Executive Summary

· China’s pharmaceutical companies are defining their identity and exploring ways to expand their market, but the path forward is fraught with challenges and must be carefully navigated.

· To gain insight into these challenges, MSQ spoke with Dr. Ruyi He, who joined the NMPA in 2016 after a two-decade career at the US FDA.

· Chinese drug makers seeking to expand into other markets should start thinking about designing clinical trials early in the development process.

· Following international standards and seeking guidance early and often from the FDA is a key factor to success.

· Recent examples of development victories and failures highlight the pathway for Chinese companies.

MSQ Viewpoint

In the last several years, Chinese pharmaceutical and biotechnology companies have transformed the ways patients access therapies and the way industry develops medicines. As their capabilities advance and they set their sights on larger markets, they face an inevitable question: do they focus on the increasing competition at home or the even bigger, global market for new and innovative drugs.

There are many questions to consider, including:

· Will a data package from studies conducted in China support a filing for regulatory approval in other countries and regions, especially the US?

· Should the data package from studies conducted in China be used to inform the design of pivotal clinical trials that can gain approval in other countries and regions?

· Should companies take a step back and use existing data to design and conduct exploratory studies in other countries and regions before setting a plan for the pivotal study?

· Should companies begin with a multi-region drug development program with the intention of gaining global approval, instead of a stepwise approach?

In order to gain better insight into this evolving conversation, MSQ has turned to a trusted and experienced expert, Dr. Ruyi He, former Chief Scientist of the Center for Drug Evaluation at the National Medical Products Administration (NMPA). He joined the NMPA in 2016 after a two-decade career at the US Food and Drug Administration (FDA). Having introduced many reforms for the NMPA drug approval system, including guidance for drug evaluation, conditional approval, and acceptance of overseas clinical data, Dr. He is exceptionally qualified to lend his voice and provide industry guidance on this important topic.

Chinese Clinical Standards are Strong, but Interaction with the FDA is Key

The most valuable market from a sales and profit perspective is the US market, and the approval by the FDA, the most comprehensive and stringent regulatory agency, can lead to clearance by other national regulatory agencies, opening up worldwide markets. Many companies in China are now looking to leverage their experience to find the best pathway to global registration.

When presented with this question, Dr. He noted that the reliability of Chinese drug clinical trials is now well recognized. The prerequisites for Chinese innovative drugs to go global have been achieved. The GMP requirements, GCP specifications, and ICH guidelines of China, the US, Japan, and the EU are consistent, creating a great opportunity for Chinese enterprises to succeed worldwide. But, of course, that doesn’t mean it will be easy to pass the multiple hurdles required for US FDA registration. Companies in China must be in constant communication with the FDA and understand the logic and reasoning behind the FDA's decisions.  Following the lead of their US counterparts, more and more Chinese innovative pharmaceutical companies, who are preparing to go overseas, are setting up offices near the FDA headquarters and hiring former FDA experts to help guide the approval process.

Even for the most prepared companies, regulatory review is highly unpredictable, as Chinese companies are learning. These decisions come with serious opportunities and consequences. Some companies have gotten quick approvals in China for drugs that have resulted in strong sales, but when they invest heavily in the same program to gain FDA approval, they have experienced mixed results, including some high-profile failures. This apparent contradiction can be unsettling for the sponsors of these drug programs.

When asked about this challenge, Dr. He does not think there is a set formula and each case likely has a compelling reason that needs to be examined individually. The recent, rapid development of Chinese innovative drugs has created heightened expectations and almost unrealistic illusion in some drug developers. However, a common mistake is the belief that if a clinical trial succeeds in one region, it will also be successful in another region. So, sponsors often skip the requisite Phase 1 and Phase 2 studies and go directly to the pivotal trial when they try to expand beyond China with consideration of variable factors in different geographies and patient populations.

Chinese Companies are Transitioning from Developing Me-Too Drugs to more Innovative Treatments

Currently, the majority of drugs undergoing clinical trials in China are so-called me-too drugs, meaning that they are technologies that are already approved in other regions. The drugs they model have passed US clinical trials with known targets, clinical trial design, sample size, and selection criteria. Therefore, the success rate of clinical trials for these me-too drugs in China is much higher than their predecessors in the US, as they are effectively replicating known results. Because of this, some companies proudly claim to have developed new drugs with 100% success rate, when in reality, they were simply successfully replicating other people’s work, which is an achievement, but falls short of innovation.

