Cancer breakthrough leads China’s biotech boom
David Crow in New York and Tom Hancock and Wang Xueqiao in Nanjing April 11, 2018
A few days before Craig Chase was discharged from the Jiangsu Provincial People’s Hospital in Nanjing, his doctor told him something he never expected to hear: his cancer had been cured.
“His English was not so good, so he used Google Translate. When he said I was cured, I told him it was impossible — there is no cure for multiple myeloma,” he recalls. “But he said, ‘no, you’re definitely cured’. It was unbelievable.”
Unbelievable, perhaps, but also true. When Mr Chase, now 57, returned home to America after his six weeks of treatment in China to undergo further tests, his doctors could find no trace of multiple myeloma. The blood cancer he had suffered for three years — which had threatened to end his life — was gone.
Wealthy Chinese people often travel to the US for healthcare, but it is rare to hear of someone going the other way. Indeed, Mr Chase was the first American to be treated at the Jiangsu hospital, where he underwent an experimental procedure known as chimeric antigen receptor cell therapy or Car-T.
As biotech has gone from strength to strength over the past four decades, China has been a backwater for the industry, tending to follow the west rather than pursuing its own innovations. But it is now rapidly emerging as a world leader in cell therapies like Car-T, which try to treat and even cure illness by hacking the body’s biology.
There are already more clinical trials in the country than in the US, and executives and scientists say it has several strategic advantages that could allow China to challenge US dominance, including an accommodating regulatory regime, low labour costs and expertise in precision manufacturing.
“The Chinese companies I have met are determined to become leaders in this,” says Brad Loncar, founder of the Loncar Cancer Immunotherapy Exchange Traded Fund, who recently returned from a trip to the country. “These treatments have the potential to be highly disruptive to medicine and I think they view it as a unique opportunity as new contenders to spring to the forefront of the biotech industry.”
At a time when President Donald Trump is fretting about Beijing’s plans to dominate the industries of the future, China’s push to become the pre-eminent destination for cell therapies and other evolving technologies such as gene editing would represent a major shift in modern medicine and an important marker in the growing technological competition between the US and China.
Car-T “is among the few corners of biotech in which China may have a chance to compete globally in the near to medium term . . . and even leapfrog global pace in certain targets”, analysts at Bernstein wrote in a report this year.
Mr Chase’s visit to China was not without its jarring moments. On one occasion in Nanjing, his doctor used a herbal wrap to reduce a large swelling in his ankle. “It smelled like an Italian lunch,” recalls Mr Chase, a paper broker, though he says it seemed to work rather well.
This low-tech anecdote belies the fact that Car-T is at the cutting edge of biology: it involves extracting a patient’s blood cells, re-engineering them in a lab so they can identify and destroy cancer and then re-inserting them into the body.
There are already two Car-T products for rare types of leukaemia on the market in the US, made by Novartis, the Swiss pharma company, and Gilead, the west coast biotech group. But the treatment is still in its infancy and many scientists in the field believe the biggest advances are yet to come. The next bigtarget is multiple myeloma, after which companies are expected to turn their attention to solid cancers and even infectious diseases like HIV.
Research into Car-T in China has exploded in recent years. There are currently 116 clinical trials registered in the country, according to a US government database, compared with 96 in the US and 15 in Europe, giving it a lead that would have been unthinkable when the treatment was first discovered.
“It was zero when we started [human trials] in 2010,” says Carl June, a professor at the University of Pennsylvania, who helped develop the earliest Car-Ts. “Then they caught up with us, and now they have surpassed us.”
Although the Trump administration’s recently proposed trade tariffs have targeted raw pharmaceutical ingredients from China, they would have a negligible effect on the country’s ability to pursue and export the cell and gene therapies of the future.
Mr Chase first heard about the particular Car-T that would rid him of cancer after a large clinical trial of the treatment was published last June at the world’s most prestigious oncology meeting. The gathering of the American Society of Clinical Oncology takes place each year in a conference centre by Lake Michigan, where 30,000 researchers and doctors from around the world pore over studies sponsored by the biggest pharma companies in cancer.
But the most eye-catching research at last year’s conference was presented by a Chinese biotech group that virtually no one had heard of: Nanjing Legend.
In a study of 35 Chinese multiple myeloma patients, who had all relapsed and were no longer responding to drugs, 33 participants had entered remission within two months of being treated. The response rate of 94 per cent was among the highest seen for a Car-T trial.
Excitement over the trial soon turned to disbelief in some quarters, in part because Legend was such an unfamiliar name, but also because it was based in China. Some delegates at the conference told the Financial Times that data from a company based in a country that fiddles its economic growth figures could not be trusted.
But Mr Chase, who had spent five months on the waiting list for a Car-T trial in the US, investigated Legend, spoke to its executives and decided it was a credible company.
One of his doctors was worried about how a Chinese hospital would handle the toxic and sometimes fatal side effects of Car-T — the excessive production of immune cells known as the “cytokine storm” — but he reasoned they would do as much as they could to keep him alive. A month later, he caught a flight to Shanghai. “I knew they were setting up to peddle this drug in the US, so they’re not going to take an American into their trial programme and send him home in a body-bag,” he says.
He was not the only one to take note of the data published at Asco. Investors snapped up shares in Legend’s parent company, Hong Kong-listed GenScript, which have appreciated sixfold since the positive study.
Legend also piqued the interest of executives at Johnson & Johnson, the world’s largest healthcare company. The big pharma group had been looking for a way to enter the race to develop a Car-T for multiple myeloma, and was stunned by the trial results.
“The clinical data looked superior to anything else we’d seen,” says Peter Lebowitz, who heads up oncology research at Janssen, J&J’s drugmaking division. “The data were almost too good to believe.”
