By Ruchi Jhonsa, Ph.D.
Rajaneesh K. Gopinath, Ph.D. &
T. Chakraborty, Ph.D.
Asia-based biotech investment and venture capital were among the topics discussed at the Bio Asia-Taiwan international conference. We bring to you some key takeaways from the discussions.
VC Collaborations between the US and Asia
Todd Kaloudis, Managing Director, Cobro Ventures, presented his views about why US venture capitalists (VCs) team up with Asia-based investors. Having worked with many in the past, he observes advantages in these collaborations. He finds investors from Asia particularly great at fostering relationships. “It’s a more recent trend that we have seen non-traditional investors doing some combination of opening offices in the Bay Area or Boston or New York, building dedicated Life Sciences teams, really understanding the subtleties of US business culture. That investment they make allows for a quicker mutual understanding with US VCs,” he said.
Besides, Asian VCs offer local market expertise. Currently, a great deal of interest is seen from US firms in Chinese, Japanese, Korean, and other Asian markets, because they represent much clearer opportunities today than ever before. US firms can gain access to new sources of capital, scientific collaborations, and huge patient populations, making it possible for them to grow in Asian markets.
The success of a company is also determined by a wide representation of investors. “When nurturing an early-stage company’s growth, it’s very important to align interests between management and shareholders that can get tricky when new investors enter the picture with potentially very different views on key issues. That’s not ideal for early-stage ventures, which often struggle to find their first group of believers in a critical mess in a new financing round,” he said. Having investors from various countries, including Asia, is a way to build optionality and gives early-stage startups a sense of confidence.
Additional Value to International Deals
Despite the recent trade tensions, Asian participation in life science ventures has remained elevated. The past decade has seen a significant increase in the amount of investment capital by China-based VC funds in private US biotechs, with numbers skyrocketing to $1.5 billion in the fourth quarter of 2017.
Neil Higgins, Managing Director, Locust Walk, discussed the factors that contributed to increased participation by Asian VCs in recent years and the value additions they have brought to international deals. The most important factor, according to him, is a growing pool of critical mass of capital. Asian VCs no longer play a right-hand role, but they now lead and help deals that are otherwise stuck due to financing issues. He exemplified Indian VCs who cracked the top 100 in 2019 in terms of global venture deals.
When it comes to value addition, Asian VCs have a lot to contribute. This was evident in the case of Regenacy Pharmaceuticals, which raised $30 million this year. The financing round was led by Taiwania Capital and Cobro Ventures with participation from Asia-based investors, including 3E Bioventures, Yonghua International, Viva Biotech, and Taya ventures. The funding will be used to advance Ricolinostat, the firm’s HDAC6 inhibitor, into Phase 2 for the treatment of diabetic peripheral neuropathy.
With Asian VCs on board, the company not only gets capital but also receives an instant setup for testing the drug in Asia, which has a high prevalence of diabetes. It also puts Regenacy in a better position for partnering and licensing rights, improved access to local KOLs, clinical trial expertise, and manufacturing networks. Moreover, it provides an opportunity for additional sources of non-dilutive capital via these licensing and development options. Asian VCs also benefit from these transactions if there is a potential for joint ventures. Ricolinostat is a case in point as it can be launched in Asian markets without any hurdles or regulatory complications following successful trials.
To sum it up, finding the right Asia-based capital partner provides a competitive edge with significant additional optionality for maximizing the value of the asset. With the increased presence of Asia based venture personnel in biotech hubs such as Boston, San Francisco, and New York, there is a competitive advantage for those venture firms as it breeds relationships and deal-making.
Accelerating Taiwan Biotechs
Seth Taylor, CBO, and CFO of SmartLabs introduced the “SmartLabs Global Launch Program,” an initiative between SmartLabs and Taiwan’s Ministry of Science and Technology (MOST) and Industrial Technology Research Institute (ITRI) that is committed to building a world-class biomedical accelerator with the following goals:
- Assist project participants in fundraising both in Taiwan and the US
- Facilitate clinical development, product development, and distribution opportunities
- Cultivate leadership thinking and educate participants to excel at global commercialization
- Enhance participant capabilities with Business Development team and Subject Matter Experts
- Enable participants to achieve milestones while engaged with the biotech ecosystem in Boston
Established in 2015, SmartLabs has assisted more than 35 companies and has offices in Boston and San Francisco. It offers the Laboratory as a service (LaaS) model, which provides companies with an “on-demand pharma quality research environment” that facilitates scientific discovery and therapeutic commercialization. Some of their clients have grown considerably and have reached specific milestones in a short period of time.
