Emerging Company In An Emerging Market: CrownBio Transforms From CRO To Biotech

In a golden age of biotech in China, Crown is transforming from a biologics development service company to a mixed biotech through a planned IPO in Taiwan. Backed by its world-largest patient-derived xenograft models bank, the company is discovering oncology compounds.

PharmAsia News brings you a series of profiles on small companies in China. In the last profile, Shenogen Pharma Group Chief Business Officer Jun Bao talked about discovery and development of small molecule and biologic drugs targeted at a novel estrogen receptor variant (Also see "Emerging Company In An Emerging Market: Shenogen Aims To Combine Modern Science And TCMs" - Scrip, 8 Oct, 2013.).

SHANGHAI – Santa Clara, California-based Crown Bioscience, Inc., which has R&D operations in Beijing and Taicang, is transforming itself into a mixed biotech company from a biologic services provider. Crown recently hired industry veteran Guo-Liang Yu as executive chairman with the ambition to build the world’s largest bank of patient-derived xenograft models and go public in Taiwan.

Founded in 2006, Crown began its business by providing biologic services to biotech and pharmaceutical companies with cell-derived xenograft technology (CDX). The founders of Crown quickly found that patient-derived xenograft (PDX) was the future of the company. “Unlike CDX with a low entrance barrier, Crown is among one of the earliest pioneers to explore PDX field,” Yu told PharmAsia News in an interview.

Prior to joining Crown in March 2013, Yu was Chairman and CEO of monoclonal antibody service provider Epitomics Inc., which was acquired by Abcam PLC for $170 million in 2012 [See Deal].

Crown claims PDX can serve as human surrogate models and enable sponsors to perform Phase II-like trials on mice. By doing so, drug companies can evaluate efficacy of their compounds before human Phase II trials, which could help sponsors to design Phase II and Phase III trials.

PDX helps companies to select the best compounds to enter human trials with the conception “fail fast, fail early,” Yu said.

The company says it has established one of the largest PDX banks with more than 1,000 models. In July 2013, the company acquired UK company PRECOS, a spinoff of the University of Nottingham, to obtain its Caucasian PDX models to supplement Crown’s models from Asian populations.

Crown also works with leading cancer hospitals to establish more cancer models. The company is partnering with physicians at MD Anderson Cancer Center, one of the largest cancer hospitals, to develop PDX models for various cancers in females.

In November 2013, the company reached an agreement with Shanghai Institute of Materia Medica (SIMM) of the Chinese Academy Of Sciences, to establish the world’s first “mouse clinical trial center” in Crown’s Taicang campus, which is 40 minutes away from Shanghai.

With between RMB 130-150 million in funding from SIMM, the company aims to establish 5,000 PDX models focused on major Asian cancer types, including hepatocellular carcinoma, non-small cell lung cancer, gastric and colorectal cancers, Yu said.

A Golden Age For Biotech

The year 2013 was a good one for biotech companies; American Stock Exchange’s Biotechnology Index rose more than 50%. And good things are also happening in China. Most notable was the launch of Betta Pharmaceuticals Co. Ltd.’s Conmana (icotinib) for non-small cell lung cancer (Also see "Betta Pharma Chairman Lieming Ding On Sustaining Innovation In China: An Interview With PharmAsia News (Part 1 of 2)" - Scrip, 8 Nov, 2013.).

“Betta’s success proved two things to the biotech industry. Firstly, a ‘me-too’ drug can also achieve great commercial success in China. Secondly, and more meaningful to us, a R&D company can also bring a drug to commercial stage,” Yu said.

Inspired by Betta’s success, investors are starting to gain faith in China’s biotech companies. At the same time, Crown has proved its strength in science with partnerships with Pfizer Inc. and Eli Lilly & Co..

The company believes now is the right time to transform itself from a fee-for-service provider to a biotech company.

Crown has formed several partnerships with leading domestic companies to develop cancer compounds by leveraging its strength in science and its partners’ expertise in development. The company filed an investigational new drug application for its lead compound in both China and U.S. “We expect to begin first-in-human trials in the U.S. this year, and at the same time with help from our partner, we expect to obtain IND approval in China later,” according to Yu, who is seeking a chief medical officer to spearhead Crown’s clinical development.

Crown’s lead molecule is CBI-3103, a highly selective c-Met inhibitor that Crown believes has potential to be a best-in-class compound. The company anticipates to complete Phase I trials in 2016 at a cost of roughly $3 million.

“Eventually, our goal is to develop new drugs for patients,” said Yu, who noted the CRO industry has been evolving for years.

Many CROs have evolved to become biotech companies by entering late-stage development. China’ largest CRO WuXi AppTec Inc. formed a joint venture with MedImmune LLC to develop and commercialize a MedImmune biologic in China for rheumatoid arthritis (Also see "B-Harmony: WuXi And MedImmune Establish JV To Seize Biologics Growth In China" - Scrip, 11 Sep, 2012.).

According to Yu, Crown’s ambition is not only to bring the compound to late-stage development, but also to launch it and guide it to market. “We want to become a fully integrated pharma company,” Yu said.

Meanwhile, Yu doesn't believe the transformation will put the company in conflict with its clients. “We established these platforms open to every drug discovery researcher, which also includes ourselves,” Yu said.

Investors And Team

Like Yu, the company’s CEO and Co-founder Alex Wu finished his B.S. at Fudan University, Shanghai and his Ph.D. at the University of California, Berkeley. Prior to Crown, he worked for several startups and venture capital firm Burrill & Company. He also served at Roche as manager of business development and strategic planning.

Crown is backed by well-established VCs including OrbiMed Healthcare Fund Management, Qiming Venture Partners and investors from Taiwan.

To be more efficient, the company is trying to reduce its headcount, according to Yu, to 350 scientists and employees.

The company is focusing on oncology. Cancer has become a huge problem in China, with one-third of the world cancer population from China, according to Yu. The company also established platforms for diabetes, as China has the largest diabetes population globally with more than 90 million diabetics.

IPO In Taiwan

With close to 70% growth in its oncology business in 2013, the company is eying for an IPO in GreTai, Taiwan’s equivalent of NASDAQ. According to Yu, GreTai is the only other stock market in addition to NASDAQ that doesn't have strict revenue requirements for an IPO (Also see "Chinese Biotechs Lining Up For Cross-Straits IPOs In Taiwan" - Scrip, 6 Feb, 2014.).

By summer 2015, the company plans to trade on GreTai’s emerging market as an “emerging stock”, which is a half-year trading period between brokerages required by GreTai before public offering, and then go public by the end of 2015.

Another benefit of listing in Taiwan is its easy processes for follow-on stock offerings after an IPO. “Once you finish an IPO in Taiwan, you will have a public vehicle there. And their follow-on process is much easier. Therefore many companies that don't expect severe share dilution in IPOs, will choose Taiwan. As the stock price rises, they can raise more funding from follow-on offerings,” Yu said.

Yu gained experience in Taiwan’s capital market during Epitomic’s IPO plan in Taiwan; however, it withdrew due to Abcam’s takeover in 2012.