A firm best known for investing in biotechs, not creating them, has seeded its first startup with plans to bring a slate of new medicines to China and other Asian countries.
Perceptive Advisors, a hedge fund that spent years backing publicly traded companies, on Tuesday launched LianBio, which emerges with partial rights to multiple drugs for heart disease and cancer, including one close to a Food and Drug Administration review.
More deals are likely coming for a startup that could have upwards of 100 employees next year, said Perceptive chief investment officer Adam Stone.
"We want to build a company of scale and significance," Stone said in an interview with BioPharma Dive. "This is not just us wanting to do a few deals and flip something."
Recent government reforms in China have sped up drug development and approval timelines, helping make it easier for foreign companies to win clearances there for drugs they had tested abroad. That has helped lower some important hurdles and create new opportunities for drugmakers to enter the world's second-largest pharmaceutical market.
At the same time, China-based biotechs have flourished, taking advantage of rule changes at the Hong Kong stock exchange to access new capital. Some, like Beigene and Legend Biotech, have struck major deals with U.S.-based pharmas and ridden their wider recognition to public listings on Nasdaq.
Biotech investors have taken notice of the changes. Alongside large pharmaceutical companies, multiple startups, like Brii Biosciences and Terns Pharmaceuticals, have formed in the past few years to help bring new medicines to China.
Stone concedes that Perceptive, which was formed in 1999, historically had a "big blind spot" when it came to China. The firm has spent the past two years rectifying that, doing due diligence that ultimately led to the creation of LianBio.
"We thought the best way to gain the exposure into China that we were looking for was actually to start our own company," he said.
Their plan is to acquire rights to medicines in later stages of development and both commercialize them in China as well as help run additional studies to expand their use. LianBio will lean on Perceptive to pick the right assets, which it will then take forward under a team with experience developing drugs in China.
CEO Bing Li, for instance, has worked at Chinese entities like Fosun Group and large pharmaceutical companies like Eli Lilly and GlaxoSmithKline. Chief business officer Debra Yu worked at the venture arm of Pfizer but also as the head of cross border healthcare investment banking at China Renaissance Securities.
Stone is counting on that combination to overcome any "trepidation" that companies might have in licensing products out to China and "losing control."
"Our presence, I think, helps a lot with that trust factor," he said.
They've started off by working within the confines of some of Perceptive's other portfolio companies. MyoKardia has granted LianBio rights in China to mavacamten, a drug that recently succeeded in a Phase 3 trial for a genetic form of heart disease and could be approved in the U.S. next year.
LianBio expects to run a "bridging" study — similar to the successful Phase 3 trial, but smaller — in China either before approval there or as a post-marketing study, said executive chairman and Perceptive managing director Konstantin Poukalov.
Another investment, BridgeBio, has dealt LianBio rights to two cancer drugs. One of them, infigratinib, is in Phase 3 testing for bile duct and bladder cancers. LianBio also has a "first right of refusal" to buy rights to some 20 drugs currently within BridgeBio's portfolio or to those that the company acquires within the next four years, Stone said.
LianBio will pay nearly $27 million to BridgeBio in the near term, and send another $40 million to Myokardia. Conditional payments between the two deals could add as much as $652 million to the bill.
BridgeBio and Myokardia also hold equity stakes in the newly created company.
The effort with LianBio represents an evolution for Perceptive, which has primarily been a "passive" investor in life sciences companies since its 1999 founding, said Stone.
The firm started out exclusively backing publicly traded biotechs, before dipping into "crossover" rounds and then early-stage companies through an investment in startup accelerator Xontogeny. This year it's also gained notoriety for using two "special purpose acquisition companies," or blank-check companies, to bring biotechs Cerevel Therapeutics and Immatics to the public markets.
LianBio has already required a "significant" amount of cash — Perceptive won't say how much — to get going. The bills will likely only get larger as the company looks for other deals to add more drugs and expand into areas like inflammation and ophthalmology.
"This sort of model is capital intensive," Poukalov says, "especially considering the pace and vision of what we're trying to build."