Issue Date: April 3, 2017
Chinese professors turn entrepreneurial
Jianmin Fang is a professor of molecular medicine at Shanghai’s Tongji University who for decades has been studying the mechanisms by which tumors develop. Fang also has two companies in Yantai in Northeast China. One, RemeGen, he founded in 2008 to develop biological drugs for cancers and other diseases. It now employs 250 people. The other provides manufacturing services to RemeGen and other drug firms.
In Beijing, Xiaodong Wang is the founder of the National Institute of Biological Sciences, a government lab that conducts basic life sciences research and employs 700 people. On the side, Wang is founder and director of BeiGene, an oncology drug research firm he launched in 2010. BeiGene has several drug candidates being tested on patients in China and other countries.
Fang and Wang are pioneers who started their companies before it was fashionable for Chinese academics to do so. China has long been fertile ground for entrepreneurs wanting to set up drug discovery firms. But among the hundreds of biotechs that have sprung up across the country in the past 15 years, few were launched by academics. Many, if not most, are led by Chinese-born entrepreneurs who worked in the U.S. biotech sector.
But more and more academics are launching their own companies nowadays. In a shift, the institutions they work for are encouraging them to do so, and the government is supplying financing. Although professor-CEOs remain less common in China than in the West, the country is quickly catching up as it aims to make science and innovation play a more important role in economic development.
The main driver for any academic to start his or her own drug firm is the desire to develop new treatments for patients rather than advance science for its own sake. “Papers push the boundaries of knowledge, but the new knowledge has to become a treatment,” Fang says. “Science has to translate into a medical solution.”
After receiving his Ph.D. in biology from Dalhousie University, Fang did a postdoc at Harvard Medical School, where he studied tumor biology and angiogenesis, or blood vessel growth, in tumors. The insights he accumulated over the years led him to launch RemeGen, which is now developing several drug candidates. One, an antibody-drug conjugate, is undergoing Phase II clinical trials in China for the treatment of breast and gastric cancers.
Fang says he could have successfully launched RemeGen in the U.S., but being based in China will benefit a greater number of patients. “China’s FDA has not approved many biological drugs, so the need is huge from the patients’ perspective,” he says.
At Shanghai Institute of Materia Medica (SIMM), a state pharmaceutical research lab that also trains students, several academics are developing commercial drug candidates. Jian Ding, a professor and former director of SIMM, went so far as to create a biotech firm in 2011 to conduct drug development for scientists at SIMM. The company, HaiHe Pharmaceutical, now also works with academics and biotech firms not associated with the institute.
A focus of HaiHe is developing treatments for cancers that are prevalent in China, says Ying Huang, the company’s vice president of discovery and early development. For genetic, environmental, or lifestyle reasons, China has more stomach and colon cancers than other countries do, she says. Moreover, owing to air pollution and smoking, lung cancer has become the most lethal form of cancer in China.
Huang, who worked for more than 20 years at the laboratories of major drug firms in the U.S. and China, says that in some ways, China provides a better environment than the U.S. for pharmaceutical development. For example, doctors in China can be more cooperative during retrospective research, which is when drug developers analyze results of clinical trials to understand patients’ response.
China has recently become more hospitable to academics who launch their own firms. Only a few years ago, university administrators frowned on professors who sought to commercialize their research, says Yi Zhun Zhu, who recently became dean of the school of pharmacy at Macau University of Science & Technology. “If you had other interests on the side, it meant that you were not fully committed to your academic work,” he recalls.
A cardiologist who later trained as a pharmacologist, Zhu was dean of the pharmacy school at Shanghai’s Fudan University from 2005 until 2016. While there, he shepherded the development of a cardiovascular drug candidate, leonurine, from discovery to the completion of preclinical studies. Research done by Zhu and his team indicates that leonurine can reduce the incidence of heart attacks in cardiovascular patients with fewer side effects than statin drugs, the current standard of care.
With his university’s blessing, Zhu recently sold rights to leonurine to Zhongzhu Medical, a health care firm based near Macau. Of the $17 million Zhongzhu paid, 30% went to Fudan, 20% went to finance more research at the school of pharmacy, and the rest went to Zhu and his team.
In recent years, China has provided hundreds of millions of dollars annually to companies and academics pursuing pharmaceutical development. Zhu credits generous government funding for his ability to develop leonurine into a viable drug candidate. “In the U.S. and other countries, professors can get money for basic research, but I got my grants for applied research,” he says.