But over the next few months Dr Lebowitz and his colleagues made several trips to China to carry out due diligence and became confident that Legend’s Car-T, codenamed LCAR-B38M, was a “spectacular asset”.
In December, the pair struck a deal. J&J paid Legend $350m to enter an agreement whereby the companies will share the costs of developing the Car-T and split the profits if it is approved by regulators in the US and China.
Dr Lebovitz thinks LCAR-B38M could be superior to a rival Car-T being developed in a partnership by Bluebird Bio and Celgene, two US-based biotech companies, which is generally seen as the most advanced product in the race to tackle multiple myeloma.
One reason could be that Legend’s Car-T binds to two spots on the cancer-causing protein, he says. “If you’re going to grab a basketball, then it’s easier to grab with two hands than one.”
Even if Legend’s Car-T turns out to be better than its US rival, however, it could be something of an outlier. Researchers in both countries say that despite the surge in research, China is still playing scientific catch-up.
“Legend is the exception,” says Dr June. “The rest are just Xeroxing what we’re doing in the US — there’s not much innovation yet.”
Yang Ling, founder of Persongen Biomedicine, a Chinese Car-T group, agrees. “On a technical level our country is basically following the trend in blood tumours.”
However, some biotech groups are breaking new ground. There are more than 20 Car-T trials targeting solid tumours in the the lungs, liver, pancreas, breasts and ovaries. Treatment of such cancers is a priority for Car-T companies given the vastly higher numbers of people affected by them.
Innovative Cellular Therapeutics, a Shanghai-based biotech group that counts Japan’s SoftBank among its investors, says it has also made significant progress towards turning Car-T into an off-the-shelf product rather than a treatment that is made for each individual patient. Moving from the current “autologous” model — which uses the patient’s own cells — to an “allogeneic” approach that uses donor cells is seen as a major step in reducing the cost and complexity of the treatment.
“We were followers at the beginning, but we have the potential to be a leader,” says ICT founder Xiao Yang.
The Car-T boom is fuelled by a flood of investment — reaching $10bn last year — into Chinese biotech companies, often founded by Chinese-born scientists returning from overseas. Such founders often say it is easier to obtain funding in China than the US.
With an ageing population, unhealthy lifestyles and pollution, China has a world-leading incidence of cancer, with 4.3m cases diagnosed in 2015, twice the 2000 figure. That makes recruiting patients for trials easier and is potentially a huge source of demand.
China also has strategic strengths, such as cheaper overheads and a high-tech manufacturing industry that could help push down the high cost of making a Car-T for each individual patient. The bespoke nature of the process — which is for the most part done by hand — has resulted in record prices for the treatment, which costs up to $475,000 per person in the US.
This worries Chinese patients whose incomes are generally much lower than in the US. Zhang Qi, one of Legend’s trial patients in China says that “Everyone was very anxious after the drug went on sale in the US,” because costs of even RMB1m ($158,000) would be “a huge burden for any Chinese person”.
Nanjing Legend’s chief executive Frank Zhang, who did a PhD at Duke and worked for seven years for a US pharmaceuticals company, says prices could be lower in China as manufacturing costs for Car-T can be one-sixth of those in the US.
Around 30 Chinese companies involved in Car-T trials are building a total of more than 10,000 sq m of dedicated manufacturing facilities, often with local government subsidies.
Vasant Narasimhan, chief executive of Novartis, the first company to launch a Car-T, says his group could end up turning to Chinese companies to help produce its treatments. “There’s no question there’s very strong expertise in China on automation, roboticisation and miniaturisation,” he says. “We want to tap into it if the quality is there.”
Dr June says Tmunity, a company he recently founded, could also carry out research in China, noting that many of the country’s biologists trained at universities in the US before returning home — but can conduct experiments at a much lower cost. If China continues to do such a huge amount of research, it will eventually lead to important breakthroughs.
“Part of the discovery process is just doing the human trials and studying the things that come out,” he says. “They’ll make new unexpected observations, and that will lead to new intellectual property. That’s what happens if you do enough experiments.”
Gap in the rules: regulatory loophole boosts trials in China
The proliferation of Car-T trials in China has benefited from a loophole in the regulations. As the therapy was classed as a medical technology rather than a drug, trials required only the permission of internal hospital ethics committees, rather than China’s Food and Drug Administration. That process can take as little as two months, doctors say.
US patients are only eligible for Car-T trials when all other treatments have failed; in China patients can begin after failing chemotherapy, which would be considered “first-line” in the US, says Yang Jianmin, a doctor at the Changhai hospital in Shanghai which has conducted Car-T trials.
Most of the hospital’s Car-T patients experienced adverse reactions resulting in fever, high blood pressure and in some cases dangerous toxicity in the nervous system, he says. But in cases where patients die, it is up to the internal ethics committee to decide whether to suspend the trial, he adds.
At least two Car-T trials in China have made use of the Crispr gene editing technique, which scientists in the US have so far not been allowed to use in human trials. “What would be considered irresponsible to life in the west has in fact pushed forward the development of the sector,” says Persongen’s Mr Yang. “It’s chaotic. But companies can also see quickly if their treatment is effective.”
Frank Zhang, Legend’s chief executive, says faster trials have aided his company. “The US may take a year or more, and China may be able to recruit in a few months.”
China’s drug regulator announced in December that Car-T therapies could be regulated as drugs, meaning it might approve some trials. Four companies including Legend have applied.
Analysts say that while slowing the breakneck development of Car-T in China, the decision would help prevent a “wild west” situation.
“This is the first time they’ve done it so there are components of making sure it is done in the right way,” says Dr Lebowitz at J&J. “But they also want to show that from a scientific and regulatory perspective, they can move forward as rapidly as everyone else.”
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