Undercurrents are surging under the cold wave of medicine, how can investors and entrepreneurs "renew the life" of innovative drugs?

An investor who chased the investment of innovative drug companies a few years ago and was worried that the project would be taken away overnigh.

This is a common mentality of investors after innovative drugs are cold in the second half of 2021.

The connotation of "innovative drugs" has undergone great changes under the circumstance that domestic biotechs are listed in blood, the stock prices of listed companies have been halved, and primary market funds have begun to wait and se.

The definition of innovative drugs in China is constantly changing with the policy and environmen.

"Price returns to valu.

"Price returns to valu.

Eighteen years ago, in 2004, a drug from China, Endo, made a big splash at a well-known oncology conference in the United State.

This drug was invented by Luo Yongzhang of Tsinghua University, and he established a joint venture company with Rongchang Pharmaceuticals to prepare for the industrialization of End.

But in the end, it was Simcere Pharmaceuticals, which had just received two billion investment funds from Lenov.

Luo Yongzhang, the inventor of Endu, only left behind a love story with a CCTV anchor, and the molecule of Endu, together with Edaravone, another divine drug, has achieved today's Simcere Pharmaceutical.

The drug Endu made the pharmaceutical industry at that time appreciate the charm of innovatio.

Later, as the policy patches continued to be applied, the innovative elements in the pharmaceutical field gradually accumulated, and finally ushered in the first vigorous development in the second decade of the 21st centur.

With a new chemical structure and independent intellectual property rights, as long as the clinical process is rigorous and there is a clinical increase compared to the era of chemotherapy, it can be given the identity of an innovative drug to participate in the medical gameplay in the new er.

In July 2021, the requirements for the clinical value of innovative oncology drugs were first increased with a new clinical guidelin.

From changing tastes in the capital market, to policy guidance, to industry feedback, countless events are on the surface, and innovation is being redefined step by ste.

From changing tastes in the capital market, to policy guidance, to industry feedback, countless events are on the surface, and innovation is being redefined step by ste.

Deep Blue View interviewed two senior industry professionals in the investment and R&D fields to try to find answer.

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What is the policy leading?

What is the policy leading?

Deep Blue View: From the perspective of top-level design or policy formulation, the requirements for innovation have become more stringen.
If you rely on fast follow to successfully raise funds and go public, is this road impossible now?

Deep Blue View:

Yuan Jianwei: Ye.

Yuan Jianwei:

The traditional definition of "innovative drug" is difficult to define a truly innovative produc.
The previous fast follow has produced a large number of "innovative products" that cannot create more clinical benefit.
These are often foreign standard answers, but copy paste (copy paste) fills some blank markets in Chin.

Through the establishment of capital-intensive and talent-intensive enterprises, it seems that value creation is being promoted relatively smoothly, but the development of the entire pharmaceutical industry is very slow, and there are actually fewer and fewer opportunities for copy past.
narrowe.

Deep Blue View: Are we facing a very serious reality now that a large number of biotechs in the primary market are indeed short of mone.
According to the current R&D investment, it may not last for too long, so cash flow is very needed no.

Deep Blue View:

Yuan Jianwei: This is not a bad thin.
There is no rule that an innovative company must be a high-valued company, or it must be able to surviv.
This is entirely a market choic.
In fact, China has not really completed a complete closed loop of the pharmaceutical innovation industr.

Yuan Jianwei:

Deep Blue View: Is there any company that has not been able to continue its financing in the C round and the D round? Are you still holding on?

Deep Blue View:

Investor: At present, not too many companies have encountered this situatio.
In the past few years, many companies have been relatively successful in fundraising, and they can get quite a lot of financial suppor.
Especially last year, their ammunition reserves are still relatively ric.

Now is a process of big waves and sand, and then the survival of the fittes.
This puts forward two requirements for innovative enterprise.
One is that they need to do very well at the innovation level, and the other is that the requirements for company operations will be very hig.

Fast follow is no longer the best strategy for companies in the early stages, because they will face more and more competitors, it is difficult to tell the story of differentiation clearly, and clinical research has reached a very expensive stage , then its capital allocation/capital allocation will be very difficult, resulting in a mismatch between financing/capital allocation and the risk hedging ability it faces, and the company's development will be more difficul.

Deep Blue View: Now because the valuation of the primary and secondary markets is very serious, some people in the secondary market think that investors in the primary market can earn a little less, and don’t have such a high premiu.
You give a little space for the premiu.
secondary marke.
There are also many investors who choose to invest in relatively early-stage projects because of the inverted valuation, and go to the university to find a professor to start a business, because the valuation of start-up companies is still relatively lo.