Likewise, Yan Zhang, an associate professor at Tianjin University’s School of Pharmaceutical Science & Technology, has set up a firm in the southern China city of Shenzhen, where he is receiving generous incentives. The rent he pays for his labs is a small fraction of the prevailing commercial rate, and the city has provided him a start-up grant for his business.
“The government backs promising firms and hopes to recover its money in taxes later on,” Zhang says. His company, BioRobust, has two main businesses. It conducts oncology research aiming to develop a drug targeting a mutated enzyme in the tricarboxylic acid cycle that has been associated with brain cancers and leukemia. BioRobust also sells monoclonal antibodies and recombinant proteins to other pharmaceutical companies to be used as drug candidates or targets.
China’s government isn’t the only source of funding available to would-be drug entrepreneurs in academia. A colleague of Zhang’s at Tianjin University, Qingzhi Gao, also launched a drug discovery firm, AuRiver BioPharma. But his company is financed by a larger generic drug maker. “I share my research data with them, and if a drug comes out of it, we will share the benefits,” he says.
Gao is a professor of medicinal chemistry and computer-aided drug design (CADD). His company uses CADD to develop new cancer drugs or improve the tumor selectivity of existing ones. An investigational new drug developed by his firm is making its way toward clinical trials.
Funding is not the only factor encouraging academics to start drug discovery firms, observes Liming Shao, a professor at Fudan’s school of pharmacy and director of the Shanghai Center for Drug Discovery & Development. At the end of last year, China’s central government issued national guidelines specifying how universities and academics are to share the financial benefits of patents owned by professors. Under the new rules, academics are entitled to at least 70% of the benefits from their discoveries.
“It wasn’t all that clear before,” Shao says, adding that the percentage is, by global standards, generous to academics. With the rules clarified, he says, professors’ main challenge—a perennial one—is figuring out how to translate basic research into a new drug.
Universities, Shao notes, aren’t equipped to turn ideas into drug candidates. “Even if costs in China are one-third of the U.S.’s, it still takes years and hundreds of millions of dollars to develop a drug.” Chinese academics are now allowed to take sabbaticals to raise money and run their own firms, but few are taking advantage of the policy, he says.
In Beijing, Tsinghua University has its own program to encourage faculty to engage in pharmaceutical development. Rather than the government-recommended 70%, professors are allowed to keep 80% of the commercial benefits deriving from their discoveries. In addition, Tsinghua has set up an incubator where scientists can open commercial labs.
Tsinghua has invited the California-based contract research firm Bioduro to provide services to its incubator. “Academics have ideas, but drug companies are looking for drug discovery assets,” says T. J. Deng, the Beijing-based general manager of Bioduro’s Chinese operations. “In between, the contract research firm is there to help professors get to where the drug firms want them.”
Despite the efforts of China’s universities and government to ease academic drug development, there remains much room for improvement, Macau’s Zhu says. The government grants that allowed him to turn leonurine into a drug candidate came with much red tape. To hire contract research firms to perform certain functions, he had to go through time-consuming bureaucratic tests designed to root out corruption.
Fang notes that technology transfer offices at China’s universities are still a work in progress. In the U.S. and other advanced countries, he says, such offices efficiently hash out profit-sharing arrangements between the university and its academics. In China, entrepreneurial professors must endure a tortuous and often frustrating process before reaching agreement with their institutions on the value of their intellectual property (IP). “It seems like no one can make a decision on how to value the IP,” he says.
China also falls short in the realm of venture capital, Fang says. Unlike in the U.S., Chinese venture capital companies are hesitant to fund early discovery work, he points out. Moreover, investors are typically unwilling to put their money in start-ups that don’t have firm plans for when they will list on a stock market. “And if you fall behind schedule, they may demand their money back,” Fang says.
The shortcomings of venture capital in China may partly explain why the government has in recent years stepped in with billions of dollars for promising drug development firms. Fang argues that it is in China’s national interest to tap its academics to develop not only new pharmaceuticals but also other innovative products.
“We study the success of Silicon Valley—the academic and private sector collaboration that is taking place there,” he says. Already, the quality of basic research in China has improved considerably, becoming world-class in several areas, Fang notes.
“We can have innovative products in China,” he says, “and the universities will be a major source of that innovation.”
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