HONG KONG – Opening the door wide to a broad range of investments, a European biotech investment firm is working with a diversified Chinese biotech company to invest in and introduce mature and innovative technologies to Greater China.

TVM Capital China Ltd., controlled by German fund manager TVM Capital Life Science, said it closed its China BioPharma Capital I venture capital fund at $50 million. The fund includes a $50 million subscription from Lummy Pharmaceutical Co. Ltd. (SZ:300006), a Chongqing-based pharmaceutical company focused on the development of novel chemical drugs, biologics, traditional Chinese medicine and health care products.

"We have a very broad standard for investment targets. Any companies willing to bring innovative products into China and operating in the enlarged health industry could be the object of investment," Lummy's Chief Financial Officer Leng Xuefeng told BioWorld Today. "A general partner we hired will help decide where the investment goes."

Investment targets will be selected based on market research, medical assessment and the development needs of proposed companies. A particular focus for the fund will be life science innovations in Western companies that aim to obtain development and commercialization licenses in China.

In an already-disclosed deal, Lummy (Hong Kong) Co. Ltd. inked a deal with Durham, N.C.-based Argos Therapeutics Inc., gaining rights to manufacture, develop and commercialize AGS-003, an investigational immunotherapy for the treatment of cancer, in China, Hong Kong, Taiwan and Macau. Under the terms, an affiliate of Lummy HK and the China BioPharma Capital I Fund purchased an aggregate of 1 million shares of Argos' stock at a 12.5 percent premium price, for a total purchase price of about $10 million. Lummy HK also agreed to pay Argos a royalty on net sales at a rate in the teens and up to an aggregate of $20 million for regulatory and commercial milestones and will purchase an additional $10 million of Argos' shares following and subject to the interim data analysis from the pivotal phase III ADAPT trial testing AGS-003, expected in late 2015.

Typically, the fund will target partnership commitments of between $150 million and $250 million.

TVM Capital Life Science has a track record of investment in life science companies in Europe, the U.S. and Canada. China BioPharma Capital I GP was founded in November 2014. Lummy will become a limited partner with the $50 million investment.

"Currently, innovations in pharmaceutical and medical technologies are mostly originated in North America and Western Europe. With our commitment to China BioPharma Capital I LP, we strive to introduce the world's top medical services and medical technologies to the Chinese market," said Qiu Yu, chairman and president of Lummy. "Our mission is to provide this vibrant market with innovative, exciting, effective drugs and technology to improve human health. We believe that continuous innovation is the only route to company growth."

The new fund will help TVM expand into the China market. One approach, said managing partner Hubert Birner, will be to use the deal flow and dealmaking capability that stems from the company's teams in Munich and Montreal.

A new TVM China office will open in Hong Kong with TVM's Mirko Scherer appointed as managing partner.

"The China BioPharma Capital I fund provides an ideal vehicle to combine the expertise and the network of TVM Capital Life Science in the West with the development, regulatory, sales and marketing acumen of our Chinese partner Lummy," said Scherer.

Apart from the effort to bring in innovative drugs and devices from abroad in China, Lummy is also investing in its own R&D capacity. Lummy finalized and published a private shares placement plan at the end of March. The company will spend ¥250 million (US$40 million) out of the total ¥1.3 billion raised on its ongoing R&D projects.

At the end of 2014, Lummy had 56 R&D projects under way covering therapeutic areas such as infectious disease, oncology, digestive disorders, neurology and circulatory diseases. The company has 12 projects in the process of applying for new drug registration approvals, six in the process of applying for clinical trial approvals, 11 in clinical studies and 27 in preclinical studies.

Lummy said in a company notice that its next step is to focus on the development of biological drugs and on top of the R&D and international registration of novel chemical drugs. The company has formed a biopharmaceutical research and development center with Chongqing Academy of Science and Technology.

"Right now we only have a few biological drug candidates, developing more biologics is a general direction for us to go onward," said Leng. "We already have a member company, Jinxing, dedicated to biomedicines."

Lummy went public in 2009 on the Shenzhen Stock Market and has six fully owned subsidiaries and more than 2,000 employees. The company's products include mycobacterium phlei FU36 injection for the adjuvant treatment of phthisis; paclitaxel injection for the treatment of various cancers; and formestane for injection to treat advanced breast cancer.