clinical-stage compounds that have enough data to show that they’re feasible, or early-stage compounds that are close to starting clinical trials. Brii would consider licensing assets at even earlier stages of development if the science supporting them is strong enough, Hong says. He adds that Brii won’t license drugs that other pharma companies have abandoned or shelved. Instead, the company is looking for “potentially breakthrough therapies” that are different than what’s already on the market.
Brii is in the vanguard of a growing number of companies that aim to bring Western biotech innovation to China. Earlier this month, Menlo Park, CA-based Refuge Biotechnologies raised $25 million in financing that led by investment firms in China. The financing gave the new investors the first crack at negotiating rights to develop and commercialize the startup’s cell therapies in China. In April, Terns Pharma, which has operations in the San Francisco Bay Area and Shanghai, raised $30 million in financing to begin clinical testing of a treatment for the fatty liver disease known as NASH. Terns’ NASH drug lags its big pharmaceutical competitors in the U.S. market, but the startup’s executives say it has the chance to take the lead in China.
Some companies are targeting China with backing from Western investors. BeiGene (NASDAQ: [[ticker:BGNE]]) raised $800 million from its January debut on the U.S. public markets. The company, which has operations in Beijing and Cambridge, MA, sells cancer drugs acquired through its partnership with Summit, NJ, drug maker Celgene (NASDAQ: [[ticker:CELG]]).
China presents challenges that some Western companies may find difficult to navigate, says Clay Thorp, general partner at Durham venture capital firm Hatteras Venture Partners. The system for providing healthcare is different than it is in the U.S, as is the system for paying for drugs. Regulation is also different, though Thorp notes that there is growing agreement between FDA requirements and those of China’s drug regulators. Companies that have novel technology and the ability to understand the nuances of the Chinese market have a better chance of success, he says.
“Every innovative company, every innovative product, there’s a growing market in China,” Thorp says. “Historically it’s been a lower cost, lower price commodity market. But as the quality of healthcare grows there, the opportunity for innovative products goes up.”
Thorp, who says he has been friends with Hong for years, is a member of a Brii strategic advisory board. That body includes former GSK R&D executive Moncef Slaoui, Alnylam Pharmaceuticals (NASDAQ: [[ticker:ALNY]]) CEO John Maraganore, and Thomas Daniel, a former Celgene R&D executive. Hatteras is not a Brii investor, but Thorp says Brii could become a partner to companies in the Hatteras portfolio that are looking to expand to China.
As of now, Brii’s U.S. base of operations is Durham, where Hong is located. He plans to open a second U.S. location in San Francisco, which Hong calls “the gateway to China.” Brii’s U.S. hires, primarily bilingual Chinese Americans, will be responsible for finding new partnerships. The company’s workforce in China will be charged with taking Brii’s drugs through clinical testing, registration, and commercial launch.
Brii’s financial backers span both East and West. The $260 million round of investment was led by ARCH Venture Partners, 6 Dimensions Capital, Boyu Capital, Yunfeng Capital, Sequoia Capital, and Blue Pool Capital. Hong says Brii raised the large sum because the company must be ready to pay top dollar for innovation.
“I really want to go after products that will provide a highly differentiated clinical benefit,” he says. “Because of that, I think it will cost more.”
Photo by Flickr user xiquinhosilva via a Creative Commons license
