Belgian biotechs partnering with China: deals of 2020

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In 2019, a delegation of Belgian biotechs participated in an economic mission to China led by H.R.H. Princess Astrid. Co-organized with BioCentury’s annual China Healthcare Summit, the mission was a success: three of the participating companies have already signed deals with Chinese collaborators or investors. We spoke with the CEOs of these companies to find out what kind of deals they obtained, and to hear about their experiences of working with Chinese partners.

By Amy LeBlanc

In November 2020, BioCentury’s 7th China Healthcare Summit was held online. With 25 Belgian participants (including argenx, Mithra, Complix, Oxurion and Novadip), Belgium represented one of the largest international delegations from outside of China.

The enthusiastic participation may have been fueled by the successes following last year’s event: co-organized with the Belgian economic mission, 2019 also marked the first time that BioCentury’s China Healthcare Summit included a Belgian biotech roadshow track. Sixteen Belgian biotechs participated in the joint 2019 event, and of the four companies that presented, three have publicly announced Chinese partnerships in 2020: eTheRNA, Miracor Medical and OCTIMET oncology.

Diverse deals for different company needs

Miracor Medical

The company
Miracor Medical is a medical device company which has developed a CE marked product for acute heart attacks. It is at an advanced clinical and early commercial stage.

The deal
September 2020, Miracor Medical announced the closing of a EUR 24 million Series E financing round, with Chinese investor Yonghua brought onboard in a plain equity deal (Miracor’s Series D was also led by a Chinese investor: Ming Capital).

Why China?
Olivier Delporte (CEO): “Our interest in China is the size and specificity of the market. We like Chinese investors because they provide strategic added value in our plans to approach the market and facilitate discussions with potential Chinese partners for acquisition or joint venture creation. We’re passionate about bringing our product to the Chinese market, because it will benefit so many patients.”

eTheRNA immunotherapies

The company
eTheRNA immunotherapies is a clinical-stage company developing best-in-class mRNA immunotherapies for the treatment of cancer and infectious diseases. The company also has mRNA manufacturing facilities in Belgium.

The deal
June 2020, eTheRNA raised EUR 39 million in a Series B financing round. Over 40% of the committed capital came from three Chinese investors, China Grand Pharma, Yijing Capital and an investment arm of Shanghai Hongyue. The Grand China Pharma investment was a preface for a strategic partnership, announced in December 2020, encompassing the creation of a joint venture company in mainland China and a licensing agreement for selected eTheRNA development products in Greater China.

Why China?
Steven Powell (CEO): “As we started gearing up for our Series B, we were also thinking about expanding our manufacturing capabilities and one of our investors suggested that we investigate large-scale manufacturing interest in China. Through our discussions with potential partners, the deal then evolved to include equity, licensing and a joint venture creation. The Grand China Pharma partnership will bring a number of key benefits to us as a company. It provides endorsement and validation of our technology, and working with such a large company will also grant us access to expertise which we can leverage for our R&D programs. As with any pharmaceutical partnering deal, we expect this to add to the skills we already have in house. Ultimately it will provide access to the substantial Chinese oncology and infectious disease market.”

OCTIMET Oncology

The company
OCTIMET Oncology is a clinical-stage company developing cancer therapies based on MET kinase inhibitors, with a focus on lung cancer.

The deal
September 2020, OCTIMET announces a Greater China licensing deal for its lead clinical compound (and a second preclinical asset) to Shanghai Allist Pharmaceuticals. Allist will take on the clinical development activities of the lead compound in China in a combination therapy with their own asset.

Why China?
Shelley Margetson (CEO): “Looking to China was a very strategic decision for OCTIMET: our clinical development was going slower than we would have liked and we had competition running ahead of us. In order to be able to catch-up or even leapfrog competition, setting up clinical development with a Chinese partner made most sense. A single hospital there can be equivalent to 15-20 clinical sites in Europe, and the prevalence of lung cancer, our primary indication, is particularly high in Asia. The partner we’ve chosen is planning an IPO later this year on the Shanghai Stock Exchange, so from their point of view, this deal contributes to a bigger, richer pipeline. They also felt that a deal with a European company looks good for potential investors. It’s a win-win situation.”

Read this previous BioVox article to learn about the evolution of Chinese biotech.

Working with China: things to bear in mind

Drawing on their personal experiences of working with Chinese partners, Delporte, Powell and Margetson had the following insights and advice:

“There are some cultural differences to be aware of,” Delporte (Miracor Medical) says. “Sometimes, ‘yes, we have an agreement’ doesn’t have quite the same finality in China, for example. Usually, in Europe or the US, if a VC fund gives you a ‘yes’, then the deal is pretty set in stone. With Chinese investors, they are sometimes still renegotiating details quite late in the process. That isn’t a problem, of course, as long as you are aware of these small cultural differences, and you do the due diligence on the partners that you’re contemplating working with. We learned a lot about our future investors by talking to some other companies that they had already invested in, which gave us confidence in the people we were dealing with.”

Read this previous BioVox article for a Belgian fund’s perspective on Chinese investors.

Powell (eTheRNA) thinks there’s also a tendency to structure deals slightly differently in China:

“There appears to be a preference to ringfence technologies and products by creating separate corporate entities more frequently in China than you would perhaps see in pharma companies from Europe or North America. We also felt the depth of the due diligence was quite intense: highly detailed and very granular. But the dialogue we’ve had over the course of this year with our new partner and investors has reflected what I would expect from any pharma deal: very rigorous, detailed and reasonably fast moving.”

“My main advice,” Powell continues, “would be to take into account the differences in prevalence of clinical indications in China. For example, one of our programs is for melanoma, which isn’t a significant medical issue in China. But again, I think this is something one should do for any different geographical region. I think if the company is an experienced partnering company, then the same rules apply no matter where in the world you are establishing a collaboration.”

Go there if you can, meet them in person, and commit yourself geographically. And remember that, at the end of the day, China is just another country. It’s not so different from the US or Europe. – Shelley Margetson, OCTIMET

Margetson (OCTIMET) also encountered some cultural differences in establishing a deal with a Chinese partner:

“While we were in Shanghai and the negotiations got serious, we met with the chairman of the potential partner. And in China, the chairman of the company is very much The Chairman, with a capital ‘C’. During the introductions, he told us: ‘a business deal is like a marriage’. I think this idea is pretty representative of how the Chinese approach a business partnership: it is a long-term, serious commitment, and making the right match is of crucial importance. In China, they tend to build a relationship first before even considering a deal, whereas in Europe or the US you might simply expect the business relationship to evolve later. When dealing with cultural differences like this, it’s invaluable to have a go-between person; somebody who truly understands both cultures and speaks both languages and can make sure that differences never evolve into problems.”

Read this previous BioVox article for more strategies when partnering with China.

For companies interested in establishing Chinese partnerships, Margetson had the following advice:

“Chinese companies want to see that potential foreign partners are serious about China, so I would highly recommend establishing a foothold in the country. I also think introductions, from someone that they know, are key. This is something that’s important across the globe, but with the focus on building trust and relationships before a deal, I think it’s especially vital in China. So: go there if you can, meet them in person, and commit yourself geographically. And remember that, at the end of the day, China is just another country. It’s not so different from the US or Europe.”

This article was sponsored by Agio Capital & Business Solutions.