When BeiGene Takes Off 'Bei' and Why NewCo Now: Three Biotech Go Global Takeaways

Two major biotech industry events struck me this week, the first is that BeiGene changed itself to appear to a global audience and another, NewCo model keeps getting popular.

BeiGene, traced its roots in Beijing ZGC Life Science Park, has been a largely China-originated biotech since its founding in 2010, after 24 years, BeiGene is transferring itself from a Chinese biotech to a global biotech, from the inside out.

On Nov. 14, BeiGene announced a plan to rebrand itself to BeOne Medicines. Unmistakably and evidently to everyone, there won’t be any reference to Beijing, although the majority of its R&D and manufacturing personnel in the thousands remain China-based. BeiGene has its R&D in Beijing suburb's ZGC park, its small-molecule manufacturing in Suzhou, and biologic manufacturing in Guangzhou.

In the statement, BeiGene said that its goal is to help more patients access to its innovative cancer therapies, ten planned to enter clinical this year.

Already, BeiGene in July unveiled a US-based R&D and manufacturing facility in Western Princeton Innovation Center in New Jersey, with a $700M investment and plan total $ 1 billion in US and European markets.

BeiGene, which already had more oncology drug sales from outside China than inside, has been steadfastly shifting away from China to become global. The Chinese sales for its PD-1 testilelizumab, have been forced to slash prices to compete with similarly or lower-priced PD-1s from competitors from Innovant, Hengrui or Shanghai Junshi.

Another best-selling BTK inhibitor Zanubrutinib, has better overall sales after scoring expanded use via more indications for blood tumor malignancies. Still, it’s plain and clear, that China with aggressive price slashing and fierce competition (nine competitors for PD-1 and two for BTK) alone won’t deliver what BeiGene has in mind. Betting big on developed markets outside China and going global is the only viable option.

That leaves others to reflect, review, and choose. Hengrui, for one, has decided to be firmly a Chinese pharma company. It, also, has no option. Hengrui, meaning Eternally Auspicious in Chinese, was founded in Liangyungang by a pharmaceutical factory technician Piaoyang Sun in the 1980s. Like many Chinese pharma companies, the company benefits from China’s innovation-friendly and enabling policy, slowly transferring itself from a copycat manufacturer to a new drug innovator.

Up to 2020, many biotech companies in China have largely chosen to be ambiguous in terms of identity, strategically so. They have set up operations in both the United States and China but keep US operations at a minimum while having a much larger operation in China to leverage China’s clinical study speed to quickly and cheaply accumulate data to make deals.

That route hits a large insuperable roadblock amid geopolitical tension, and unfolding US-China bilateral rivalry, the Biden administration imposed executive orders to restrict supplying to China’s semi-conduct and the US Congressional Biosecure Act to limit contracts to certain Chinese R&D and bio manufacturers.

That also catalyzes the phenomenon of NewCo.

NewCo is a company set up by US venture funds in the US stateside to develop assets licensed from Chinese companies. NewCo plays into the intention of US investors to de-risk these assets, all early-stage, but shield them from uncertainties associated with US-China complications.

The most recent NewCo, Oblenio is based in Oakland, CA. The company, born with a coalition of Aditum Bio and Leads BioLabs, is to develop Leads t-cell engager antibody for autoimmune conditions.

T-cell engager is a hotly pursued asset, and the NewCo will have funding from Aditum, co-funded by former Novartis CEO Joe Jimenez, with assets from Leads, who is based in Nanjing, Jiangsu Province.

Autoimmune is the second biggest area other than cancer-treating therapeutics in another example of US money marrying Chinese innovation. Nanjing, a proximity to Shanghai, has cost-effectiveness and provincial support afforded to the local new biologics developers.

Extremely attractive to companies looking to expand to the U.S. but has limited resources, NewCo allows the biotech venture firm co-founded by a former big pharma executive to tap into Chinese innovation and help small biotech firms with funding, know-how, and vitally, the connections while learning the rope.

My first takeaway is, NewCo bodes well for Chinese companies wanting to have a share of global biopharm revenues while leaving the nitty-gritty of commercialization, go to market, to US investors.

In contrast, BeiGene’s rebranding to a global-bound biopharma only applies to a handful of lucky ones who can do so. Either way works, you have to devote yourself to your best and leave the rest to professionals.

Secondly, NewCo helps bring otherwise little-known biotech companies forward to the front seat. Without the funding, spotlight/publicity, biotechs in China would have to elbow each other in a limited growth space. NewCo offers them the global market. Funding size, and evaluation aside, the route is a sure way to go beyond China to step onto the global stage.

Lastly, China remains a vibrant source of innovation, not limited but a power in antibody innovation. There have been talks after talks about emerging competitors from other Asian countries, China's antibody innovative clusters have certainly grown out of Shanghai, and Beijing to tier-2 cities, first Chengdu, Hangzhou, Suzhou now Nanjing.

Their follow-on deal-making and going global strategies remain to be played out. Stay tuned.

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