Growing up in China, Zhi Hong saw the healthcare challenges of his homeland firsthand. Despite the country’s economic strides, life science innovation there lags advances made in the West, he says. The GlaxoSmithKline veteran now wants to use his experience to adjust the balance. Backed by $260 million in financing, his startup, Brii Biosciences, plans to deliver new medicines in new ways to patients in the most populous nation in the world.
“I really believe that by serving as a bridge, I can bring the innovation to China,” says Hong, Brii’s co-founder, president, and CEO.
The U.S. is the largest and most lucrative market for pharmaceutical companies but a growing number of them are casting their eyes toward China. Brii, founded earlier this year, is one of the latest. The company, which is based in in Durham, NC, and Shanghai, China, has no drugs in its pipeline yet. But it has a partnership under its belt that could provide drug candidates, cash to procure more compounds, and a strategy to develop better ways to commercialize therapies in China.
During his 11 years at GlaxoSmithKline (NYSE: GSK), Hong led the pharmaceutical giant’s infectious disease research. Though he was based at GSK’s Research Triangle Park, NC, site, he traveled to China frequently. He helped form and then lead the GSK Institute for Infectious Diseases and Public Health, which develops new infectious disease treatments for patients in China. He also served as a director of ViiV Healthcare, an HIV company formed as a joint venture between GSK and Pfizer (NYSE: PFE).
Hong says many biotech startups targeting China focus on taking a single drug through clinical trials. While that approach has worked, it takes a lot of time. The strategy also does not factor in the challenges of making a drug commercially successful in China. In forming Brii, Hong says he wants the ability to move more quickly than traditional biotech startups. Brii already has a partnership that could provide a fast start. Under a deal with San Francisco’s Vir Biotechnology, Brii gained marketing rights in China for as many as four of Vir’s drugs. Vir, which launched last year backed by financial commitments exceeding $500 million, is nearing the start of clinical trials on its first infectious disease drugs.
Though Brii is still building its drug pipeline, the company is already laying the groundwork for drug commercialization through a partnership with AliHealth, the healthcare unit of Alibaba Group. Hong says AliHealth’s digital and data capabilities will be used to develop new tools to improve how patients become aware of new drugs. These tools will also help patients stick to the schedule of taking these medications. Hong says that in the West, patients often don’t follow the proper dosing instructions for their medications. Consequently, patients may not receive the full benefit of a drug, or they can experience complications. Digital technologies can give patients new ways to understand their medications and help them follow the proper dosing instructions. With this approach, Hong says Brii aims to go further than many drug companies typically do.
“I’m not just a medicine company providing a medicine,” he says. “I’m providing a very different patient experience.”
Hong says infectious disease makes sense as a starting point for Brii, given his prior experience at GSK. But he also wants to address other diseases. Another area that Brii might enter is cancer, though Hong says he will be careful because in his view, the field is too crowded. With many cancer drugs going after similar targets, it will be difficult for a new therapy to differentiate itself once it reaches the market, he says.
In the nearer term, Brii is hunting for more partnerships similar to the one it has with Vir. Hong says he’s looking for clinical-stage compounds that have enough data to show that they’re feasible, or early-stage compounds that are close to starting clinical trials. Brii would consider licensing assets at even earlier stages of development if the science supporting them is strong enough, Hong says. He adds that Brii won’t license drugs that other pharma companies have abandoned or shelved. Instead, the company is looking for “potentially breakthrough therapies” that are different than what’s already on the market.
Brii is in the vanguard of a growing number of companies that aim to bring Western biotech innovation to China. Earlier this month, Menlo Park, CA-based Refuge Biotechnologies raised $25 million in financing that led by investment firms in China. The financing gave the new investors the first crack at negotiating rights to develop and commercialize the startup’s cell therapies in China. In April, Terns Pharma, which has operations in the San Francisco Bay Area and Shanghai, raised $30 million in financing to begin clinical testing of a treatment for the fatty liver disease known as NASH. Terns’ NASH drug lags its big pharmaceutical competitors in the U.S. market, but the startup’s executives say it has the chance to take the lead in China.
Some companies are targeting China with backing from Western investors. BeiGene (NASDAQ: BGNE) raised $800 million from its January debut on the U.S. public markets. The company, which has operations in Beijing and Cambridge, MA, sells cancer drugs acquired through its partnership with Summit, NJ, drug maker Celgene (NASDAQ: CELG).
China presents challenges that some Western companies may find difficult to navigate, says Clay Thorp, general partner at Durham venture capital firm Hatteras Venture Partners. The system for providing healthcare is different than it is in the U.S, as is the system for paying for drugs. Regulation is also different, though Thorp notes that there is growing agreement between FDA requirements and those of China’s drug regulators. Companies that have novel technology and the ability to understand the nuances of the Chinese market have a better chance of success, he says.
“Every innovative company, every innovative product, there’s a growing market in China,” Thorp says. “Historically it’s been a lower cost, lower price commodity market. But as the quality of healthcare grows there, the opportunity for innovative products goes up.”
Thorp, who says he has been friends with Hong for years, is a member of a Brii strategic advisory board. That body includes former GSK R&D executive Moncef Slaoui, Alnylam Pharmaceuticals (NASDAQ: ALNY) CEO John Maraganore, and Thomas Daniel, a former Celgene R&D executive. Hatteras is not a Brii investor, but Thorp says Brii could become a partner to companies in the Hatteras portfolio that are looking to expand to China.
As of now, Brii’s U.S. base of operations is Durham, where Hong is located. He plans to open a second U.S. location in San Francisco, which Hong calls “the gateway to China.” Brii’s U.S. hires, primarily bilingual Chinese Americans, will be responsible for finding new partnerships. The company’s workforce in China will be charged with taking Brii’s drugs through clinical testing, registration, and commercial launch.
Brii’s financial backers span both East and West. The $260 million round of investment was led by ARCH Venture Partners, 6 Dimensions Capital, Boyu Capital, Yunfeng Capital, Sequoia Capital, and Blue Pool Capital. Hong says Brii raised the large sum because the company must be ready to pay top dollar for innovation.
“I really want to go after products that will provide a highly differentiated clinical benefit,” he says. “Because of that, I think it will cost more.”