SHANGHAI – Innovent Biologics Inc. and its staff of 170 took occupancy of its $140 million facility in Suzhou's Biobay Industrial Park this month.

The impressive facility designed with ancient fengshui principles in mind, houses two state-of-the-art 1,000-liter bioreactors. A government sponsored showpiece, it holds the promise of China's burgeoning biotech future.

A key figure behind it all is Michael Yu, co-founder and CEO of Innovent. Holder of 64 patents, registered in the U.S. and China, Yu has seen two of his inventions become marketed drugs, both of them substantial firsts in the annals of Chinese drug development: Oncorine, the world's first oncolytic virus product, for head and neck cancer, approved in 2006, and Conbercept, China's first novel antibody product for ocular diseases, approved at the end of the year. (See BioWorld Today, Dec. 18, 2013.)

BioWorld sat down with Yu at his new facility, where he talked about his current project, Innovent, and opened simply, "We are 3 years old. We will be a clinical-stage company this year. We have 10 monocolonal antibody products in the pipeline: half novel and half biosimilar. We filed four INDs [investigational new drug applications], and this year will have another three IND filed for different indications."

But it is his past and his reputation that helps to explain how in such a short time Innovent has been able to achieve so much, and attract substantial support form the venture capital community, which usually is gun shy when it comes to early phase projects, and from the government, a crucial partner in any company's success in China.

As Yu tells it, he was a co-founder and minority shareholder of Chengdu Kanghong Biotech Co. Ltd., where he invented Conbrecept. When he decided to leave over issues with the company's management, Stephen Knight from Fidelity Biosciences and Daniel Auerbach from Fidelity Growth Partners Asia, followed by Yi Shi from Lilly Asia Ventures plus domestic ventures, including Frontline and CSVC Suzhou, reached out, giving him a start in seed capital and operational funding. Today, that amount has grown to close to $45 million.

China has 20 monoclonal antibody (mAb) products on the market, with 11 from multinationals, and nine from local companies. "Out of those nine, only one is novel, from Chengdu Kanghong, which I invented and developed," Yu said. "That gave me a lot of credit. When they heard that I was leaving to start something new, they got in touch with me."

That led to talks with Biobay, a leading Chinese biomedicine industrial park founded by the Suzhou government in cooperation with Singapore. Biobay, a co-founder along with Fidelity and Yu, has invested the $140 million for the land and manufacturing facility – providing it rent-free for five years to the company on a 20-year lease – thus alleviating the burden of a hefty capital outlay to construct a manufacturing facility.

"They really want to promote homegrown, so we are a good match," Yu said.

In China, the marketing license for locally made biologics is granted to the manufacturer. That causes a conundrum for drug developers, who don't want to give that up to a contract manufacturing organization (CMO). Instead, they are left setting up pilot plants for the drug development approval process, but they must bank on investing heavily in an operation that can manufacture to commercial capacity.

Innovent has this taken care of, with what the company said will be the first fully GMP-compliant biologic plant in China. Starting with a 300-liter pilot facility online since last summer, it now has two 1,000-liter reactors built. When operating at full capacity down the road, it will have six more bioreactors able to produce at 15,000 liters each. All designed to meet CFDA, EMA and FDA standards by the German firm M+W Group.

With no drugs in the clinic yet, the facility is functioning as a CMO – a service that already is generating revenues for the company.

According to Yu, the largest facility currently operational in China is 3,000 liters and it fails to match the international standards of Innovent's design. It could be that Innovent will be able to produce more than double China's current capacity.

Taking it a step further, Yu noted that no biologic has been marketed outside of China because the product quality is not compliant with international standards. It is clear that Yu hopes to change that situation.

A PIPELINE, EQUAL PARTS NOVEL AND BIOSIMILAR

Innovent is looking to provide the Chinese market with much needed, effective and affordable drugs that treat diabetes, cancer and autoimmune diseases. While the still largely preclinical pipeline is mostly under wraps, three of the 10 candidates are public knowledge.

