Global pharmaceutical companies have recognized China as a force to be reckoned with, as evidenced by their lockstep establishment of R&D and commercial operations in the country. However, a China strategy is a bit trickier for U.S. biotechs to achieve. Although Amgen Inc., Celgene Corp. and Gilead Sciences Inc. are among the big biotechs with offices in China, most small-cap firms have deferred a presence in the country.

EntreMed Inc. is a contrarian in that respect. The Rockville, Md.-based company opened its own office in Beijing in August 2012, and earlier this year the firm received its first patent from the Chinese State Intellectual Property Office (SIPO) for lead compound ENMD-2076, an orally active, Aurora A/angiogenic kinase inhibitor with a unique kinase selectivity profile and multiple mechanisms of action.

The granted claims in China cover composition of matter and uses to treat various cancers. EntreMed completed Phase I trials of ENMD-2076 in solid tumors, leukemia and multiple myeloma, has an ongoing Phase II study in ovarian cancer and is enrolling additional Phase II studies in triple-negative breast cancer and advanced/soft-tissue sarcoma.

Ken K. Ren, EntreMed's CEO, said pursuit of the patent in China was designed to broaden the company's international patent estate for its lead compound and to confirm recognition by SIPO that ENMD-2076 represents "new and inventive chemical structures."

As part of its development strategy to use its China resources, in January EntreMed submitted a new drug clinical trial application with the Chinese Food and Drug Administration (CFDA) for ENMD-2076 in triple-negative breast cancer.

Both the cost and time to develop drugs in the U.S. have increased rapidly, Ren pointed out. In fact, the cost to run a Phase III trial in the U.S. is now estimated at more than $45,000 and as much as $100,000 per participant, Although EntreMed conducted most of its completed studies of ENMD-2076 in the U.S., Ren estimated the company can run a trial in China for about one-third the cost.

"Time is money," he told BioWorld Today, noting that China's enormous population can quickly enroll a large patient pool in a variety of oncology indications. Moreover, the quality of clinical research in the country has improved over the past five to 10 years, and the company's presence helps to ensure data integrity. In addition, the Chinese government is lending increasing support to the development of innovative drugs that address unmet medical needs in the country. In cancer, those include cancers related to tobacco use and environmental toxins, he said.

"The traditional biotech model is broken," added Cynthia Hu, EntreMed's chief operating officer. "The companies that survive are going to developing countries and looking for creative ways to not only accelerate the timeline for drug development – in our case, by leveraging our resources in China – but also to significantly reduce the cost of drug development, in general. That's the only way for biotech to survive."

Patent Protection in China 'Essential'

As a second prong to its China strategy, EntreMed is considering in-licensing compounds to build a portfolio of oncology drugs that can be moved through clinical trials and commercialized in China.

"Our strategy in China is twofold," Ren explained. "One is to support global development under FDA's investigational new drug pathway by leveraging faster recruitment at lower cost. Secondly, we are seeking to leverage U.S. technology, products and high-quality research to support local development under Chinese FDA's regulation for local registration."

Obtaining patent protection in China is a key element for EntreMed to fulfill its mission as an integrated biopharma in the country, added Ren, who joined EntreMed in 2012 as interim CEO and assumed the permanent position in April. Though many U.S. companies still look askance at China's patent system, the country has made significant progress over the past two decades in developing a patent system that offers better protection, more openness and greater conformity with international standards than in the past, Ren insisted.

He called EntreMed's experience with SIPO "quite positive," noting issuance of the patent for ENMD-2076 indicated Chinese officials clearly recognized the novelty and intricacy of the compound in different indications, in concurrence with the U.S. Patent and Trademark Office and other global intellectual property (IP) agencies.

"There are still some challenges," Ren conceded. "But, in general, the Chinese government is very serious about patent protection and enforcement."

For China to continue to attract foreign investment and technology – and multinational tenants to its growing R&D complexes – the country has an obligation to recognize the claims of those inventions, he added, so it's in the best interest of both parties to seek IP protection through SIPO.

Indicators suggest that China will become the second largest pharmaceutical market in the world by 2020, with some projections showing the U.S. pharmaceutical industry will lose its leadership position to China, on a per-capita basis, in 2029 and even sooner if indexed to gross domestic product. (See BioWorld Today, May 2, 2012.)

"Having an IP and a patent strategy there is essential to our drug development strategy," Hu said.

'The Problem Is Enforcement'

Mary Sylvia, an intellectual property attorney in the Washington office of Baker & Hostetler LLP, agreed that the Chinese market is too big for U.S. companies to ignore. She cited statistics from the Association of Corporate Counsel showing that, in 2012, nearly 653,000 applications for invention patents were filed with SIPO, an increase of 24 percent in a single year. Of those, more than 535,000 originated in China and more than 117,000 originated abroad, at growth rates of 28.7 percent and 6.2 percent, respectively.

"The problem is enforcement," Sylvia said. "Having boots on the ground in China is going to be very important."

In addition to language, time and geographical barriers, U.S. companies without a presence in the country face a complex judicial system that is still largely closed to foreigners.

"You have to have someone in China who's pretty savvy with the court system," Sylvia said.

That said, pressure on China to change has prompted the country's patent system to comply with World Intellectual Property Organization and global treaties, and efforts are afoot to foster an independent judiciary that would operate similar to those in other countries. Thus, failure to file in China could become more costly than the expense of enforcing it.

"If your investors want to see that you have a global portfolio, you might as well file and prosecute in China," Sylvia told BioWorld Today. "And if you think there's any chance of an infringement enforcement, it's better to have a patent than not have a patent. It certainly strengthens your hand."

Although most U.S. biotechs go the partnering route rather than venturing into China alone, Ren's roots in China, where he also received his medical degree, provide him with an insider's advantage, which he hopes to use to EntreMed's benefit.

"Our long-term goal is to become the leading oncology drug company in the country," he said, suggesting EntreMed eventually will establish manufacturing and other commercial operations in China.

"We think it's very important to build our own in-house capability, especially on the regulatory and clinical side, and make sure those quality data can support our global strategy," Ren noted.