SHANGHAI – Biotech acquisitions are increasingly becoming a part of the Chinese outbound investment story. This time around, up and comer Betta Pharmacuetical Co., of Hangzhou, Zhejiang, has made a $20 million equity investment in Xcovery Inc., of West Palm Beach, Fla.

Betta now has a stake in the American company, along with China rights for X-396, a small-molecule anaplastic lymphoma kinase (ALK) inhibitor in an ongoing phase I/II expansion cohort.

Betta is known as much for its partnership with Amgen Inc. as it is for having the first innovative small-molecule cancer drug in China, Conmana (icotinib hydrochloride), a selective epidermal growth factor receptor (EGFR) tyrosine kinase inhibitor for non-small-cell lung cancer (NSCLC). It has been a company to watch, and it is ramping up for its initial public offering in China. (See BioWorld Asia, April 22, 2104.)

With this deal, Betta is now entering into its first foray into the U.S.

From the beginning, it was a meeting of the scientific minds from both companies. The arrangement came together rather quickly, said Fenlai Tan, chief medical officer and vice president of Betta, after seeing Xcovery chief scientific officer and co-founder, Chris Liang, present the data at the annual American Society for Clinical Oncology (ASCO) meeting in June.

"When we compare X-396 to the other three next-generation ALK counterparts – so far potency at the molecular and cellular level is the best. If we are talking about the safety side, we can see X-396 is the best; the difference in safety profile is significant."

Betta is positioned as the number three company in China for lung cancer and has ambitions to be the leader in the field. In pursuit of that goal, it has been looking for the right ALK candidate for some time. After the ASCO presentation, Tan followed up with a visit to Xcovery's offices and came away convinced this was the right opportunity for Betta.

For Xcovery, the investment is good news and will give a financial boost to help fund the phase III trial for X-396.

BioWorld Asia caught up with Liang while in China – he will be presenting the phase I data in Chicago later this week – to find out more about the companies' plans going forward. (See BioWorld Today, Dec. 1, 2009.)

The two companies will take a parallel tack to their regulatory strategy for China – Xcovery will file for a multicenter, multiregional trial as part of the phase III global study. Meanwhile, Betta will file a local abbreviated phase I, with plans to follow up with a phase III with the CFDA.

According to Tan, China has about 600,000 new cases of lung cancer patients each year. Anywhere from 5 percent to 7 percent will have the ALK mutation. That could mean 30,000 to 42,000 patients per year eligible for treatment with an ALK inhibitor such as X-396.

Lung cancer is the most commonly diagnosed form of cancer in China – and contrary to western countries where lung cancer is in decline, China has seen the rate of morbidity due to lung cancer increase alarmingly from year to year. However, a key problem is that high-priced biologics are seldom covered by China's basic medical insurance.

Even Betta, considered a "local champion" by many (referring to companies with promise for homegrown innovation), is confronted with that challenge. The firm's lead drug, icotonib, has been on the market for three years but is only reimbursed by one province, Betta's home province of Zhejiang. An EGFR inhibitor, it costs about ¥12,000 (US$1,963) per month.

Tan pointed out in the U.S., when a drug is approved by the FDA it enters into the insurance system; that is not the case in China, and Tan expects X-396 will be much more costly to deliver to patients than an EGFR inhibitor.

A prominent example is Pfizer Inc.'s ALK drug Xalkori (crizotinib), which is available on the market in China and costs patients roughly ¥50,000 per month. To put that into context, that is about twice the average workers' annual salary. Since the drug is not covered by basic medical insurance, many companies adopt creative strategies to help overcome affordability issues.

Betta has taken such an approach with icotinib. After patients pay ¥70,000 (or about six months' worth), the remainder of the medication is provided at no cost to patients.

X-396 is expected to be a more potent inhibitor of ALK and similar potent inhibitor of MET compared to crizotinib.

Beyond its ALK inhibitor, Xcovery's pipeline has other propositions that could hold promise for China: a selective c-Met inhibitor that has finished the investigational new drug application (IND) stage; a VEGFR/PDGFR drug entering phase II; and three more candidates in the IND stage, including a small-molecule mTOR inhibitor, an inhibitor of the P110δ isoform of PI3K and a dual mTOR and P13K inhibitor.