IBI301 is a mAb against CD20 found on the surface of B cells, for the treatment of non-Hodgkin's lymphoma, chronic lymphocytic leukemia and autoimmune diseases such as rheumatoid arthritis. There is potential that it will be more efficacious than Rituxan (rituximab, Biogen Idec Inc. and Roche AG), the best-selling mAb in China, capturing about half of the overall mAb market and reaching ¥1.4 billion (US$228 million) in annual revenues, according to company materials.

IBI302 is a novel compound, a bispecific mAb for oncology that blocks two critical genes in the disease pathway of cancers and for which Innovent has retained global rights. It also has IBI303, a fully human mAb against TNF-alpha used for the treatment of rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn's disease and other autoimmune diseases.

Last summer, Innovent struck a deal with Adimab LLC, of Lebanon N.H., whereby Adimab will use its antibody discovery and optimization platform to identify human therapeutic antibodies against targets selected by Innovent.

That deal is more than a service relationship. Although Innovent provides an initial fee, both partners retain rights in their respective geographic territories of the U.S. and China, and Adimab is required to reimburse Innovent specific development costs. Innovent will take the lead on cell line development formulation, manufacturing and clinical trials.

"The major effort is to develop products," Yu explained, and the Adimab deal helps to ensure the firm won't lack in candidates. Its search for partnerships is in fact to out-license, not the other way around unlike many of its peers in China.

According to Yu, the timing could not be better as many multinational drug companies are looking to partner with local companies that can offer a quality fit. He added that Innovent is developing candidates for a range of specific indications, to match up with big pharma expectations.

CLEARING THE WAY FOR A BIOSIMILAR PATHWAY

Recently, Yu has caught the wave of government attention on biosimilars, having become a trusted industry advisor on policy, to advocate for a separate pathway for biosimilars approval. In China, the only path for drugs that claim to be biosimilar is as a new drug, where similarity is not evaluated.

"Based on my experience, one currently spends more money developing a biosimilar than developing a novel drug," Yu said. "So I share with the authorities, that does not make any sense. The goal is to have these (biosimilar) guidelines enable the quick and affordable development of high-quality biosimilars."

Yu explained that a separate biosimilar guideline will be out shortly, expecting that a first draft will be shared with key advisors this month, released in September for public comment and finalized by the end of the year.

He said the current state of China's biosimilar industry is riddled with many low-quality drugs, none of export quality and few worthy of the title biosimilar since they are not comparably similar to an originator.

"During the first wave of biologics in China, those so-called biosimilar products competed on market by price (rather than by quality). Nobody is making any money – nobody has sufficient profit to invest in real R&D," Yu said. "It is a cycle – low-quality product, low price, nobody making sufficient money – that results in no investment in real R&D in China."

The answer for Yu is to set a high bar for similarity that meets CQA (certain quality attributes) and acts as a barrier for companies wanting to enter this space, so only high-quality products can be approved through a biosimilar pathway.

"The key is that developing a product that is similar to the original product is more difficult than going through an IND process," he said. The payoff will be a shorter development time, skipping a phase II trial and permission to do a smaller phase III, all of which will benefit the company that can produce the quality with reduced costs.

LOOKING FOR STRATEGIC GLOBAL PARTNERSHIPS

Looking ahead, with more and more of the obstacles out of the way, the true test of success will be execution, and that will rely on the integration of the team which comprises returnees with years of experience in the U.S. and local scientists with a culturally different way of working, Yu said.

The onus, he added, is on his top team of returnees, to adapt their way of working into a Chinese company. The time at Chengdu Kanghong likely helped to sensitize him to the challenges firsthand.

Five years down the road, Yu said, the expectation is to have a deep pipeline with drugs at various stages of development in the clinic, to have a major strategic partnership with a big pharma willing to sell Innovent's product outside of China and to be listed in capital markets.

While Yu clearly is enjoying his time at the helm, he still has a part of his heart in the laboratory.

"I miss time in the lab," Yu said. "For Conbrecept, I have a second-generation coming out soon. I really enjoy making something new, while at the same time having my own business."