In what some might call a game of musical chairs, about 35 U.S. company managers traded one seat for another earlier this month as they visited with several potential Japanese partners in Tokyo and Chiba.
It's part of an effort arranged by the Japan External Trade Organization (JETRO) to increase U.S. investment in Japan's biotech and health care sectors. While the country is considered the second largest market worldwide behind the U.S., Japan has established a national biotechnology strategy to grow the market to $240 billion by 2010. The market last year was at about $17 billion, a 5.2 percent increase over the previous year.
Japan is interested in partnering with U.S. biotech companies, or in encouraging them to set up operations in the country, but American companies are likewise looking to Japan to help advance their early stage products. One such company, Quintessence Biosciences Inc., of Madison, Wis., is developing its EVade technology, a ribonuclease cancer therapy that is in preclinical testing.
"We're interested in partnering with companies that might help us get this product further along in the pipeline," said Ralph Kauten, chairman, president and CEO of Quintessence. "The Japanese pharmaceutical industry is strong, well established. The Japanese market is very big and there's interest there among Japanese pharmaceutical companies in this class of cancer therapeutics."
Kauten participated in JETRO's business partnering program from May 15 through May 21, which was coordinated by the Japanese Ministry of Economy and Trade and Industry, the U.S. Embassy in Japan and the Greater Nagoya Initiative.
While some have likened Japan's strategy for partnering with speed-dating, in which a single person hops from chair to chair, conversing for a few minutes with each potential mate, Kauten and the other participants spent about an hour with prospective Japanese partners.
"Some parts of the program were like [speed dating]," Kauten said. "Although it wasn't quite the speed that is associated with the dating."
At the very least, the program planted a seed in the minds of both Japanese and U.S. biotech managers. It allowed them to have a series of one-on-one meetings to understand market trends and the differences in suppliers, culture, language and business. Each American company met with as many as 12 different potential partners to learn strategies for investing in or for marketing products in Japan.
JETRO solicited the companies that participated, including BioSystem Solutions Inc., of Santa Clara, Calif., and Third Wave Japan, of Madison, Wis., along with Quintessence.
About 20 Japanese biotech and health care companies participated, including Fujisawa Pharmaceutical Inc., Otsuka Pharmaceutical Co. Ltd., Takara Bio Inc. and Chugai Pharmaceutical Co. Ltd.
JETRO took the strategy of "speed-partnering" as an enabling tool for companies to find the best relationships to advance their products.
"Before thinking about investing in Japan, it is important to establish the right partnerships and create sales channels to maximize one's growth opportunities in the Japanese market," said Masahiko Hosokawa, president of JETRO New York.
Japan had 464 biotech companies in 2004, an increase of about 100 from a decade earlier. The growth of the market came mostly from the increase in imports of four genetically engineered agricultural crops (soybeans, corn, rapeseed, cotton), followed by the jump in sales of biopharmaceuticals, including antibody therapeutics.
Quintessence's lead product is made by taking a ribonuclease from the human pancreas and manufacturing it in recombinant E. Coli. It is then modified to evade ribonuclease inhibitor, and made toxic to cancer cells.
"It's a cytotoxin, but one of the features is that it has an amazing safety profile relative to other chemotherapy agents," Kauten said.
Quintessence expects to reach the clinic with the lead candidate in the second half of 2006. The company also is working on a targeted delivery of the cytotoxin, and is talking with companies about attaching it to monoclonal antibodies either as a fusion protein or a conjugate for targeted delivery. And there are other possibilities, as well, Kauten said.
"We think this has great appeal in combination therapies, given that it has a mechanism of action that is totally different from other therapies," he said.
A partnership could help Quintessence realize the potential of the technology, which was discovered at the University of Wisconsin in Madison by Ron Raines, a researcher in the ribonuclease area. Raines and professor Laura Kiessling founded Quintessence as a spinout from the university in 2001. It existed as a virtual company until receiving $6 million in an angel financing in 2003. It now has 10 employees.
During his trip to Japan, Kauten met with a list of companies that could be potential partners for Quintessence. Some of the one-hour visits piqued enough interest from the participants for them to want to set up additional meetings.
"There were additional opportunities to set up some extramural meetings that obviously leveraged the time spent there and the trip there," Kauten said.