AZN - Week In Review: AstraZeneca Considers Spinning Off China Ops Into Separate Company

2023-06-25 05:45:00 ET

Summary

• AstraZeneca may separate its China operations into a standalone company and conduct an IPO in Hong Kong or Shanghai to protect its business from east-west political tensions.
• Cutia Therapeutics, a Shanghai dermatology company, raised $65 million in a Hong Kong IPO, with plans to allocate 45% of the proceeds for trials of its lead adipose accumulation drug.
• Chengdu WestGene Biopharma completed a $42 million A Round to advance its portfolio of innovative tumor treatment vaccines in China and global trials.

Deals and Financings

AstraZeneca (AZN) may separate its China operations into a standalone company that would conduct an IPO in Hong Kong or Shanghai, with the goal of protecting its China business from east-west political tensions (see story ). Although the China operations would be a separate entity, the parent company would retain control. The spinout plans, which are not definite, were revealed in a Financial Times article. Instead of the new company, AstraZeneca may choose to simply add a Shanghai listing of the entire company as an alternative. Recently, the California venture capital company Sequoia announced it would spin out its China business into a “completely independent” entity named HongShan.

Cutia Therapeutics, a Shanghai dermatology company, completed a Hong Kong IPO that raised $65 million. The company’s technology platform customizes the transdermal delivery characteristics of drugs and develops micron and nano-sized particulates. Cutia said it would allocate 45% of the proceeds for trials of its lead adipose accumulation drug, currently in a Phase II trial. Formed in 2019, the company has raised $275 million in four rounds. Its investors include well-known names such as 6 Dimensions Capital, an VC firm tied to WuXi AppTec, as well as Yunfeng Capital, Sequoia Capital, and Fidelity Investments (Hong Kong).

Chengdu WestGene Biopharma, a two-year-old mRNA company, completed a $42 million A Round to advance its portfolio of innovative tumor treatment vaccines in China and global trials (see story ). The company has started trials of its EBV-positive tumor mRNA therapeutic vaccine (EBV-mRNA) and liver cancer mRNA therapeutic vaccine (HBV-mRNA). WestGene was also singled out for its disruptive technology in a China competition. In addition, the company’s novel adjuvant was adopted for an XBB Covid-19 vaccine, which is now approved. In December 2022, the company announced it had raised $21 million in a previously closing of the A round.

Edding Group, a China in-licensing pharma, will conduct an IPO on the Hong Kong Exchange (see story ). It is the Market Authorization Holder for its three core in-licensed products: Vancocin, an antibiotic for MRSA, and Ceclor, a cephalosporin for gram +/- bacterial infections, both acquired from Lilly. From GSK, it has China rights to a nebulizer-delivered asthma therapy. Edding said the three core drugs produced 90% of its revenue, $273 million in 2022, and the company’s profits totaled $57 million. The company develops originator-branded anti-infectives, CVD, and respiratory system therapeutics, with synergistic value in pediatric care.

Trials and Approvals

Shanghai Everest Medicines (HK: 1952) reported that a partnered rare disease drug, a treatment for the kidney disease, IgA nephropathy (IgAN), was effective in a Phase III trial conducted by Sweden’s Calliditas Therapeutics (CALT). In 2019, Everest entered a $121 million deal for China rights to Nefecon from Calliditas. Nefecon is an oral-delayed release formulation of budesonide, a corticosteroid with potent glucocorticoid activity. The results of the Phase III trial showed a statistically significant improvement compared to placebo. Everest said it expects to release data from a cohort of China patients in Q3 of 2023.

BioCity Biopharma, located in Wuxi, China, will start a China Phase II trial of its novel oral endothelin A ((ETA))-receptor selective antagonist, enrolling two patients with IgA nephropathy (IgAN). The multi-center study will be a randomized, placebo-controlled trial that assesses the safety and preliminary efficacy of SC0062 compared to placebo in patients suffering from chronic kidney disease with albuminuria. BioCity's Phase I trial showed a favorable safety profile in healthy subjects. The company has already started a separate Phase II trial of SC0062 for IgAN with diabetic kidney disease.

Shanghai Minghui Pharma has dosed the first patients in two Phase 1 clinical studies of two antibody drug candidates that target TROP-2 and B7-H3 for advanced/metastatic solid tumor cancers. The two candidates, MHB036C and MHB088C, contain a potent topoisomerase (TOPO) 1 inhibitor linked with antigens via a cleavable linker. Minghui believes its novel payload increases the therapeutic potency of its ADCs, especially against cancer cells with lower antigen expression. The two trials will determine the maximum tolerated dose, the recommended Phase II dose, and they will assess the pharmacokinetics and preliminary efficacy of the candidates.

Disclosure: none.

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