Billionaire Li's Biotech Moves Closer to New Drug Dream

(Bloomberg) -- Hutchison China MediTech Ltd., the biotechnology company backed by billionaire Li Ka-shing, reported positive late-stage results for its drug to treat colorectal cancer, taking the company one step closer to having a home-grown therapy on the market.

The Hong Kong-based company, known as Chi-Med, said in a statement Friday that it is currently preparing to submit a new drug application for fruquintinib to the China Food and Drug Administration. Chi-Med's shares traded 6 percent higher in London at 8:15 a.m. local time.

Chi-Med's results show how Chinese biotechnology companies are moving forward with their plans to develop innovative drugs that can sell at higher prices than generic copycats. While billions have been poured into China's biotechnology sector in the past decade, few world-class treatments have been approved so far from its companies. The data Friday puts Chi-Med on track towards commercializing the drug in the Asian country and in global markets, while giving investors a clearer path for return on their investment.

“Our achievement today proves that we've established an innovative biopharmaceutical company in China,” said Christian Hogg, the company's chief executive officer. “It took us 17 years to get to this point: it's a huge milestone for our company.”

Majority-owned by CK Hutchison Holdings Ltd., Chi-Med was established in 2000. Hogg was its first employee, and the company received more than $75 million in funding from Li Ka-shing's organizations between 2000 and 2005.

The company's fruquintinib therapy met its main goal of increasing overall survival in patients, it said in the statement. The NASDAQ, the other exchange where Chi-Med's stock is listed, was not yet trading when the news was announced.

Inventing Drugs

During the past decade, the company has pursued two streams of development, fueled by an additional $400 million it raised through two initial public offerings and other partnerships, according to Hogg. Over the years, it built up a workforce of 330 scientists and more than 2,000 sales representatives. Chi-Med acquired treatments to distribute in China, even as it developed and invented its own drugs. In the past few years it has struck partnerships with several multi-national corporations, including with AstraZeneca Plc. and Nestle SA.

For the compound that it announced positive results for Friday, Chi-Med brought in Eli Lilly & Co. as a China commercialization partner in 2013. Chi-Med retained global commercialization rights excluding China and manufacturing rights. This was different from the types of arrangements that have been more common in China. Chinese biotechs have tended to license rights for China for a compound or drug, rather than developing their own. Lilly could not be reached by phone outside normal operating hours.

Friday's approval puts Chi-Med and Lilly closer to receiving Chinese regulatory approval, Hogg said, adding that he's hopeful fruquintinib could be used to treat colorectal cancer as a third-line treatment by early 2018. Third-line therapies are those used when others stop working or are ineffective.

The company also plans to seek U.S. approval, and has plans to start development there later this year, Hogg said. It is also pursuing further uses for the therapy, including in lung and gastric cancer.

Fruquintinib can be used in combination with chemotherapy and other targeted treatments like immunotherapy. A treatment for solid tumors, it works by shutting off capillary growth between additional blood veins and the tumor.

Cancer that starts in either the colon or the rectum is called colorectal cancer, according to the National Cancer Institute. About 4.4 percent of men and women in the U.S. will be diagnosed with colon and rectal cancer at some point during their lifetime, based on 2011-2013 data on the institute's website.

Of the 1.4 million people worldwide who had colorectal cancer in 2012, about 253,000 cases were from China, based on the World Health Organization's Globocan database.

Chi-Med, which has seven other drug candidates in clinical trials around the world, wants to address more types of cancers. The company aims to present the full dataset for fruquintinib at the American Society of Clinical Oncology in June.

“The door is now open," Hogg. "It's just the start of China becoming a force in innovation in the global pharmaceutical industry in the 20 years.”

To contact the reporter on this story: Natasha Khan in Hong Kong at nkhan51@bloomberg.net.

To contact the editors responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net, Sam Nagarajan