HONG KONG – Xuanzhu (Shijiazhuang) Biopharmaceutical Co. Ltd., Beijing-based Sihuan Pharmaceutical Holdings Group Ltd.’s innovative drug R&D platform, has secured ¥800 million (US$117.2 million) in series A funding from the State Development and Investment Corp. (SDIC).

CMG-SDIC Capital Co. Ltd. (CMG-SDIC) invested the entire ¥800 million, giving SDIC an 18.6% equity interest in the platform, a company spokesperson told BioWorld. The two companies will work together to develop and introduce new, innovative drugs.

Leslie Boyd, chief commercial officer at Xuanzhu, said, "SDIC ‘s investment is a vote of confidence in Xuanzhu’s ability to develop high-value innovative drugs. The investment allows for the development of innovative therapies to improve patients' lives and medical standards."

Xuanzhu will use the funds to “support pipeline projects” but did not provide further details. Additionally, the financing will implement an equity incentive plan, with the two companies aiming to build an innovative drug R&D and production platform in China, the companies said.

"SDIC’s investment will strengthen Sihuan's strategic plan for its core, which consists of an innovative drug R&D center, generic drug R&D center and manufacturing companies, as well as its investments in other companies,” said Che Fengsheng, chairman and executive director at Sihuan.

A private equity management institution with more than ¥100 billion in accumulated assets under management, SDIC has invested in advanced manufacturing, valued technological innovation, and entrepreneurs as well as teams. It is now seeking to invest in life sciences, smart manufacturing, smart and new energy vehicles, and information and communication technology fields.

SDIC’s decision to invest in Xuanzhu was influenced by Sihuan’s development vision for the platform and its work to research and develop “innovative drugs to expand treatment options for Chinese patients,” it said.

With its Xuanzhu investment, SDIC is also gaining a foothold in the Chinese pharmaceutical market, the world’s second largest and one that is rapidly growing. The private equity management institution seeks to benefit from the government-supported shift from “primarily generics to primarily innovative drugs development.”

The number of clinical applications for innovative drugs in China has seen rapid growth since 2016, with data from the China Association for the Promotion of Medicines reporting the number of annual clinical applications for category 1 chemical new drugs increased from 220 in 2016 to 381 in 2019. Antitumor drugs made up 44.3% of the 2019 applications.

However, China still lacks clear regulations on drug review times, with priority review regulations for innovative drugs and breakthrough drugs currently being improved. Once completed, the review period will be shortened, which in turn is expected to lead to a boom in Chinese innovative drugs in the next three years.

Xuanzhu’s current pipeline covers indications such as oncology, diabetes, metabolic diseases, digestive system, male reproduction and infectious disease. The company is in late-stage clinical trials for candidates such as janagliflozin, a SGLT2 inhibitor treating diabetes. Phase III trials to test the candidate as both as a monotherapy and a combined therapy with metformin are currently underway in China. Birociclib, the company’s CDK4/6 inhibitor for advanced breast cancer, is currently in phase II trials as a monotherapy. Phase I trials to test the drug as a first-line as well as second-line therapy with fulvestrant are also underway.

Founded in 2002, Xuanzhu became a wholly owned subsidiary of Sihuan in 2012. The company was then spun off in 2018, and now has registered capital of around ¥1.15 billion. When asked whether Xuanzhu would seek another round of funding, the spokesperson declined to comment.

Sihuan joined China’s fight against COVID-19 when it initiated clinical trials of favipiravir to treat the virus in March. The trials looked to recruit 60 COVID-19 patients for a treatment period of 10 days, with the open-label, controlled trial investigating the efficacy and safety of favipiravir, also known as Avigan. Three groups of 20 patients would receive favipiravir twice a day in doses of 1,600-mg, 1,800-mg and 2,400-mg doses, respectively, for 10 days. Pending positive results, Sihuan aims to file new drug applications with the FDA for both candidates within 2021.

Chinese authorities listed favipiravir as a potential COVID-19 solution alongside chloroquine phosphate and Veklury (remdesivir), Gilead Sciences Inc.’s broad-spectrum antiviral medication, in February. Zhejiang Hisun Pharmaceutical Co. Ltd. won its own approval to start clinical trials for favipiravir a few days after Sihuan. Zhejiang purchased the exclusive rights to favipiravir from Japan’s Toyama Chemical Co. Ltd., a Fujifilm Holdings Corp. subsidiary, in June 2016. There are currently eight clinical trials in China investigating favipiravir’s safety and efficacy against COVID-19 listed on the Chinese clinical trial registry website.

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