In addition to the world’s top academic institutions, such as Harvard University and the Massachusetts Institute of Technology, Boston is also home to many of the world’s largest pharmaceutical companies. Therefore, in terms of talent, information, and manufacturing, Boston has the world’s top biotech ecosystem.
The “SmartLabs Global Launch Program” implemented in Taiwan will “train, mentor, and position companies for accelerated growth.” The most attractive feature is that select companies will be given a residency in Boston for 3 to 6 months to engage with the ecosystem. The program provides customized assistance based on the scale and development stage of companies on a one-to-one basis, including strategy formulation, partner recognition, and even improvement of corporate image. Also, workshops will be held to help companies improve their strategy and operations.
Seth lauded the Taiwanese government for its high-quality medical and education system. Compared to China, Taiwan’s regulatory policies on drug and medical device manufacturing are more in line with European and American bodies. Besides, Taiwan is renowned for its patient sample data. He believes that with its uniqueness and potential, the Taiwan market may become a bridge to the Chinese market in the future.
Reimagining Taiwan’s Central Role in a Regional Biotech Hub
Michael Huang, Managing Partner, Taiwania Capital, talked about how Taiwan can play a crucial role in becoming the regional biotech hub in Asia. Taiwan’s geographical location helps in reducing the cost of logistics as it is within three hours of flight-time to Japan, Shanghai, among others, and is within 50 hours from the five major ports in the region.
Presently, Taiwan has five biotech parks with a cumulative strength of over 400 companies. Each park is unique in its ability to conduct varied research. Moreover, the high-speed rail connectivity between these parks enables quick transportation. Additionally, National Geographic has ranked Taiwan the number one medical services provider in Asia and number three in the world, affirming its fast growth in the biotech space. To understand and test the feasibility of the biotech products, clinical trials are mandatory, and in 2017 alone, Taiwan had conducted over three hundred multicentral and multicentric trials. As a result of which private investments have been pouring in with 1.8 billion USD invested in 2018 alone. Out of which, medical devices raked in half a million, and 733 million went to the development of pharmaceuticals.
To create and sustain a hub in Taiwan, the government has played a vital role in luring further investors in the biotech space by providing special subsidies and tax deductions to the companies. Additionally, the government realized the need for private sector investments, thus giving rise to two funds; Taiwania Buffalo I and Taiwania Buffalo II. Each of these funds holds a sizable capital to be invested in therapeutics, robotics, MedTech, digital health, among others. Cross-border collaboration, pipeline enhancement, and establishment of R&D centers can play a significant role in making Taiwan a leader and a biotech hub of Asia.
Taiwan-Japan Partnership to Strengthen the Venture Ecosystem
Frederick Shane, Managing Partner, Axil Capital Partners LLP, discussed the biotech environment in Japan and further demonstrated the strategies undertaken to enhance the venture ecosystem in Japan and Taiwan. Axil, a biotech venture capital firm based in Tokyo, invests in biomedical and healthcare technologies, including robotics, artificial intelligence, and others, thereby translating promising technology to viable commercial products.
While discussing Japan’s current biotech environment, he pointed out the increase in the elderly population in both countries. Therefore, it is important to generate new ideas and practical solutions to improve the quality of life. Japan has consistently ranked among the top countries as the origin of blockbuster drugs, like Nivolumab (Anti-PD1 therapy), Trametinib (MEK inhibitor), and others. However, the number of drugs approved in Japan is much lower as compared to the US. Furthermore, though Japan ranks within the top 5 countries among basic research publications, it lags in clinical research and commercializing scientific discoveries.
In the last decade, Japan has relaxed some regulations to help venture ecosystems by providing funding and loan programs. Axil’s strategy is to have cross-country collaboration and tap into the best resource from each collaborating country, thereby optimally developing a product for commercial success. Shane concluded that Taiwan is in a position to be a key strategic partner due to the unique talent pool that his company possesses, its close ties with Japan, and the country’s transformative state.
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