BEIJING – Biologics developer Hisun Bioray Bio-pharmaceutical Co. Ltd., a subsidiary of Chinese state-owned drugmaker Zhejiang Hisun Pharmaceutical Co. Ltd., received ¥3.8 billion (US$540 million) from Hong Kong investor PAG for a 58% stake in the company.
"This acquisition will be the largest private equity investment in China's biotechnology industry to date," according to the Hong Kong-based private equity firm, set to become Hisun Bioray's controlling shareholder, with parent company Zhejiang Hisun continuing to hold the remaining 42%.
PAG China's chairman, Xiao Suining, will serve as the biotech startup's chairman. PAG will also appoint three members to the five-member board at Hisun Bioray.
The biologic-focused subsidiary was established in January to serve as a core business division and the platform for the parent company to develop, manufacture and commercialize biologic antibody-based drugs, after Zhejiang Hisun started to tap into the biologics segment in 2003.
"The R&D department of Zhejiang Hisun is on its way to be incorporated into Hisun Bioray's R&D department to develop biologics," Zhejiang Hisun's spokeswoman told BioWorld.
Hisun Bioray has two research and development and manufacturing centers, one in Taizhou, where its parent is headquartered, and the other in Hangzhou, both in Zhejiang province. The startup is said to be equipped to carry out full spectrum research and development tasks from drug discovery to formulation.
Another attraction for PAG likely was Bioray's extensive pipeline. The firm has more than 10 drug candidates in or beyond the clinical trials phase for treating autoimmune diseases and cancers. It plans to market some of them in the next three years.
One is Anbainuo, a biosimilar version of TNF drug etanercept. After Zhejiang Hisun developed the drug and obtained marketing clearance, Hisun Bioray is taking over the task of manufacturing and marketing the biosimilar for treating autoimmune diseases such as rheumatoid arthritis, ankylosing spondylitis and psoriasis.
Another asset in its portfolio is Anjianning, one of China's first adalimumab biosimilars. Adalimumab, marketed by Abbvie Inc. as Humira, is used to reduce pain and swelling due to certain types of arthritis.
"The product is expected to be launched later this year or early next year. It has obtained approval from Chinese regulators," the spokeswoman said. "Hisun Bioray will be responsible for manufacturing and commercializing the drug."
PAG will make a payment to Zhejiang Hisun after Hisun Bioray obtains China marketing approval for Anjianning. If Hisun Bioray fails to do so before June 2020, it has to pay PAG ¥3.75 billion as compensation.
According to Zhejiang Hisun, its subsidiary also plans to launch biosimilar versions of infliximab and trastuzumab by December 2021 and June 2022, respectively.
Also in its pipeline is believed to be pritumumab, a monoclonal antibody for the treatment of epithelial cancers, which include cancers of the brain, pancreas, colon, lungs and breast. Zhejiang Hisun acquired the rights to the drug candidate from U.S. biotech firm Nascent Biotech Inc. in a $3 million deal in 2016. (See BioWorld, July 27, 2016.)
To alleviate a heavy debt
Zhejiang Hisun is listed on the main board of the Shanghai stock exchange, which means it needs to maintain profitability. However, the state-owned company saw its net income fall 3,730% to record a net loss at ¥492.5 million last year.
To meet the challenge of funding costly drug research and development, bringing in foreign direct investment is the way to go. The sale of a controlling stake in Hisun Bioray to PAG will translate into investment earnings of ¥1.27 billion for the state-owned drugmaker this year.
"By bringing in foreign direct investment to support the development of China's biopharmaceutical industry, [Zhejiang Hisun] can sharpen its focus while supporting Hisun Bioray's future development," said Jiang Guoping, chairman of Zhejiang Hisun.
Jiang said PAG was chosen as the company's strategic partner from more than 40 potential investors because of its financial resources and industry knowledge and experience.
"PAG's investment will support and accelerate the development of our pipeline and clinical trial progress, further strengthen our competitive advantage, and expand our footprint in the latest generation of innovative biologics and biosimilars," said Wang Haibin, CEO of Hisun Bioray.
PAG currently manages more than $30 billion in capital for some of the world's largest institutional investors. It has a growing interest in China's biotech industry.
Besides Hisun Bioray, the private equity firm is also invested in Yantai-based drugmaker Rongchang Pharmaceuticals Co. Ltd. and Suzhou-based Alphamab Oncology Co. Ltd. PAG backed Alphamab's $60 million series B financing round in May. (See BioWorld, June 12, 2019.)