Dr. He weighed in on the merits of this approach to drug development. The risks in these cases are certainly not comparable to those of the original drugs. The success of an innovative drug in the US, especially the first-in-class new drugs, may be accompanied by dozens of failures. The drugs in China are mostly “me-too” medicines with a high probability of success and low risk, in line with the current mindset of So far, China's pharmaceutical industry has mostly been learning and developing by imitation. This current developmental step has been necessary because we can’t expect to innovate without having mastered the skills and techniques necessary for successful approvals. What is clear however, is that the ability to replicate must not be mistaken for the ability to innovate.

Dr. He recommends a careful and methodical mindset in building a company, acquiring the skills and experience, and then successfully developing drugs. Of course, patience is not in abundant supply in the capital markets that support the biotech industry, and perhaps also runs short among the innovators. Investors and founders feel a sense of pressure and urgency because they are anxiously looking at the timetables for the next round of fundraising and an eventual IPO. There are inevitable challenges when it comes to opening well-designed clinical trials overseas leading to friction between the scientists who must patiently run the study and objectively wait for clinical data and their corporate backers.

Moving too Quickly can Lead to Setbacks

Dr. He observed that more and more developers are looking for ways to accelerate development, such as skipping certain trials or seeking waivers for standard clinical studies on the way to approval. While under the right circumstances this accelerated process provides patients with quicker access to necessary medicines, and saves time and money for companies, it could create unrealistic expectations and unintended consequences. Developers may deviate from fundamentals to new drug development and cut corners around the painstaking and methodical steps necessary to collect quality data and carefully test the treatment hypothesis.

In the history of regulatory review, a typical clinical development program is divided into three phases. Collective experience recommends following this path because each phase and each step has a distinct purpose, designed to efficiently deploy resources and generate data, while minimizing risk to sponsors and patients. When looking at a different country or region, the patients are different, doctors are different, there are important differences in standard of care, and many other subjective factors come into play, all of which can change the underlying premises of a development program. In other words, data from another country may be quite different from data collected in China, and vice-versa.

Dr. He cautioned that we must be careful when considering going directly to Phase 3 or pivotal clinical studies abroad based only on data from China. The aforementioned factors come into play and can totally change the anticipated results. What looks like a quick win may not turn out as expected, and failure of a pivotal study has enormous cost, often on the scale of millions of dollars and significant loss value.  In many cases, companies should take a more deliberate approach, conduct a Phase 2 study, determine the appropriate dosing regimen and target patient population in order to generate the requisite data to aid the design of a Phase 3 study. Sometimes, a more lengthy and costly development plan is the best way to ensure long-term value.

Chinese companies should not skip intermediary steps and clinical studies, because they need to move beyond developing a me-too drug where one is following well-published protocols and data towards a known conclusion. They should not dismiss the importance of Phase 2 studies or boast about the speed of their ambitious development plans. Running overseas studies often exposes problems that were not apparent in the work done in China. Dr. He based these observations on the many examples of failures he witnessed at the FDA. Otherwise, promising drug candidates with encouraging US-based clinical study results experienced setbacks in studies conducted in Europe.

Recent Examples Highlight the Challenges Faced

Drug development is distinct from other industries and unlike the introduction of other new technologies, Phase 3 clinical studies in different regions may not yield the same results. Emphasizing this point, Dr. He provided a good example. Early in the COVID-19 pandemic, Gilead’s antiviral drug Veklury (remdesivir) was considered a candidate to treat hospitalized SARS-COV-2 patients. In early February 2020, Chinese scientists took the lead with the initiation of a Phase 3 clinical study. Two and a half months later, they published a paper in The Lancet and concluded remdesivir was ineffective for the treatment of patients with severe SARS-COV-2. When the news was announced Gilead’s stock price dropped precipitously.

Meanwhile, instead of directly entering Phase 3, an adaptive trial design equivalent to a small Phase 2 was adopted and run in the US and other regions, exploring a clearly defined patient population and endpoints. After that, the US-led group modified the protocol to enroll patients on home oxygen therapy without being hospitalized. This change was the key to remdesivir's success in clinical trials in the US. Trials indicated 31% faster recovery with reduced symptoms relative to standard of care. On May 1, 2020, the FDA approved the emergency use authorization (EUA) of remdesivir for the treatment of SARS-COV-2, an approval that was followed by more than 100 countries worldwide.

