Crossing the Golden Gate of

Biopharma Partnership  

East-West Summit - San Francisco JAN 2023 

The event started with the opening speeches given by Tony Chen, Partner at Jones Day, and Echo Hindle-Yang, founder and CEO of MSQ Ventures. After that, Marc Estigarribia, Managing Director of MSQ Ventures, and Ginger Ding, Managing Director of MSQ Ventures, shared MSQ’s (latest) Viewpoints on the 2023 Outlook of Cross-border Deals in China.

MSQ expects cross-border licensing deals to maintain its growth momentum in 2023. Small and medium-sized biotech companies are becoming more prudent with in-licensing opportunities, and out-licensing should continue as an ongoing trend for Chinese biopharma. Ophthalmology and infectious disease areas should continue to grow, as neurology is emerging. Chinese biotech companies are showing more interest in therapeutic areas other than just oncology. 

After the opening speeches, Neurophth Therapeutics, LeaderMed Health Group Limited, PhilRivers Technology, BioVersys AG, and ABM Therapeutics gave presentations, introducing their companies and pipelines.  

Panel 1: “Capital Markets & Investment: Opportunities and Challenges in 2023” 

The first panel was moderated by Charles Chau, Partner of Jones Day Hong Kong. The discussion focused on the opportunities and challenges of healthcare about capital markets and investment in 2023. Mr. Joe Lai, Managing Director & APAC Head of BNP Paribas, Stella Xu, Managing Director of Quan Capital, Takaaki Tobaru, Partner of Remiges Ventures, Kan Chen, Partner of Qiming Venture Partners, Peter Devlin, Partner of Jones Day New York, and John Tang, Partner of Jones Day San Francisco all attended the panel discussion. 

The Global Markets in 2022 

Joe Lai of BNP Paribas gave a brief overview of the global capital markets in 2022. He commented that the market was down in 2022 compared to that in 2021, driven mostly by US interest rate hikes, and the tough political environment. He had an optimistic forecast for 2023 as he sees the relaxation of regulatory policy, and the meeting between the presidents of China and the US as positive signals. 

Then, Stella Xu introduced Quan Capital’s investment criteria, and how they are currently helping its existing portfolio companies survive and thrive during these challenging times. “We really focus on the key driver. You need to have not only a pipeline of assets with the right proof-of-concept data but also a platform that can sustainably generate multiple shots on the goal.” More importantly, she added, “you need the right people who can handle both the scientific complexity and the constantly changing market dynamics.” 

Kan Chen of Qiming agreed with Stella. “We provided a lot of support to our portfolio companies in this tough environment”, he said. Kan added that Qiming Ventures Partners raised the criteria bar and slowed down the pace of making new investments.  

Takaaki Tobaru of Remiges (US-Japan) echoed Stella’s and Kan’s opinions. In the previous year, his team expanded its scientific knowledge basis by reaching out to KOLs and science innovators to prepare for the future. globe. 

Impact of China's COVID Policy Change on the Investment Environment 

From the capital market perspective, Joe Lai commented that it was a roller coaster ride in the past 2 years but noted that people are looking beyond COVID as the impact of COVID is expected to weaken. Everything should get back to normal per Joe, as investors will focus back on company fundamentals when making investment decisions. 

From both biotech and private market perspectives, Kan Chen pointed out that in the short term, the surge of COVID patients will delay clinical trials. However, in the long term, as cross-border collaborations and idea exchanges between east and west are facilitated, Kan said “it's great for biotech investments in general”.  

2023 Investment Outlook for the Healthcare Sector in U.S., Europe, and Japan 

For the U.S., Stella analyzed the progress of innovation, regulatory policies, and private investment. She compared the downturn in the past 2 years with that of 2008 and 2009, which were different. Even though it was hard for companies to raise funds in the previous years (‘08-09), some of their portfolio companies were still able to make progress in both the private and public markets. She summarized with a “cautiously optimistic” tone that “we might see more strategic partnership deals as well as financing”. 

