experimental treatments. And they are all similar to products initially developed in the United States that have not managed to be commercialized there. H101, for example, is essentially a modified version of Onyx-015, initially developed by Onyx Pharmaceuticals, a biotech company in Emeryville, California, and dropped in 2003. Likewise, Endostar is a Chinese version of endostatin, which was discontinued by Rockville, Maryland-based EntreMed in 2003. Endostar has been engineered to contain an additional nine-amino acid sequence to enhance protein purification, solubility and stability, (Song, H-f et al. Acta Pharmacol. Sin. 26, 124–128, 2005).

Why such success? Is it a pure coincidence? Or has China something to offer that other countries don't have? One reason why experimental therapies have reached the market in China, but languished in the West, is cultural. As Mark Tang, CEO of World Technology Ventures, a Jersey City, New Jersey-based investment company, explains: in the United States, treatments, such as gene therapy, have been stigmatized by highly publicized failures like the death of Jesse Gelsinger during a trial at the University of Pennsylvania; this stigma does not exist in China.

What is more, in China, "they're more open-minded about trying these novel biological therapies than people here," says Frank McCormick, director of the University of California at San Francisco Comprehensive Cancer Center and cofounder of Onyx. Another possible key factor for success is the ability of Chinese firms to easily recruit patients. The existence of a huge population combined with the fact that most cancer treatments are not covered by the healthcare system in China has enabled all of the successful biotech developers to recruit large number of highly cooperative patients in a short time and at very low cost.

In China, the economics are also different, according to McCormick. "There is less concern about systemic treatment being a major driver." Head-and-neck squamous-cell carcinoma is a very prevalent disease in China, according to McCormick.

The opportunity to develop such drugs in the United States may be somewhat limited, however. Most US companies investigating vector-based therapy are pursuing other indications. Onyx had initially planned to seek US Food and Drug Administration (FDA) approval for localized head and neck cancer, and then to conduct trials to see if the approach would be effective for the far larger market to treat systemic cancer. "Most big pharma companies [and Onyx's investors] didn't think that that indication [localized treatment] alone would justify the cost of development," McCormick says.

The approval could have wider implications, though. Leonard Post, senior vice president of R&D at Onyx is confident that the developments in China are a positive step forward for gene therapy, and that it could pave the way for its introduction into the US market. "Eventually this type of product will make its way into the US, whether Sunway Biotech chooses to do that, or some other product gets here first. I think we saw enough [positive results] with Onyx-015, and some of the other data that's out there, to say that the idea [of using engineered viruses to selectively attack cancer cells] is right."

Intellectual property (IP) could be a factor limiting export of the technology to the US market—the focus of all Chinese biotechs. Fang Hu, president of Sunway Biotech, explains that his company dealt with the IP issue by first obtaining a patent for the oncolytic virus, which Onyx did not apply for in China. And then, in January 2005, Sunway Biotech obtained a license for Onyx-015 from Onyx in a deal worth up to an estimated $10 million; including $1 million upfront. Onyx's Post acknowledges that his company spent far more than that on development of the product, but notes that the overall deal includes other elements; these include regulatory and commercial milestone payments, as well as royalties, according to a recent filing the company made with the US Securities and Exchange Commission.

In parallel, according to Chinese sources SiBiono is also reportedly holding negotiations with its US counterpart Introgen Therapeutics, based in Austin, Texas to enter the US market. But other companies could find it more difficult. For example, if a company like Medgenn attempted to bring the technology into the US or another country where the original patents are in force, they could be challenged as in any other patent dispute, according to Giulio DeConti, who is a partner at the Boston, Massachusetts-based intellectual property law firm Lahive & Cockfield. If Medgenn's technology differed enough from the original to be outside of the scope of the original claim, they would be free to operate.

In the particular case of Medgenn's drug, its general manager, Yongzhang Luo, explains that Endostar is different from endostatin because of the additional nine-amino acid sequences which improves the protein's half-life and its capacity to combine with zinc. Judah Folkman, who is familiar with Endostatin, since it was discovered in his laboratory at the Children's Hospital in Boston says, "[Medgenn] has improved on the function of endostatin." He cites tests in his laboratory that show endostar is at least twice as potent as endostatin in animal tumor models.

Are the successes of these Chinese companies likely to make the country more attractive to US firms? Differences in regulatory practices in China, where safety not efficacy is paramount, certainly have contributed to the faster approval of innovative drugs (Box 1). US companies, however, would still not necessarily opt for the Chinese approval system. For example, Introgen intends to sell its gene therapy products throughout the world, but the company has no intention of moving its testing to China or anywhere else to speed development. "We're very focused on creating the global standard for this new class of products, and that's going to be defined in the US and in Europe," says David Nance, CEO of Introgen. "It takes longer, but I think it answers a lot of questions."

Meanwhile, it is too early to say whether these first successes will encourage more biotechs to be created in China. Some biotech players in China may develop a fundamental innovative strength," says Medgenn's Luo, who is also a professor of Beijing-based Tsinghua University, "but, as a whole, Chinese players will have to keep following the steps of their US counterparts."

Indeed, the successes of three Chinese biotech firms do not yet represent a developmental watershed for the country's fledgling biotech industry, confirms Zailin Yu, president of Beijing-based drug development company Bioway-Fortune Gene Technology Research Center. "All three cases are a result of the heavy, even desperate, government investments," he adds. Medgenn receives most of the RMB100 ($12.4) million research funding from various levels of government in the coastal province Shandong, one of the richest in China. Similarly, Sibiono receives nearly all of its RMB80 ($9.6) million research funding from government bodies, public foundations and major universities. The problem, according to Yu, is that, "China's venture capitalists, pharmaceutical firms and the stock market are not ready to support an overall 'great leap forward' in the biotech industry."