In early December, the Suzhou-based startup Kintor Pharmaceutical was granted a sizable financial subsidy from the Chinese government for its novel chemical compound proxalutamide, or GT0918, an androgen receptor antagonist targeting prostate cancer and triple negative breast cancer.
GT0918 is currently in Phase 2 studies in China, and Phase 1/2 in the U.S.
Kinto's clinical progress was boosted, in part, by a new regulatory framework introduced by the Chinese government in November 2015 to help modernize drug regulations in the country.
"Without the MAH scheme, we could not go this far," Kintor CEO Youzhi Tong told BioPharma Dive, referring to the marketing authorization holder (MAH) scheme that is being tested in China in 10 major regions, including Beijing, Shanghai, Jiangsu province and Shandong province.
China initiated the three-year pilot scheme to push novel drug development in the country, which has largely been known for producing generics. Should all go well, the MAH scheme will be officially rolled out in 2018 across the country.
"One of the goals for China's healthcare reform is to accelerate the novel drug development and commercialization," said Sven-Michael Werner, a partner with Bird&Bird. "It's not an overstatement to say that the MAH scheme paves the way to the goal."
An EU term, marketing authorization is like product licensing, allowing research companies without manufacturing facilities to sign CMOs to take care of the manufacturing. In China, though, research companies were not even allowed to file an IND before the scheme took off.
"The MAH scheme allows research firms like us to focus on R&D, and it will surely push innovation in China's pharma industry," Tong said.
The CMO Kintor uses for clinical supply is Tot Biopharm. The two companies have a lot in common, including their base of operations and their focus on oncology products.
"A good CMO also has to understand the research part to better design its manufacturing process," Tong said, but acknowledged that the shortage of such CMOs in China is a challenge for many research companies at the current stage.
As the MAH scheme is still a pilot program, Tong said there is room for improvement. For example, how to define responsibilities between an MAH and a CMO when a drug encounters a safety issue. Currently, an MAH is the only party who is responsible for the drug quality.
"A CMO shouldn't just be a manufacturing service provider, but a partner who manages a drug's life cycle together with the MAH. So we expect to see supporting policies in the future," added Tong.
Serena Du, a Shanghai-based associate of the law firm Bird & Bird headquartered in London, agreed.
"China's laws on product liability provide limited reference about how to allocate responsibilities and seek remedies against the wrongdoers. So there will be great concerns over the risks an MAH will have to take," she said.
CMOs lining up for biologics
Biologics startups also welcome the MAH scheme. Among them is Beijing-based BeiGene, which signed Boehringer Ingelheim to supply BGB A317, an antibody targeting PD1 for cancers.
CANbridge Life Sciences, also based in Beijing, contracted CAN008, a human fc-fusion protein treating glioblastoma multiforme, to Wuxi Biologics, a biologics manufacturing unit of the Chinese CMO Wuxi Apptec.
Boehringer and Wuxi Bio both invested heavily in biologics manufacturing to bet on China's MAH scheme. In early December, Wuxi Bio started operation of its $150 million, 30,000 liter biologics facility in Wuxi for commercial manufacturing of a variety of biologics products, including monoclonal antibodies and recombinant proteins. In May, Boehringer unveiled a €70 million ($82.5 million) 2,000 liter cGMP facility in Shanghai mainly for commercial manufacturing of monoclonal antibodies.
"The MAH scheme and CMOs will foster the innovation and progress of China's biopharma sector. We are confident that the scheme will become official in 2018 as China continues to encourage the innovation of drugs and medical devices," said Jiali Luo, head of biopharm China at Boehringer.
Other CMOs investing in biologics manufacturing, mostly for clinical studies, include Taiwan -based JHL Biotech, which has a cGMP facility in Wuhan, and Alphamab, a Suzhou -based company with a CNY1 billion ($151 million) facility in Jilin province, and is building a CNY600 million ($90.7 million) facility in Suzhou.
Facing the rise of Chinese biologics CMOs, Luo said a great advantage of Boehringer is that as a multinational with past experience in biologics development and manufacturing, it can help Chinese biopharma supply high quality biologics not only to the domestic market but also global markets.
"And because this facility is located in China, we can also provide support to foreign companies who wish to have faster access to China," Luo explained.
Working with clients around the globe, Boehringer has a deep understanding of the development level of China's biopharma sector.
"Chinese companies still focus on biosimilars at the current stage, but they are catching up with R&D capacities, although few candidates are commercialized so far," Luo said.