Takaaki shared his outlook for the Japanese and European markets. He introduced how the Japanese government supports the development of vaccines in Japan and how countries like Germany and France support new startups. He remarked that the momentum is there, and he expects to see more companies get support. 

Takeovers and Privatization in the Coming Years 

Peter Devlin of Jones Day commented that as the bargaining leverage has shifted back to the investor side, many investors are looking for alternative ways to invest. Since valuations are very cheap, companies started to think of going private. 

Peter noted that there are a lot of issues to be considered for a public company, such as securities, corporate, and regulatory laws. For those go-private transactions, the regulatory regime is strict. He suggested thinking about those issues early to create protections and mitigate risks, he said “start to talk to lawyers very early”.  

From the perspective of a banker, Joe agreed that the volume of take-over and privatization transactions would increase because of low valuations. However, since the cost of capital is still very high, people are currently very cautious. All in all, the volume of these transactions will be very steady at a high level, instead of a sharp spike.  

John Tang of Jones Day echoed Peter’s opinion of starting to talk to a lawyer early to mitigate, if not eliminate, risks. When a lawsuit is filed, it would be late to change a lot of things. He commented that shareholder litigation is unique in the US. In takeover transactions, both the target and the buyer are typically sued for different reasons. It is virtually a certainty. In the vast majority of these scenarios, transactions are able to close on time, even if the lawsuit continues in the background.  

The Most Promising Sector in the Coming Year 

Takaaki chose neuroscience. “I'm really looking forward to seeing Alzheimer's drugs from Biogen and AZ”, said Takaaki. 

Kan was enthusiastic about the intersection between artificial intelligence and drug discovery. They have paid attention to the emergence of new artificial intelligence models in previous years. They believe that artificial intelligence will be more widely used in the whole process of drug discovery. His team has made some investments in this field. 

Stella pointed out two directions: one is emerging validation of truly cutting-edge breakthroughs and new modalities, for example, in-vivo CAR-T and in-vivo gene editing; the other is small molecules such as PROTAC. In conclusion, Stella said the key is to apply those new technologies to solve unmet medical needs. 

At the end of the panel, the panelists shared their expectations for 2023. 

Panel 2: “Winners in 2022”. 

The second panel, “Winners in 2022”, was moderated by Echo Hindle-Yang, CEO & Founder of MSQ Ventures. John Zhu, CEO & Founder of Duality Biologics, Linda Zhao, US Head of BD of Jiangsu Hengrui Pharmaceuticals Co., Ltd., Li Chen, CEO & Founder of Hua Medicine, Yao-Chang Xu, CEO & Founder of Abbisko Therapeutics, Guoliang Yu, Chairman of Apollomics, Bing Liang, Partner of Jones Day, and Joshua Berlin, Head of Business Development of BioCentury Inc. all joined the panel discussion. The panelists shared how they won during the challenging time, how the win should impact the global biopharma community, and what the future of this win is expected to be. 

John Zhu, CEO and founder of Duality Biologics, shared his experience and insights on Duality’s achievement in 2022. Duality established collaboration with Adcendo and Harbour BioMed. John started his own company after being an investor for more than 10 years. “If we want to build a company, we want to make it agile and base it on novel modalities, such as bispecific antibody or ADC”, he said. His team finally built a third-generation ADC platform.  

“Once you have a platform, you can apply the platform to other targets”, said John. He and his team started the company just at the beginning of the pandemic. During the last 3 years, they suffered a lot. However, they were still able to push forward the assets to clinical development because of the strong platform. They even pushed one asset from concept to IND in just 30 months. 

John also highlighted the importance of establishing partnerships. “Drug is not like wine. For wine, the longer you keep, the better you’ll have. For drugs, however, the longer you keep, the worse you’ll have. Because the value has gone. That’s why it’s important to establish partnerships”, he said.  