Deep Blue View:

Yuan Jianwei: This is a very interesting statemen.
The logic of this is that the mid-to-late project valuation is high and it is easy to be upside dow.
Based on this, we prefer to cooperate with university professors on early-stage projects to control valuation and satisfy innovatio.

Yuan Jianwei:

I think it is necessary to choose a good angle and method to invest in early-stage project.
Not all projects are suitable for finding from school.
For example, in the field of ADC antibody conjugated drugs, the source of its innovation lies in how to solve the problem through engineering, and it can directly find the source of innovation from the industr.
But like gene therapy, cell therapy, its innovation actually comes from changes in the underlying tool.
Changes in the underlying tools have a low probability of coming out of an industrial laboratory, and a higher chance of coming out of a universit.

I have contacted many professors in colleges and universities, and after communicating with them about technology and company entrepreneurship ideas, I instead advised them not to start a business, because the opportunity cost is very hig.
We must clearly understand the difference between high-quality scientific research articles and product industrialization, and understand the difference between laboratory operations and company operation.

We must clearly understand the difference between high-quality scientific research articles and product industrialization, and understand the difference between laboratory operations and company operation.

There is a huge gap between a successful thesis and a successful dru.
This is not just about the industrialization of scientific research, it involves how the company operates, how to find suitable talents to implement the technology, et.
This is a change of thinkin.

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investment reshuffle

investment reshuffle

Deep Blue View: How can investors invest in real innovative projects today?

Deep Blue View:

Yuan Jianwei: At this time, we must take the initiative to chang.
If on the one hand you are shouting to invest in innovation, but on the other hand you are afraid of risks, you cannot have forward-looking thinkin.
Not much of the real innovation is made by retrospective analysis, it must be forward thinkin.

Yuan Jianwei:

Logically speaking, retrospective analysis can avoid risks, but in an era of innovation, we must use forward-looking mentality and thinking to judge trends and direction.
Only funds that actively seek change at this point can become the next wave of dominant fund.

Innovation investment is not just a casual tal.
There are several dimensions: the first is how to judge the innovation of the investment project, which is a requirement for the lowest level of ability; the second is how to face the risks brought by these innovations , and how to resolve it; the third need to be able to help portfolio (invested companies) to extend new innovation capabilitie.

The first is how to judge the innovation of the investment projects, which is a requirement for the lowest level of ability; the second is how to face the risks brought by these innovations, and how to resolve them; the third is to be able to help the portfolio (invested enterprises) to extend new innovation capabilitie.

Deep Blue View: Not long ago, the seventh national drug centralized procurement just ende.
In fact, if you don’t work hard on innovation, everyone just goes to imitation and fast follo.
In fact, the future of innovative drugs cannot escape the outcome of generic drug centralized procuremen.

Deep Blue View:

Yuan Jianwei: Yes, the market only pays a premium for differentiated rigid deman.
The key to centralized procurement is the game of price, and the innovative products of fast follow do not have an advantage in bargainin.
This also shows that unless there is a first-mover advantage, the investment is not the investment of innovative products, and the return will not be rewarded by innovative product.
Therefore, avoiding the crushing of prices in centralized procurement is essentially a problem of product innovation capabilitie.

Yuan Jianwei: Unless you have a first-mover advantage, the investment is not the investment of innovative products, and the return will not be rewarded by innovative product.

There are many ways out for good innovative products, and going overseas is a very good choice, but China still needs a process to create products with bargaining powe.
The entire Chinese medical and health industry itself is in a process of entrepreneurship, and entrepreneurship exists first and then optimize.

The entire Chinese medical and health industry itself is in a process of entrepreneurship, and entrepreneurship exists first and then optimize.

Therefore, the past seven years should be regarded as the completion of the stage of existence, and the various elements exist firs.
At present, some good R&D infrastructures have been built, and a batch of products with global innovation capabilities have been create.
There will definitely be a process of survival of the fittest in the future, but on the whole it will definitely produce an optimized resul.
As an external environment, centralized procurement policy is a very good selection pressur.

Deep Blue View: In fact, the current biotech is in a process of rushing through the san.
In the end, there will be those companies that are truly innovative and change, and those companies that have been eliminated, can they find opportunities for mergers and acquisitions or opportunities for cooperation?

Deep Blue View:

Yuan Jianwei: Even a relatively backward company faces the reintegration of some resource.
These talents have absorbed experience and can start a new business, or join other companies with experience, which will definitely improve the overall innovation environmen.

