A move to roll up China’s cell therapy market

You might be excused for never having heard of Cellular Biomedicine Group, but the young biotech just threw its hat into the ring hoping to become another beneficiary of the craze for CAR-T therapies.

The difference between it and its Nasdaq peers is its focus on China, implying an entirely different pricing dynamic to that faced by companies targeting the US or Europe. Its stated aim is to roll up China’s immune cell companies and gain first-mover advantage – something that might interest investors and bankers alike.

Monday’s acquisition of the Chinese PLA General Hospital’s CAR-T assets was Cellular’s second takeover in the past half year. In September it paid $3.3m to buy Agreen Biotech, a Chinese company with technologies in T-cell receptor clonality analysis, and T central memory cell and dendritic cell preparation.

The Chinese PLA hospital’s CAR-T technologies target CD19 – an antigen involved in leukaemias and B-cell lymphomas that all the key CAR-T players are also working on – as well as the far less prominently investigated CD20, CD30, EGFR and others.

While these are all logical oncology antigens in theory, they are currently the domain of antibody-based approaches. For instance, Roche’s leukaemia blockbuster Rituxan is an anti-CD20 MAb, while Seattle Genetics’ Adcetris is an anti-CD30 antibody-drug conjugate.

Of the academic groups behind Nasdaq’s major CAR-T companies, Baylor College of Medicine – which has tie-ups with Bellicum, Cellectis, Bluebird Bio and Celgene – is running a clinical trial of a CD30 CAR-T in Hodgkin’s and non-Hodgkin’s lymphomas.

Cellular has given away few details, but the Chinese PLA hospital is known to have been focused on typical autologous, vector-transduced, second-generation CAR constructs with a 4-1BB co-stimulatory domain. It is not clear whether work has been done on a safety switch to control T-cell persistence – an important consideration given the off-target effects associated with many novel antigens.

How much?

One thing that could raise eyebrows is the low price Cellular has paid for the asset: just RMB12m ($1.9m).

Recently Cardio3 BioSciences did pick up Celdara Medical’s CAR-T assets for just $10m up front, though Ziopharm and Intrexon paid $115m for MD Anderson’s less-than-stellar technology (Sleeping Beauty wakes up to $115m deal, January 14, 2015). Ziopharm yesterday laid out plans to start up to five CAR-T studies this year.

Ziopharm and Intrexon both raised cash on the back of the deal – $88m and $116m respectively – and this must be a blueprint for Cellular, though clearly on a far smaller scale.

The Chinese group is capitalised at $258m, having gained its Nasdaq listing through a reversal into EastBridge Investment Group in February 2013. It raised $11.1m in equity last year, and finished the third quarter with just $9.8m in cash, but states that it will use its Nasdaq listing to consolidate China’s most important immune cell technology players.

Its lead projects are a mesenchymal stem cell therapy for osteoarthritis in phase II and a dendritic cell vaccine for liver cancer in phase I studies; it also says it has anti-PD-1 assets.

Since cell therapies are likely to rely on specific, regional hospitals and manufacturing plants capable of carrying out the complex procedures, aiming to become the leader with a network of authorised treatment centres throughout China certainly makes sense. Cellular even boasts that it has a US FDA-compliant manufacturing plant in Shanghai.

And avoiding the US could circumvent the IP litigation in which major players will become embroiled sooner or later. But whether there exists a market in China for CAR-T therapy, or whether its cost can be reduced drastically enough to make it affordable there, are questions that could temper the enthusiasm.

EP Vantage has published a broad overview of the current opportunities and risks in the CAR-T space. A free copy of the report is available by download.