Linda Zhao, US Head of BD of Jiangsu Hengrui Pharmaceuticals Co., Ltd. shared the achievement of Hengrui in 2022. Hengrui Pharma announced positive results from its phase 3 study of camrelizumab in combo with rivoceranib, which is co-developed by Hengrui Pharma in China and by Elevar Therapeutics, Inc. globally (excluding China). The study is a multinational, randomized, open-label trial. It was initiated in June 2019, and met the primary endpoint in Apr 2022. Median OS for camrelizumab + rivoceranib was 22.1 months vs. 15.2 months. Median PFS for camrelizumab + rivoceranib was 5.6 months vs. 3.7 months. In 2022, Hengrui also had another innovative drug approved in China. “Our focus is China. Our strategy is to find partners for co-development or co-commercialization outside of China”, shared Linda. 

Li Chen, CEO & Founder of Hua Medicine, shared that China’s NMPA approved its first-in-class glucokinase activator (GKA) for type 2 diabetes in Oct 2022. The drug was approved on Oct 8, launched on Oct 28, and sold out on Nov 3rd.  In the process of drug development, Hua Medicine focuses on science, technology, and development. They collaborated with Wuxi with TigerMed on clinical development. For manufacturing, they also partnered with Wuxi. They collaborate with Sinopharm and Bayer for commercialization. “We really harmonized the capabilities in the pharmaceutical ecosystem”, said Li. 

Apollomics reached many milestones in 2022. Guoliang Yu, the chairman of Apollomics shared his experience. “The most important thing is that you have a very good science to start with”, he said. For the molecules that Apollomics started with, the science is solid. Their goal is not just to get approval from NMPA in China but also to get approval from FDA. There's a strategy involved. “The strategy is to focus all the effort on getting the first drug approved by FDA”, said Guoliang. Apollomics will have a pre-NDA meeting with FDA soon. With good clinical data, Apollomics was able to raise more money and then invested the money into early-stage pipelines. “There's always limited resources. There's always opportunity cost associated. The key is to give up something in order to get bigger gains”, shared Guoliang.  

Yao-Chang Xu, CEO & Founder of Abbisko Therapeutics, shared the achievement Abbisko achieved in 2022. In 2022, Abbisko’s lead programs received good results. Abbisko updated the pipeline almost every month.  

Joshua Berlin, Head of Business Development of BioCentury Inc., shared the journey made by BioCentury in the previous years and how they overcame the challenges.  

BioCentury provides business intelligence and data to support companies in making critical decisions. They have spent a lot of time connecting China and the west, which has been very challenging in the last several years. BioCentury was creating new practices to overcome challenges and bring people together. “We really believe biotech is a relationship business. Nobody is going to develop or discover a drug on their own. It's really going to require partnerships and relationships”, said Josh.  

Bing Liang, Partner of Jones Day, shared two collaborations Jones Day represented, the collaboration between Johnson & Johnson and Legend Biotech and the collaboration between Merck and Kelun Biotech. In the deal between Johnson & Johnson and Legend Biotech, Jones Day represented Legend Biotech, the licensor. In the collaboration between Merck and Kelun Biotech, Jones Day represented Merck, the licensee.  

Bing highlighted that IP due diligence became a more critical component in technology-based transactions. From the buyer’s perspective, those companies are looking really hard to identify IP issues and major deal stoppers such as ownership issues, freedom to operate issues, and so on. They will look into IP carefully, including IP licensing from universities or from projects funded by the government. On the flip side, from the seller’s perspective, they need to address all of those IP issues. They have to characterize how much and to what degree their IP asset can protect potential buyers. “I can't emphasize enough that from day one, carefully design your IP. It will pay off in the future”, said Bing. 

The panelists also share their one-word expectations for the year 2023. 

After the second panel, the event was concluded by presentations of Oculis Company, ILdong Pharmaceutical CO., LTD, Denovo Biopharma, Alamar Biosciences, Inc., Immodulon Therapeutics Ltd, and Oye Therapeutics.   

In conclusion, despite the tough global environment of the biopharma industry in 2022, we are positive that 2023 should be a better year as the impact of COVID is weakening. We look forward to more east-west knowledge-sharing, communication, networking, and collaborations within this invaluable healthcare ecosystem.