BEIJING - While reporting a strong rise in earnings for 2008, the leaders of China's Simcere Pharmaceutical Group said they have signed a co-development deal with a San Francisco biotech firm on a monoclonal antibody treatment for cancer.

"We recently signed an agreement on co-development of a monoclonal antibody therapy for cancer with Epitomics, which is based in San Francisco," Simcere chief financial officer Frank Zhao said in an interview.

Simcere and Epitomics will collaborate on pre-clinical and clinical trials, on manufacturing the biologic, and on distribution worldwide, Zhao explained. Inside China, Simcere will have exclusive rights to produce and distribute the biopharmaceutical.

During a recent conference call with investors and analysts, Simcere CEO Ren Jingsheng said the new partnership with Epitomics was just one of the channels the company has been exploring to expand Simcere's pipeline of biologics and small-molecule drugs. Simcere is also screening a small pool of Chinese pharmaceutical companies that are candidates for takeover (Also see "Magnitude 7.9 Quake Cut into Simcere Pharmaceutical’s First-half Earnings; Company “Very Close” To First Round Of Acquistions" - Scrip, 7 August, 2008.).

Despite tremors that have shaken financial institutions across North America and Europe, and that have reverberated across Asia, Simcere continued to expand its business and to generate higher profits in 2008.

Simcere, developer of the innovative biologic Endu (recombinant human endostatin), posted total revenues of RMB 1.74 billion ($255 million) for 2008, an increase of 27.2 percent from RMB 1.37 billion for the previous year. The Nanjing-based company also registered net income of RMB 350 million ($51.3 million) for last year, a rise of 16.2 percent from RMB 301.3 million in 2007.

And while some smaller biotech firms in China and in the U.S. have reported a cash crunch as a result of the economic meltdown, Simcere ended 2008 with cash and cash equivalents of RMB 813.8 million ($119.3 million).

"During the current global economic situation, some health care companies are going to see their valuation lowered," CEO Ren told investors. That, in turn, is creating the right conditions for acquisitions, he added.

Sounding remarkably similar to the leaders of Pfizer or Roche, Ren said: "Simcere plans to expand its pipeline through acquisitions of companies with promising late-stage drugs."

CFO Zhao said that Simcere's mergers and acquisitions team is now reviewing a handful of China-based firms for possible takeover (Also see "CFO of China’s Simcere Sees Year of Acquisitions For 2008 - PharmAsia News Spotlight" - Scrip, 1 May, 2008.). "We definitely would like to conclude at least one transaction this year," he told PharmAsia News.

Zhao also said that the new deal with Epitomics involves a 50-50 partnership in terms of distributing the biopharmaceutical across the globe.

Epitomics is headed by Yu Guoliang, who holds a doctorate in molecular biology from the University of California, Berkeley. Epitomics co-founder Zhu Weimin, vice president of antibody technology, was formerly a visiting scholar at the University of California at San Francisco, and a research scientist at Bayer.

Over the last three years, Epitomics has signed licensing agreements covering its antibody technology with Roche and with Genentech.

Although Simcere is ramping up its expansion drive, the company has not gone totally unscathed through the global economic crisis. "We had a foreign exchange loss that brought our net profits down in the fourth quarter of 2008," said Zhao.

Yet CEO Ren said that the prospects for growth inside China remained good in light of the government's hospital building drive and stimulus plans for the health care sector.

"As part of China's health reforms, the government has pledged RMB 850 billion in funding for expansion of health insurance and of the health service sector over the next three years," said Ren.

The restructuring of China's health care industry," added Zhao, "is seen as a long-term positive for us."

- Kevin Holden (k.platt@elsevier.com)

Simcere Enters Co-development Partnership With San Francisco Biotech Outfit On Monoclonal Antibody Treatment, Scans China For Takeover Targets

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