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Lilly’s VC Arm Invests in China’s Cansino Biotech


By Shannon Ellis
Staff Writer

SHANGHAI – The venture capital arm of Eli Lilly and Co. plans to invest in a small but rapidly growing biotech company with a strong pipeline to push forward the development of a third-generation whooping cough vaccine.

Tianjin Cansino Biotechnology Co. Ltd. will get a financial boost from Lilly Asia Ventures, the Shanghai-based venture capital arm of Lilly. Lilly Asia plans to invest as much as $10 million to develop a third-generation vaccine for pertussis, more commonly known as whooping cough. Cansino wants to develop a potent and affordable DPT vaccine for China and other emerging markets.

DPT vaccines typically cover diphtheria, pertussis and tetanus.

“Lilly’s investment represents more than funding support because it also brings Cansino a wealth of market experience and industry resources, which will accelerate the development of the company,” said Cansino Chairman and CEO Xuefeng Yu. “The investment is a major milestone in the history of Cansino.”

Yu is the former head of bacterial vaccine development at Sanofi Pasteur, of Toronto. Sanofi Pasteur produces the “gold standard” DPT vaccine. In fact, most of the executives in Cansino have experience working in or with Canada, thus the company name.

Yu said his team’s depth and breadth of experience in Western pharmaceutical companies makes up for China’s overall lack of international know-how.

For Lilly Asia, the Cansino investment is an ideal fit, said Managing Director Yi Shi, who had been scouting for some time for a company with a robust pipeline and strong management.

“When looking at the profile of the team, we want them to deliver on what they have already had substantial experience doing in their professional career,” Shi said.

Cansino was established four years ago to research, develop and commercialize human vaccines. The company now has a team of 70 people working out of a base in the northern city of Tianjin, not far from Beijing.

The company has filed investigative new drug applications for a Haemophilus influenza type B vaccine (Hib) and for a qadrivalent meningococcal conjugate vaccine against four different serotypes of meningitis infection.

It is that strong pipeline of products that set the company apart for Lilliy Asia.

“They are a company with a robust portfolio, more than seven attractive products, while most other companies are only developing one or two at the most,” Shi said.

China has dozens of vaccine makers and produces 1 billion vaccine doses each year. The main supplier for the most widely used DTaP vaccine is China National Biotec Group (CNBG).

The current whooping cough vaccine available on the market is a less-than-optimally-potent acellular pertussis. Other companies also are working on third-generation pertussis vaccines, but none of them are on the market.

“We have used genetic engineering technology to increase antigen production,” Yu told BioWorld Today. “We will have better control in terms of quality and efficacy. Also our productivity is very high, the volumetric yield of our antigens are among the highest in the world.”

That high productivity also will help bring prices down to a level that the market in China and other emerging markets will find attractive, although Yu is reluctant to speculate about the prices for a vaccine that won’t hit the market for several years. However, a point of comparison might be top products such as Sanofi Pasteur’s Pentaxim, which sells for approximately ¥800 (US$131) per dose and, in China, falls in the self-pay category.

And there is always the potential of DPT falling under the Chinese government’s public innovation program. The downside of the program is that the government sets prices; the upside is in volume sales. Some 20 million babies are born each year in China, and DPT vaccines require four doses, which could translate into sales of 65 million to 80 million doses per year without factoring in adolescent or adult vaccines, Yu said.

The investment from Lilly Asia will be used to conduct DPT clinical trials and build up manufacturing capacity at Cansino. The first step in the process will be to file an investigative new drug application with the China Food and Drug Administration.

As it has in the dozen other companies it has invested in to date, Lilly Asia will hold a seat on Cansino’s board.

In March 2011 , the World Health Organization said the Chinese regulator complied with indicators for a functional vaccine regulatory system, which has given China manufacturers the opportunity to export vaccines to other emerging markets.

Cansino has in-licensing deals with Canada’s McMaster University for tuberculosis (TB) vaccine technology and with the National Research Council of Canada to acquire cell culture technology. The company also works with Aeras, a U.S.-based nonprofit global organization that aims to advance TB vaccines.

Lilly Asia was set up in 2008 to invest in Chinese life science companies involved in high-growth market segments. Lilly Asia typically takes a minority stake in invested companies along with a board seat or observation rights.