With its feet planted on both sides of the Pacific Ocean and its ambitions nearly as wide, Ruiyi Inc. netted a $15 million series B round from its existing investors, which include 5AM Ventures, Versant Ventures, Apposite Capital, SR One, Merck Serono Ventures and Aravis SA.

“The round came together pretty quickly,” Paul Grayson, Ruiyi’s president and CEO, told BioWorld Asia. “We have a great syndicate.”

Ruiyi, which is developing drugs in China for the Chinese market, has its corporate headquarters in La Jolla, Calif., but its discovery efforts and research facility in the Zhangjiang Hi-Tech Park in Shanghai.

Grayson said timing of the financing was dictated by the completion of key de-risking milestones by the company, using its intermembranous Conformation Antigen Presenting System, or iCAPS, technology to leverage therapeutic specificity across a set of targets from the large G protein-coupled receptor (GPCR) family. Although nearly one-third of approved drugs modulate GPCRs, traditional drug discovery methods have been stymied in exploring many of the selective targeting GPCRs – especially those with small extracellular domains. Ruiyi’s iCAPs changed that equation, enabling the purified, isolated, conformationally correct presentation of functional GPCRs, optimized to identify selective antibody inhibitors or activators with greater specificity, resulting in the potential development of more effective antibodies and other biologics.

Following a collaboration last year with Genor Biopharma Co. Ltd., of Shanghai, Ruiyi is preparing to move its lead candidate, RYI-008, into initial human studies in China. The anti-IL-6 monoclonal antibody (MAb) has potential uses in autoimmune diseases and cancer, with rheumatoid arthritis as a proposed initial indication. (See BioWorld Today, May 17, 2013.)

From iCAPS, Ruiyi identified another candidate, RYI-018, that is specific and selective to cannabinoid receptor 1 (CB-1), a commercially validated but previously intractable GPCR target. Ruiyi is preparing to advance RYI-018 through protein engineering for investigational new drug (IND)-enabling studies.

The company plans to file multiple IND applications for RYI-008 within the next 12 months, with INDs for RYI-018 to follow nine to 12 months later.

In addition to supporting both programs, funds from the series B enabled Ruiyi to expand its management team with the addition of Erik Karrer as chief scientific officer and Brian Campion as vice president of business development. Karrer joined Ruiyi from Perseid Therapeutics LLC, a former Astellas Pharma Inc. unit, where he served as head of molecular biology and discovery. (See BioWorld Today, May 15, 2013.)

The three moves were related, according to Grayson, who eschewed the desire to attract additional capital or staff “until we had pretty significant technology advancement.” With several years of learning under its belt, Ruiyi is prepared for the next steps, he added.

‘OURS IS A VERY RISKY BUSINESS’

Indeed, Ruiyi has moved quickly both on the clinical and business development fronts, marrying interests from the West with the East. In June 2011, Grayson joined Anaphore Inc., of La Jolla, Calif., as CEO. The company was focused on the discovery and development of Atrimer therapeutics and had snagged a potential $345 million partnership for its Atrimer protein engineering platform with Mitsubishi Tanabe Pharma Corp., of Osaka, Japan. (See BioWorld Today, Dec. 13, 2010.)

Under Grayson’s direction, Anaphore changed course, picking up Ruiyi and its drug discovery platform in March 2012 and giving Anaphore a wholly foreign-owned enterprise in Shanghai. Ruiyi had been founded by Raymond Stevens, a professor in the departments of molecular biology and chemistry at the Scripps Research Institute, and Fei Xu, a former scientist in Stevens’ lab.

In October 2012, Anaphore took on Ruiyi’s name and added key members to its discovery team in Shanghai, with the intention of developing biologics for China. The company quickly inked a deal with Argen-X BV, of Breda, the Netherlands, for a worldwide exclusive license to develop and commercialize the anti-IL-6 MAb ARGX-109 – now RYI-008. Though financial terms were not disclosed, the agreement called for Ruiyi to make an up-front payment of cash and equity to Argen-X, which remains eligible for milestone payments and royalties on global product sales.

Ruiyi also has an agreement with contract manufacturer CMC Biologics to develop a cell line for RYI-008.

What’s driving the company’s business strategy?

“Part of our philosophy is that there are huge benefits to biologics, in general,” Grayson told BioWorld Asia. “But ours is a very risky business. Whenever there’s opportunity to wring risk out of the equation, we embrace that.”

‘LESS PROTEIN MEANS LESS COST OF GOODS’

Ruiyi is on a mission to advance its lead compound as expeditiously as possible without leaving the rest of its pipeline in the dust. In-licensing RYI-008, which does not target GPCR, was envisioned as a creative strategy “to outsmart the risks of biology” by targeting a well-established pathway. “We wanted to accelerate our learning of how to develop a biologic in a developing market,” Grayson said. In-licensing RYI-008 gave the company a two-year head start in understanding the nuances of drug discovery in China before working with a MAb that came out of its internal discovery pipeline.

RYI-018, meanwhile, is potent and has a long half-life – characteristics that are ideal for a developing market like China, in which affordability is paramount. (See BioWorld Today, June 3, 2013.)

“Development of a biologic is directly related to how much protein you need to treat a patient for a year,” Grayson observed, noting that a more potent compound with a longer half life requires less protein at fewer intervals. “If you’re developing a therapeutic for a developing market, less protein means less cost of goods.”

Although the CFDA is seeking to stay ahead of the ever-growing amount of INDs in the country, most have focused on generics and biosimilars, according to Grayson. Now, the agency is beginning to gain experience with novel compounds. Although the turnaround is longer than in the U.S., the CFDA “truly is embracing innovation,” he said.

Expanding that comfort level is another reason Ruiyi began the regulatory process with an IL-6 inhibitor. “The more data that you can provide them around a biological pathway and on your capabilities as a company, the more comfort they have,” Grayson said.

The other big difference between China and more developed markets is the large number of untreated patients in any given indication, providing an unmatched opportunity to investigate biologics in treatment-naïve patients. That, in turn, translates to shorter enrollment times and lower development costs – a huge advantage for biotechs once they navigate the front-end business challenges. The series B, combined with astute partnering, now gives Ruiyi “optionality,” according to Grayson, allowing the company to move its lead assets through multiple milestones “without having to partner away global rights or having to raise a lot of additional dilutive financing.”