TAIPEI, Taiwan – As the momentum surrounding high-growth Asian markets seemingly slows, the standing of Taiwan as an innovation and financing center for biotech interests is still strong, at least on the basis of regional comparison. But while public capital markets are vibrant and local valuations high, big international investors remain largely elusive. So say speakers at the Biologics World Taiwan 2015 conference.

Taiwan's biologics industry has a well-rounded look to it, with growing strengths and capacity across the sector's scope from novel drug development to biosimilars, and vaccine and contract biopharmaceutical manufacturing. Although it has yet to see a locally developed novel biologic reach the market, there are a handful of companies with products in late-stage trials, including Taipei-based OBI Pharma Inc., with its OBI-822 immunotherapy product for metastatic breast cancer in a global phase II/III trial, and a larger number of companies with products at the phase II level, including Taimed Biologics Inc., of Taipei, with its TMB-360 monoclonal antibody (MAb) for HIV, and United Biopharma Inc. of Hsinchu, with UB-421, also a MAb for HIV.

According to Liu Lee-Cheng, CEO of specialty biologics CMO Eirgenix Inc., growing business volume at his firm is a window into of the healthy state of the local industry. When his company started in 2013, spinning off from the government-funded Development Center for Biotechnology (DCB), it had only one small project on the books, with this number increasing to five within nine months.

ACTIVITY RAMPS UP

"But last year we signed a total of 19 projects. From this number you can see how much development is happening in Taiwan. Many projects are soon to file an investigational new drug application or are already at the clinical stage, with most being innovative drugs. And some have a very big market that, if successful, will have a great impact on the world. For example, anti-HIV drugs," he said.

The increase in activity is certainly a reflection of increased capital availability. Both public and private capital markets have grown more willing in recent years to accept the long wait and higher risks of investing in biotech.

"As the investment community starts to understand bioscience, they understand it's not like investing in '3C' [computers, communications and consumer electronics] companies. I'm sensing that investors are getting more patient. They're willing to put in money to get a long-term commitment, and that's a very healthy trend," said CEO of United Biopharma, Liao Mei-June.

This is reflected in valuations being at all-time highs. Exactly how high is difficult to measure, as Taiwan defines biotechnology very broadly. For example, stock markets' biotechnology boards include companies such as Johnson Health Tech Co. Ltd., a maker of dumbbells and other fitness equipment. Panelist Jang Haishan, CEO of drug development and CRO firm Brim Biotechnology Inc., said that in her analysis the average valuation of a listed biotech company in Taiwan is around $300 million, being comparable to U.S. figures.

VALUATIONS TOO HIGH?

While valuations are high, the island's drug development sector is still largely unable to attract the attention of large overseas private equity firms. That's because high valuations are a double-edged sword, according to Carl Firth, CEO of Aslan Pharmaceuticals Pte. Ltd., headquartered in Singapore, but with operations in Taiwan.

"Banks such as JP Morgan are starting to cover Taiwan stocks. But the reasons they've said why they haven't invested yet is that the valuations are too high. There are some decent companies but they are too expensive," he said.

There are a few exceptions, a notable one being CMO and drug development firm JHL Biotech Inc., of Hsinchu, which attracted $45 million in series A funding from Kleiner Perkins Caufield & Byers, Sequoia Capital, and Burrill & Co.

High valuations may be healthy in the short term however, as it helps to build interest in the market, and eventually a market will correct to where the true value is. A shake-up of this nature occurred last year when one of Taiwan's flagship companies Medigen Biotechnology, Corp. had its liver cancer drug PI-88 (Muparfostat) disappoint in midstage phase III reporting, with this news wiping out about half of the company's near $2 billion value and triggering a massive selloff across the sector.

Eric Tsao, CEO of Synermore Biologics Co. Ltd., of Taipei, added, "If a place like Taiwan commands very high valuations, it attracts companies, technology and capital. By doing that, you create a virtual cycle, so that perhaps one day high valuation can be justified."

What the panelists all agreed on was that Taiwan was still an attractive place for innovative drug research and clinical development activities.

PRIME CLINICAL TRIAL LOCATION

Firth talked about some of the reasons why, and why his company chose Taiwan as the location for its second office.

"Number one was the clinical trial environment. We conduct a lot of early phase I, phase II studies. Taiwan is one of the best places to be running these sorts of studies. Good access to patients, very willing investigators, and a very long history of running innovative clinical trials. Reason number two was access to talent. These people have good multinational experience, they've worked in big CROs, they understand the hospitals, and they haven't just worked in Taiwan but also in other countries. It's very difficult to find people like that that small companies can find and attract."

While scientific and development talent is readily available, not so much when it comes to experienced managerial-level staff, according to Scott Liu, CEO of Shanghai Henlius Biotech Co. Ltd., of Shanghai, China.

"At the bench level, associate scientist, scientist, Taiwan has an abundant talent pool. But at the VP level, we are far, far behind Mainland China. We see a lot of industry-veteran Taiwanese working in Shanghai, but we have not seen any talented managers from China working in Taipei. That's a big problem in my opinion."

Biologics World Taiwan is an annual biopharmaceutical-focused meeting run by Singapore-headquartered events firm Imapac Pte. Ltd., which is part of a series of conferences that includes Biologics World Korea and Biosimilars World China.