Yuan Jianwei:

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Biotech founder redefines innovation

Biotech founder redefines innovation

Deep Blue View: There was an article that said that the medical insurance department closed the door of the past, but can the medical insurance department open a window for innovative drugs?

Deep Blue View:

Founder: At present, the homogenization of innovative drugs is relatively serious, and the price of innovative drugs has generally dropped significantly after being included in medical insurance through "national talks.
There is still a gap between the returns of innovative drugs and the European and American market.
I think it will be difficult for medical insurance to open a window for "homogenized" innovative drugs within 10 year.
If this window is opened, it means high prices similar to those in Europe and the United State.

Founder:

It is almost impossible for homogenized new drugs to have high profits and high returns in the Chinese marke.
Now, everyone is aware of this drawback and tends to make new global medicines and target the global marke.

It is almost impossible for homogenized new drugs to have high profits and high returns in the Chinese marke.

In fact, our innovative drug companies want to be differentiated and original from the bottom of their heart.
But the original is high risk, high investmen.
You don't want to take too much risk, just follow other.

Innovation must be cared for with "high returns", but the current domestic medical insurance system is still "basic insurance" first, and the ability and willingness to pay at own expense is insufficien.
In other words, it is difficult to make huge profits in the Chinese market with huge investment in innovative drugs similar to those in the European and American market.
At the same time, Chinese products may also face pressure from US regulators, and the threshold for entering the European and American markets is relatively hig.

Deep Blue View: You said just now that the most important thing is to differentiate and innovate, and to go to overseas markets, but you also said that it is difficult for China to innovate like the United State.
Since we don’t have that kind of innovation, How to enter the US market again?

Deep Blue View:

Founder: When we go to the US market, or other parts of the world, we must do original or differentiated innovation; that is to say, if we want to grab the cake in the US market, we must do such drug.

Founder:

In terms of innovation, our ecology as a whole cannot compare with the United State.
But on a single point, we can also generate a lea.
As far as basic research is concerned, the level of some professors is already world-class, which is no worse than that of the United States; in addition, it may be difficult for companies like us to do original work in an all-round way, but you can also do one or two world-class project.
, which is fin.

Deep Blue Concept: World-class projects, do you mean world-class medicines?

Deep Blue View:

Founder: It can be don.
The success rate of a certain company is low, but 10 companies may produce a world-class medicin.

Founder:

Shenlanguan: You just said that this world-class innovative drug is not a magic drug like CAR-T, PD-1 or adalimumab, but a general innovative drug with global valu.
,do you mean this?

Deep Blue View:

Founder: Yes, some medicines are once-in-a-century, not only in China, but all over the world may only be encountered once in 100 year.
The world-class projects I'm talking about refer to: for example, if you make a new target, if you are the top three in the world, you are a world-class projec.

Founder:

For example, BeiGene's BTK, which is the third in the world, has some advantages over the previous products and is also a world-class projec.
World-class products are already available in China, not to say there are none at al.
It's just that everyone will spend more time and more money to make such products in the future, instead of rushing to do fast follow or me to.

Deep Blue View: There is a seemingly clichéd question here, what is the definition of innovation? How do entrepreneurs understand, how do regulators like the Medical Insurance Bureau understand, how does the overall pharmaceutical industry understand, and how these groups understand innovation can determine what kind of innovative drugs will emerge in the en.

Deep Blue View:

Founder: If innovation is only understood as magical and revolutionary innovation, it is very difficult, and it is very difficult in any countr.
For example, there are more than a dozen new drugs every year, but many of these drugs are orphan drugs, there are not many patients in the world, and the annual sales are less than 100 million US dollar.
It is not a blockbuster, but the innovation is the same, just not so big influenc.

Founder:

In fact, no matter how you define innovation, the most important and core part - whether it is the view of the health insurance bureau or the market - should be this: innovation is to solve unmet clinical need.

Innovation is all about addressing unmet clinical need.

It is difficult for us to be at the forefront of innovation, but we can still innovat.
Innovation has different levels and form.
For example, the latest ADC drug DS-8201 launched by Daiichi Sankyo is also an epoch-making drug, but it is a combined innovation of old drugs and target.

Yuan Jianwei: Partner of Xiangfeng Investment, has more than ten years of investment experience in the medical industry and drug research and development experience, and has invested in more than 30 medical project.

Founder: P.
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of a chemical medicine company, currently serving as the CEO of a six-year-old innovative drug compan.