The Burrill Report


What began for Jinzi Wu with a casual summer dinner conversation with a real estate mogul in China has resulted in a new multinational biopharmaceutical startup seeking to combine U.S. drug development know-how with China’s cost-efficient and skilled scientific workforce and backed with a $100 million initial funding.

It pays to dine with billionaires.

Wu, who at the time was vice president of global HIV drug discovery at GlaxoSmithKline, was vacationing in China. During his visit he had dinner with Jinxing Qi, a self-made billionaire who built his fortune in China’s real estate market. The two had known each other for some time. Qi, a co-founder of Hangzhou Binjiang Investment Holding, was seeking to diversify his investments outside of real estate and as the two discussed drug development and the market in China, he saw possibilities. This led to conversations over the next several months that culminated in the formation of the new company Ascletis.

Wu, who is president and CEO of the new company, said he did speak to some venture investors while raising money for the venture, but found their time horizons have narrowed and saw greater flexibility in raising capital from private investors. The $100 million round is a sizeable one for a startup. The first tranche is for $50 million, but all commitments for the round have come from private entrepreneurs in China, the U.S. and elsewhere. Qi’s company, Hangzhou Binjiang Investment Holding, is the lead investor. It’s the first investment Qi has made outside of the real estate field, says Wu.

Ascletis will house key executive staff at offices in Research Triangle Park, North Carolina and scientific staff in Hangzhou, China, about 140 miles west of Shanghai. Ascletis has built a team of key executives, who are veterans of the pharmaceutical industry. Right now there’s a staff of six people at the company’s facility in China and Wu expects to grow that to about 50 in the next year and 100 within two years.

The company has what Wu calls a two-pronged strategy. Ascletis plans to in-license drugs for development for the growing market in China as a near-term route to revenue. At the same time, it will look at discovering and in-licensing early-stage drug candidates that it will develop to proof-of-concept and then seek to partner with major pharmaceutical companies on a global basis. The company is also in discussion with several large pharmaceutical companies to in-license China rights to late-stage drug candidates.

While Ascletis is not the first attempt to marry U.S. expertise in drug development with capital efficiency promised by turning to affordable talent in China, Wu says he hopes to seize on opportunities created by cultural differences between China and the United States that may allow the company to in-license some promising products that have been shelved by pharmaceutical companies because they were viewed as too inconvenient or undesirable to compete in developed markets. For instance, Wu said while Americans want pills rather than injections, that’s not a problem in China.

“We have some interesting leads with injectables, but we are looking at other things. People in the U.S. will not take twice-a-day pills, even if it has the same efficacy [as a once-a-day pill],” says Wu. “If GSK or Merck have something like that, they will put it on hold. People in China don’t care about that. They care more about pricing and efficacy and safety. That’s the angle we are looking at very hard.”

There are several lessons to draw from this. One is that when possible, raise lots of money. Capital efficiency is important and there are opportunities to be had in taking advantage of experience in one market and a highly skilled workforce in another. Also, drugs in one region may have greater value in another region, providing an opportunity to exploit.

But perhaps the key lesson here is that it pays to dine with billionaires.


April 08, 2011
http://www.burrillreport.com/article-fine_dining.html