Cell and gene therapies are making gradual gains with Chinese investors
Shi Yingzi ·02/18/2022
China Biotech Fundraising Tracker

By Minhua Chu and Yingzi Shi

Chinese investors continued to show an interest in innovative drugmakers in the New Year with 41 closing a financing round in January. That's more than any month in 2021.

Funds raised, however, were modest compared to last year. There were 36 deals with disclosed amounts totaling $908 million. No individual deal exceeded $100 million.

Xuanzhu Biopharmaceuticals, a subsidiary of Sihuan Pharmaceuticals that focuses on the R&D of large molecules, received the most funding with RMB 601.5 million ($94.63 million).

Most deals remained within the range of $10-50 million, with 25 of them accounting for 69% of the total value of all disclosed deals. They were primarily series pre-A or A financing rounds. These are relatively early stages, which may be one explanation for January's meager figures.

Companies developing cell and gene therapies were at the forefront, receiving 29% of all disclosed funding.  

Gene therapies are gaining ground

Four gene therapy companies received financing last month: CureGenetics, Genmedicn, Otovia Therapeutics and Weimei Gene. All were established within the last two years and develop classic gene therapy products. They use vectors to deliver genetic material into cells to compensate for abnormal genes or produce a beneficial protein to treat single gene disorders.

Some gene therapies gained approval for marketing overseas. Among them was LUXTURNA (voretigene neparvovec-rzyl), a treatment indicated for patients with confirmed biallelic RPE65 mutation-associated retinal dystrophy. This is the world's first approved gene therapy. It uses AAV2 to carry a functional copy of the RPE65 gene into retinal pigment epithelial (RPE) cells to produce normal RPE65 proteins.

Another gene therapy to gain approval was Zolgensma (onasemnogene abeparvovec-xioi), which uses a similar mechanism  to treat SMA. It delivers an SMN1 gene into the blood-brain barrier via the AAV9 viral vector and increases the expression of SMN proteins.

These domestic gene therapy companies focus on treatments for rare diseases. Genmedicn, for instance, has made rapid progress in R&D. It has three drugs ready for IND submission and expects that one or two of them will receive phase II clinical data by 2024. Genmedicn mentioned that the RMB 110 million it obtained in this round will be used to promote IND application for thalassemia and also to accelerate the development of other products like a gene therapy for recessive dystrophic epidermolysis bullosa (RDEB).

The other two companies, Otovia Therapeutics and Weimei Gene, are both developing gene therapies for hearing disorders. Otovia, for example, received RMB 55 million from Fosun Health Capital, which is an innovative medicines fund under Fosun Pharma. This investment indicates that Fosun sees a promising future for gene therapies. They have become one of Fosun Health Capital's three key investment targets. Another company, UgeneX Therapeutics, which develops gene therapies for ophthalmic diseases, also appeared on the fund’s list of invested projects. Fosun has made frequent moves in the field of gene therapies, this investment in Otovia will expand the scope of its investment strategy.

Greater diversity in the cell therapy space

In the past, Chinese companies developing cell therapies focused primarily on T cells. But the field is beginning to see more diversity. Eight cell therapy companies received funding last month. Only half of them specialize in T cell therapies. Two develop tumor-infiltrating lymphocyte (TIL) treatments. The other two are developing stem cell therapies.

Among CAR-T related companies, Yizun Biotech is worth a mention. The company aims to develop universal “off-the-shelf” CAR-T therapies for solid tumors and dramatically reduce the production cost of cell therapy products. It secured hundreds of millions in series A financing, an indication that investors are optimistic about the company's future prospects. Liu Lingfeng, Yizun's founder, participated in the development and clinical research of CAR-T cell therapy during his tenure at the Fred Hutchinson Cancer Research Center in the U.S. He obtained a number of international patents, some of which are licensed to Juno Therapeutics, the first Nasdaq-listed U.S. cell therapy company.

In addition, two TIL therapy companies received financing last month. Junsai Biotech closed nearly RMB 150 million in Series A+ and Series A++ financing. Its IND application for its TIL injection was accepted by the NMPA on February 9. It's the second company in China to submit an IND application for such a therapy (GRIT Biotechnology was the first). Chineo is also preparing to submit an IND application for a TIL therapy. The company mentioned that the nearly RMB 100 million it received in this Pre-B round will support this application.

Given that solid tumors tend to show a great level of antigen heterogeneity, CAR-T cell therapy is more limited in solid tumor applications than in hematological tumors. TIL may be able to recognize an array of known tumor antigens, which means it has greater potential to deal with solid tumors. However TIL therapies, still face the  challenge of tumor microenvironment barriers, cell expansion, and cost.

Chineo said that its super-strong TIL is very different from traditional TIL therapy. By extracting patients' TIL cells for genetic modification in vitro, it can simultaneously solve the problems in tumor identification, microenvironmental effect and manufacturing efficiency. At present, this product has obtained some data from the IIT study.

That data have indicated that TIL showed great potential in treating solid tumors. In 2019, the FDA granted breakthrough therapy designation to LN-145 for treating advanced cervical cancer. LN-145 is a TIL therapy developed by Iovance. The combination of TIL therapy (LN-144 or LN-145) and pembrolizumab (Keytruda) also demonstrated encouraging efficacy and safety in the 2021 SITC Annual Meeting.

Patients with advanced melanoma, cervical cancer, head and neck squamous cell carcinoma (HNSCC) have all had high response rates in this study. The findings showed that in 14 patients with cervical cancer achieved an overall response rate (ORR) 57.1% including 1 complete response (CR). 10 patients with melanoma achieved an ORR of 60.0% comprising 3 CRs. 18 patients with HNSCC achieved an ORR of 38.9% including 1 CR.

Looking ahead, if domestically developed TIL therapies can also achieve positive results in clinical studies, research and investment in this field may see even more of a boost. 

Keywords: Cell and gene therapies Chinese investors innovative drugmakers 41 closing a financing round in January receiving 29% of all disclosed fundin
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