HONG KONG – Looking to expand its global footprint, China’s largest biotech, Shanghai Fosun Pharmaceutical Group, has inked a potential $531 million deal with Switzerland’s Sellas Clinicals Holding Ag for two drug candidates. The deal not only gives Fosun cash to continue its focus on drug development, but also allows Sellas to diversify its product offerings and sources of new drugs.

Fosun Pharma is part of the Fosun Group, a diversified conglomerate involved in insurance, industrial operations, investments and asset management. Fosun Pharma holds a 32 percent interest in Sinopharm Group Co. (HK:1099), the largest pharmaceutical company in China.

Under the terms of the deal with Sellas, Fosun will transfer two compounds – one for cancer and the other for diabetes – along with global development and commercialization rights, except for China, to Sellas Clinicals.

The potential Type II diabetes treatment is a dipeptidyl peptidase-4 (DPP4 or adenosine deaminase complexing protein 2). Sellas has offered milestone payments of up to $231 million after the agreement is signed and after Phase I and II trials followed by 10 percent royalty payments for sales or any sub-licensees for eight years after approvals in the U.S. and Europe.

The second compound is a receptor inhibitor that could be developed into an anti-tumor product for cancers of the lung or breast among other types. The terms of the deal are the same as with the first compound but the initial payments are $2.75 million less.

A Fosun spokesperson declined to comment further on the deal. The agreement still needs approval of shareholders at a general meeting.

Fosun Pharma has a strong focus on research and development. It has R&D teams in Shanghai, Chongqing and the U.S. covering areas such as metabolism and alimentary tract, cardiovascular conditions, oncology and immunomodulation, central nervous system and anti-infection treatments. With 17 pharmaceutical manufacturing subsidiaries and four R&D companies, it provides products through 148 GMP certified production lines in Shanghai, Chongqing, Sichuan, Hebei, Guangxi, Jiangsu and Liaoning.

Fosun’s lead products are the Leiwan capsule, an adjuvant therapy designed to block blood and oxygen supply to cancer cells, and an inactivated influenza vaccine for both adults and children.

Fosun Pharma owns a number of companies such as Guilin Pharmaceutical (Shanghai) Co., which makes anti-malarial and generic drugs, and Jiangsu Wanbang Biopharmaceutical Co. Ltd., which launched Wanuric (febuxostat) in China in August. The CFDA approved Wanuric in June for the treatment of chronic hyperuricemia.

Fosun Pharma is one of the five largest domestic pharmaceutical companies in China. It was founded in 1994 and is based in Shanghai. It went public in Shanghai in 1998 and in Hong Kong in 2012. The company exports drugs to 40 developing countries and medical devices to 70 countries. Wanbang Pharma develops and produces biochemical and biological products, traditional Chinese drugs, and chemical pharmaceutical ingredients.

Fosun Pharma has been in expansionary mode, signing a number of deals this year to acquire some products and license others. In August, it signed a letter of intent with Canadian biotech company Sirona Biochem Corp. to develop and commercialize Sirona’s SGLT2 Inhibitor for Type II diabetes in China for payments of up to $9.5 million and royalties. Fosun Pharma did this deal through Wanbang. (See BioWorld Today, Aug. 20, 2013.)

Sellas Life Science Group, of Zurich, Switzerland, recently announced a $20 million plan to invest in biotechnology.

“Our vision is to create a biotechnology park in Greece,” said president and CEO Angelos Stergiou. “Our in-depth knowledge of the biotechnology sector, our highly qualified group of experts and our international partnerships are the vehicles for the successful accomplishment of our goals.”