Chinese Biosimilars Firm 3SBio Reports Positive Second Quarter

3SBio, the first Chinese biotechnology company to list on NASDAQ, reported strong second-quarter earnings for its lead EPO and thrombopoietin products and is on track to launch a pre-filled syringe EPO product in China by year-end, the firm announced Aug. 8.

The Shenyang, China-based firm reported total net revenue for the quarter of $5.7 million, a 49.2 percent year-over-year increase. Net income for the second quarter increased 268.9 percent year-over-year to $3.1 million, CEO Jing Lou said in a same-day conference call with investors.

The firm's focus is on oncology and nephrology. It has six products on the market, some of which have exclusivity in key markets, Jing said. Its lead product is EPIAO (recombinant human erythropoietin injection), the first EPO approved in China for use in chemotherapy-induced anemia in cancer patients. EPIAO sales reached $3.9 million for the quarter. The product accounted for 69.7 percent of the firm's Q2 sales.

EPIAO is the market leader in China, with 36 percent of total EPO sales and 30 percent of volume, according to IMS figures. The biologic recently gained an exclusive contract to supply 19 hospitals in the Beijing military system, Jing noted.

3SBio's TPIAO , an injectible recombinant human thrombopoietin to treat chemotherapy-induced platelet deficiency, accounted for 22.3 percent of quarterly sales.

The firm also markets two in-licensed products, Tietai , an iron sucrose supplement for treatment of iron deficiency in anemia patients, and Baolijin , a granulocyte colony stimulating factor for treatment of chemotherapy-induced white blood cell deficiency.

3SBio is now conducting Phase III clinical trials for three additional drug candidates, a high-dosage EPIAO for anemia associated with chemotherapy, TPIAO for idiopathic thrombocytopenia purpura and Nuleusin , a second-generation IL-2 for renal cell carcinoma and metastatic melanoma.

At present, 3SBio has more than 150 sales and marketing reps. The firm is executing a marketing plan to target an additional 121 hospitals in 14 Chinese provinces and plans to have training of its new sales team members completed by the end of the third quarter.

The changing regulatory landscape in China has increased the level of uncertainty among pharma stakeholders. Those changes include a new Chinese Health Minister, plus introduction of more stringent new drug and biologic approval processes this year (¹ (Also see "China Drug Registration Proposal Requires Clinical Trials For Follow-On Biologics – Sidley Austin" - Pink Sheet, 18 May, 2007.)).

Jinsheng Ren, CEO of Nanjing-based pharmaceutical firm Simcere, recently predicted a major consolidation of Chinese pharma firms over the next several years, from the current level of 4,000 to as few as 1,000 (² (Also see "Simcere Seeks Oncology Acquisitions, Ex-China Licensing Partners For Endu" - Pink Sheet, 15 Jun, 2007.)).

However, 3SBio's Jing says those regulatory changes will actually benefit his company, given its "high quality products and compliance track record."

Jing also noted during the call that 3SBio is working to establish compliance with European good manufacturing requirements. The company "is currently in the process of hiring European consultants to assist with ... EMEA compliance," the exec said.

CIBC analyst Elliot Wilbur wrote in an Aug. 8 note that, "Despite a high level of macro uncertainty, as a leading biosimilar manufacturer, 3SBio remains a high-quality play on China's burgeoning pharma market."

3SBio began trading on the NASDAQ exchange Feb. 12 under the symbol SSRX.

-Pamela Taulbee ([email protected])

This article is reprinted from "The Pink Sheet" DAILY, Aug. 9, 2007