TAIPEI, Taiwan – Taiwan's media and capital markets overlooked the positives from OBI Pharma Inc.'s recently reported top-line results from its global phase II/III trial of the OBI-822/821 active immunotherapy for metastatic breast cancer, which missed its primary endpoints, according to Michael Chang, chairman of the Taipei-headquartered company.

While primary endpoints were missed, Chang said, the phase II part of the study showed a proof-of-concept immune response that it was designed to demonstrate.

Chang made those comments at the annual Biologics World Taiwan conference last week during his keynote presentation, which discussed trends, profitable business models and suggested pathways forward for the local biologics industry.

OBI Pharma's stock price (TWO:4174) had been in free fall since the Feb. 21 announcement, down by its government-allowed daily maximum of 10 percent for four days straight before recovering somewhat to close Friday at NTD463 (US$13.91), still way off its high of NTD755 in December and, in the process, wiping out more than $1.5 billion in market value. As of Friday, the company currently has a market capitalization of around NTD76 billion.

Recalling a similar reaction in July 2014, when then-local industry flagship Medigen Biotechnology Inc. lost half its market value following the announcement that its phase III trial for PI88, the company's adjuvant treatment for hepatocellular carcinoma after surgical resection, showed no improvement in patient survival rates over placebo, the inherent risks of drug development have again been laid bare for Taiwan's skittish investment community. And the question of risk profile and what kinds of business models are sustainable and suitable for an emerging biotech location such as Taiwan are once more being raised.

Fielding questions at the end of his presentation, Chang remarked further on OBI Pharma's data, reiterating that OBI-822/821 did show a proof-of-concept immune response, and noted that patients showing such responses also had highly significant improvement in progression-free survival.

"That pointed out one thing; our capital market and investment community doesn't really understand much about new drug development, especially when it comes to biologics," he said.

As for further plans for OBI-822/821, Chang said he believed there is a bright future for the immuno-vaccine. But while the trial was set up as a phase II, proof-of-concept trial in the U.S., in Taiwan it was set up as a registration trial; however, as the company had not yet talked to the TFDA about the data, its approval future in Taiwan remains uncertain.

But because proof of concept can lead to a much deeper pipeline, the company has been preparing for just such a scenario, according to Chang, and is planning to meet with regulators to discuss the design for an upcoming global phase III trial.

"For example, if we can demonstrate in a large clinical setting that our experimental drug can induce a specific class of antibodies, and demonstrates it kills cancer cells, shrinks tumors and prolongs life, then that too demonstrates proof of concept in mechanism as well as in the clinic," explained Chang.

"If you have monoclonal antibodies that can do this, then this antibody becomes a sure bet. And we then have a number of other things that follow behind. If the first one demonstrates proof of concept, then immediately your pipeline becomes enriched," he noted.

Chang added that's the reason for taking a drug such as OBI Pharma's as far as possible through clinical development, instead of out-licensing at an earlier point.

"The rationale is simple. You have not proven your clinical concept. So you cannot find anyone who will give you a good deal. Once you prove the concept, the tools are very available to quickly come up with a number of products to follow that," he said.

THE STAR MODEL

Chang still espouses such a go-all-the-way philosophy, suggesting that the way forward for Taiwan and its small-sized biotechs is to go as far as possible along the clinical development pathway, regardless of the inherent increasing risk. The acquire/develop/transfer model of in-licensing phase I or preclinical assets, developing them in Taiwan and then out-licensing them after phase II, while successfully applied by local companies such as Taigen Biotechnology Inc. and Pharmaengine Inc, is not going to produce "star" companies that are needed to save Taiwan's economy from its current overreliance on electronic manufacturing, according to Chang.

"It's not a bad business model. But even if everyone does that, it cannot sustain an economy or the biotech economy that we wish Taiwan to become. So you must take it as far as you can, and preferably all the way to branding yourself."

He said that "star" model is what works well in many small countries such as Israel, Singapore, South Korea and Ireland, where a small number of very successful companies perform well globally, while companies that make up the rest of the sector in each country operate in an opportunistic but lower-risk fashion. To succeed, Taiwan should follow such a model.