This example clearly demonstrates that different clinical trial designs using the same drug can produce completely different results because the dose, method of administration, and target populations are different.

Considering another example, Innovent’s recent failure to gain FDA approval for sintilimab was discouraging news for many companies in China. While there are many complexities in this case, one sentiment that has formed among many in China is that FDA is overly skeptical of drugs developed and approved in China.

Dr. He does not readily share this sentiment. He does not believe US FDA has decided to shut the door on Chinese companies. Rather, the lesson we should take from Innovent’s example is that developers must clearly understand the FDA's standard requirements for reviewing a new drug.

The FDA Considers International Results Objectively

The FDA's principle of reviewing drugs has not changed. The agency has always maintained a core fundamental principle: the clinical value and safety of new drugs in development. Innovative research and development in the US is a high-investment, high-risk game, and to succeed it relies on a high-return investment environment that depends on both efficacy and patient safety

One of the lessons developers must take from the Innovent example is that if there are no clear meeting minutes or official FDA guidelines, the statement of an FDA official at a certain time and on a certain occasion is not an adequate basis for corporate decision-making. Developers must maintain constant, active dialogue with regulatory agencies. When navigating the regulatory process, Chinese companies must follow the latest FDA review requirements, guidance, and meeting minutes for similar drugs, and always communicate clearly with the FDA.

Ultimately, Dr. He does not believe the FDA has a different set of rules for drugs or clinical data from China. If the drug has clinical value and can solve unmet medical needs, it is feasible to apply for FDA approval even if all clinical trial data are from China.

At the same time, clinical trial designs should reflect the US clinical standards and clearly address medical needs. For example, RemeGen's antibody drug conjugates (ADC) drug disitamab vedotin (RC48) has been tested in clinical trials in China for several different indications. After evaluating the disease landscape with similarly targeted agents,  RemeGen chose urothelial carcinoma as the entry point to US approval because RC48 has clear treatment advantages. As a result, RC48 was able to obtain breakthrough therapy designation (BTD) for urothelial carcinoma and subsequent FDA approval in September 2020. In this case, even though it is a known target and all the clinical trial data are from China, RC48 won FDA approval based on the clear clinical value. Dr. He observed that with superior clinical data, the FDA has flexibility to expedite clinically valuable products to the market.

However, the overall development landscape indicates that a cautious approach and methodical execution of complex multi-region clinical development programs may be necessary. And, of course, this approach is time consuming and costly. Therefore, in order to differentiate from competing drug programs and clinical designs, increased overall efficiency, cleverness, and creativity are essential. While emphasizing there are no shortcuts, Dr. He was also quick to acknowledge there are indeed creative ways for Chinese companies to pursue multi-region clinical development programs from the get-go.

In the FDA review meeting that took place on Feb 10, 2022, there was a chart showing that mainland China has conducted the fewest number of global multi-center clinical trials (MCT), which suggested a lack of experience in this area. Other Asian countries are ahead of China in generating clinical trial results from MCTs, and those data have been more in line with FDA’s preference for data from many global centers.

Clinical trials in the Asia-Pacific region have been overlooked in the past. When talking about international MCTs, most people immediately think of centers in Europe and US. However, clinical trials in the Asia-Pacific region also meet the US FDA's requirements. Examples include Hong Kong and Taiwan, whose extensive experience is well recognized by the FDA. In addition, there are critical unmet medical needs for more prevalent indications in the Asia-Pacific region including gastric cancer, nasopharyngeal cancer, and liver cancer. Efficient, thoughtful enrollment from a large patient population is a method to improve the pace of clinical trials, and the US FDA will also value this. Therefore, this could be a pathway for Chinese companies to effectively conduct MCT programs and generate the data that can satisfy FDA regulatory requirements.

Dr. He has kindly provided valuable advice to companies in China looking to expand to overseas markets. While there are no right answers or formulas, we thank Dr. He for his insightful analysis and recommendations and look forward to the opportunity to contribute to global drug development and solving unmet medical needs.

For more information or questions concerning this report, please contact us at info@msqventures.com