Technology blockade, biotechnology internal circulation

While most innovative pharmaceutical companies are showing off their abundant cash reserves to show that they are enough to survive the winter, one company is deliberately hidden

As of June 30, China Biopharmaceutical had cash and bank balances of 7.

In the cold wave of U.

Gloria In's proposed acquisition of Snapdragon for $57.

The curtain is slowly opening

Overseas mergers and acquisitions have encountered obstacles, and the domestic M&A ecology is not mature

01 Innovative drugs also stuck in the neck

Biden has been busy lately, signing an executive order on September 15 asking CFIUS (Committee on Foreign Investment in the United States) to step up its review of certain transactions that affect U.

If the acquisition company is restricted, will it spread to the authorized introduction of pipelines and technologies? Very unlikely

There is also the problem of Western patent barriers in the frontier field of

Arbutus is the pioneer of LNP delivery technology, holding the US patent No.

It is difficult

The Peptide Nanoparticles (PNP) delivery platform of Shengnuo Pharma, a small nucleic acid drug company, is an enhanced delivery platform built on the technology authorized by Dr.

In the field of ADC drugs with higher commercialization, Synaffix's technology platform has been licensed to many innovative pharmaceutical companies in China, and its HydraSpace and GlycoConnect technologies are the cornerstones

Source: NASDAQ, the company's official website, CITIC Construction Investment

02 Biotech three futures

Snapdragon, which Gloria is looking for, is a cutting-edge technology that applies continuity technology in the production of innovative drugs and APIs

F-star, which China Biopharma values, has a super cost performance, using quadrivalent (2+2) bispecific antibodies, can target two different antigens at the same time, and has 5 clinical stage products, including LAG-3/PD-L1 double antibody FS118, CD137/PD-L1 double antibody FS222, OX40/CD137 double antibody FS120, of which the core product FS118 for the treatment of head and neck cancer, NSCLC and DLBDCL has entered clinical phase

On June 23, as soon as the acquisition announcement came out, F-star shares rose 59.

A number of U.
S.
stocks Biotech, which sold pipelines to domestic Biotech, also have a latest market capitalization of less than $100 million
.
BioLineRx XiangfangPharmaceutical License out the world's second CXCR4 antagonist, with a market capitalization of $73.
74 million.

LogicBio licensed the gene technology platform to Beihai Kangcheng with a market value of $12.
03 million, Kazia to Simcere Pharmaceuticals License out high-efficiency blood-brain barrier penetration PI3K/mTOR pathway inhibitor with a market value of $21.
4 million, Ambrx to the new code biolicense out two core products ARX788 (HER2 ADC) and ARX305 (CD70 ADC), with a market value of $46.
73 million.

Without CFIUS holding the stick of protectionism, a medium-sized Chinese pharmaceutical company would have been able to eat more than 4 Biotechs in one bite, spending less than $300 million
.

The sinking structure of the market value can lower the threshold for big fish to eat small fish and promote the metabolism of biotechnology ecology
.
Iterative and leapfrog innovation is undertaken by small pharmaceutical companies, and the cost of trial and error is the lowest, while large pharmaceutical companies have become investment and business transformation platforms to some extent, which is conducive to the smooth output
of the entire innovation system.

Now that the road to outsourcing is almost blocked, can the internal circulation of biotechnology be realized?

Let's first look at the reference system
established by U.
S.
stock biotechnology.

CITIC Construction Investment Pharmaceutical analyzed 424 sample companies of Biotech/Biopharma listed through NASDAQ's IPO from 2004 to 2018, showing four important characteristics
.

225 companies still exist, accounting for 53.
1%, and nearly half of them disappeared
.

175 were acquired/merged, accounting for 41.
3%, the main channel for exit is mergers and acquisitions, and delisting and bankruptcy account for only a very low proportion
.

Among the surviving enterprises, 84 have a market value of less than 100 million US dollars (as of August 9), accounting for 37.
3%, and only 9 have a market value of more than 5 billion US dollars, accounting for 4%.

Some of the disappearing companies have a market capitalization of less than $100 million
.

Of the 316 Biotechs listed from 2004 to 2016, only 36 companies survived for more than 10 years, accounting for 11.
4%.

U.
S.
stock Biotech has stronger primary innovation capabilities and sunk even lower market capitalization, with Arbutus, the founder of LNP delivery technology, with a market capitalization of just $333 million
.
In contrast, domestic unprofitable biotechnology enjoys a premium, Hong Kong stock 18A companies are not cheap, so far none of them have been acquired/merged, or delisted, bankrupt, and the market value is less than 1 billion Hong Kong dollars
.

Domestic biotechnology has not yet opened the metabolism, but the road to go is still to go, internal mergers and acquisitions, the cycle will also start
.
With reference to the US stock market, we can look forward to three laws:

1.
More than 30% of Biotech's market capitalization will be less than HK$1 billion
.

About 10% of Biotech will survive for more than 10 years
.

3.
The main channel for exit is mergers and acquisitions
.

In the process of jumping from Biotech to Bigpharma, the representatives of high-market capitalization and high-return companies in the U.
S.
stock market include Amgen (IPO in 1983, cumulative increase of 87364%), Regenerative Element (IPO in 1991, cumulative increase of 2816%), Gilead (IPO in 1992, cumulative increase of 17009%)
.

Although the cost of innovation is heavy, innovative pharmaceutical companies also contain the greatest resilience and surprises
.