BEIJING – Osaka-based Japanese infectious disease specialist Shionogi & Co. Ltd. said it will partner with Chinese insurance giant Ping An to establish a data-driven joint venture to develop new drugs in a deal involving ¥‎33.53 billion (US$311 million). It also plans to tap into immuno-oncology to address the patent cliff of its HIV drugs.

Under the terms, the Japanese pharma will sell a 2.05% voting stake, or 6.35 million shares of its common stock, to Ping An for ¥‎33.53 billion. Shionogi will own 51% of the joint venture while Ping An owns 49%, Shionogi IR group manager Kunihiro Mera told BioWorld. The two companies plan to set up the new venture in Hong Kong.

“We will establish the joint venture by the end of July this year,” Mera said, adding that the new venture will be devoted to developing drugs for infectious diseases and the central nervous system in its initial stages.

According to Shionogi, the capital from Ping An will be used mainly in drug development, with ¥13 billion put toward acquiring development rights for, and in-licensing of, new drugs to expand Shionogi’s portfolio, while ¥17 billion will go to discovering and developing pharmaceutical products, which are to include new, generic and over-the-counter drugs.

As a health insurance giant in China, Ping An has the data the Japanese pharma need to build a data-driven drug discovery and development model to find novel cures. Shionogi said it can combine its new drug R&D capabilities with Ping An’s health care data and analytical expertise developed from its bases in the insurance, financial services and health care industries.

“Chinese pharma companies want to produce new drugs and need our R&D capability,” Mera told BioWorld. “We will cooperate with Ping An using our R&D and manufacturing know-how to create synergy in this collaboration.”

With that data-driven platform, Shionogi is optimistic that it will identify more potential treatments, with the goal of being a drug discovery-oriented pharmaceutical company.

The aim is for Shionogi to use the patients’ lifestyle data, such as their behavior patterns, sleep patterns, genetic data and other information, to support precision diagnoses. Then Shionogi can leverage its drug development know-how and understanding of the diseases to identify efficacious therapeutic agents. Ping An will be the technological support system, providing its data acquisition network and data analysis technology.

Shionogi said high-quality real-world data sources can be used as control groups in clinical studies, especially in rare diseases and areas that see few patients.

New growth areas

Besides creating a change in how drug discovery and development can be done, the company also plans to extend its focus to more therapeutic areas.

In an R&D meeting on March 19, Shionogi CEO Isao Teshirogi said the pharma aims to also tackle obesity and geriatric metabolic diseases, as well as oncology and immunological diseases, while maintaining infectious diseases and psychoneurological diseases at its core.

For cancer particularly, the company plans to progress cancer peptide vaccines and pursue research into novel immune-modulating therapies.

“We’re planning to talk about anticancer drugs and adjuvants, and we have been gradually building a technical foundation not only for small molecules but also for larger molecules,” said Teshirogi in the meeting.

Currently, the Japanese pharma has a TLR9 agonist known as S-540956 and an anti-CCR8 antibody in preclinical development for cancer.

“We used a breast cancer model for mice, and even in the case of cancers for which PD-1 antibodies are ineffective or only moderately effective, the anti-CCR8 antibody is shown to be extremely effective,” said Ryuichi Kiyama, senior vice president of Shionogi’s pharmaceutical research division. The company plans to start phase I trials in the second quarter of 2021.

Meanwhile, S-540956 features excellent immune enhancement, high IFN-alpha induction and low safety concerns, he added. Phase I trials are expected to initiate in the fourth quarter of 2020.

The decision to explore a new therapeutic area comes under the pressure of the patent cliff. Shionogi is known as the developer of HIV drugs, such as Juluca (dolutegravir and rilpivirine) and Dovato (dolutegravir/lamivudine).

Teshirogi warned that from 2020, the company will see a drop in revenue and profits from its HIV products, particularly oral drugs, as their patents expire around 2028.

“Not only ourselves, but all companies that sell HIV oral drugs will face the same problem, and with that timing in mind, the question is what sort of pipeline we should build,” he said. “In the two or three years from 2020, unless our next core therapeutic area becomes clear, our earnings structure will find itself in a considerably severe situation.”