The Needle Issue #12

Juan-Carlos-Lopez
Juan Carlos Lopez
Andy-Marshall
Andy Marshall

The Summer BIO report “The State of Emerging Biotech Companies: Investment, Deal, and Pipeline Trends” highlights how much China-based programs have contributed to the drug pipeline over the past 10 years.

A couple of weeks ago, Bloomberg also summarized deal data showing how the share of global licensing by Chinese biotech companies has jumped over the past two years.

Judging by a report listing 16 ‘high-value’ currently unlicensed assets from China being hawked by longtime Phalanx Investment Partners analyst David Maris, there is more licensing to come.

In this context, we read with interest a recent Science Immunology paper describing a monoclonal antibody (mAb) program targeting a novel phagocytic checkpoint under development at yet another Chinese biotech: MedimScience, founded in Hangzhou City in 2021. MedimScience is one of a growing cadre of companies, including LTZ Therapeutics, Dren Bio, Chengdu Kanghong, Antengene and ImmuneOnco, looking to develop novel myeloid cell engagers/phagocytic checkpoint inhibitors.

Phagocytic checkpoint inhibitors are drugs that circumvent the molecular cloaks that tumors throw around themselves to avoid uptake and destruction by myeloid cells, such as macrophages, monocytes, and neutrophils. The strategy first came to the fore through pioneering work on the ‘don’t eat me’ signal CD47, work carried out by Ravi Majeti and Irv Weissman at Stanford. Results from their preclinical studies spurred the launch of startup Forty Seven (subsequently acquired in 2020 by Gilead) and the first-in-class anti-CD47 IgG4 magrolimabprogram.Phase 1b trial results of magrolimab combined with azacitidine in acute myeloid leukemia (AML) patients were so impressive that, by 2022, more than 20 different companies had anti-CD47 programs in clinical development. This blew up spectacularly when early trials failed to be reproduced in larger efficacy trials of combinations — failure that was largely attributed to intolerability/anemia issues related to the target, slow action/early disease progression, and a failure to account for patient heterogeneity with regard to P53 mutation status. But the strategy is compelling and the hunt for new phagocytic checkpoints has continued with new antibody formats seeking to avoid these pitfalls.

Now, Cheng Zhong and his colleagues at MedimScience report the identification of a new evasion actor — PSGL-1 — that suppresses macrophage-mediated phagocytosis in a variety of hematological malignancies. PSGL-1, which was previously known largely for its role in cell adhesion, is highly expressed in various hematologic cancers, including AML, T-acute lymphoblastic leukemia (T-ALL) and multiple myeloma (MM).

Moreover, high PSGL-1 expression has been found to correlate with poor patient survival in AML, T-ALL and MM.

Using several mouse models, the researchers found that tumors lacking PSGL-1 show slower progression, increased macrophage infiltration, and higher rates of phagocytosis by macrophages, effects that were independent of T cells or dendritic cells.

Mechanistically, the team found that PSGL-1 disrupts the interaction between the cell-adhesion molecule ICAM-1 on tumor cells and the integrin LFA-1 (CD11a/CD18) on macrophages. And when they tested Novartis’ lifitegrast, an inhibitor of ICAM-1/LFA-1 binding, they found this largely abrogates the phagocytosis of PSGL-1 knockout tumor cells, confirming PSGL1’s role in impairing prophagocytic signaling and cytoskeletal reorganization required for effective tumor-cell engulfment.

The authors went on to develop a humanized mAb against PSGL-1 and show its ability to induce phagocytosis of human tumor cells in vitro and to reduce tumor burden in mouse models of AML, T-ALL, and MM. The antibody showed a good safety profile in non-human primates with no significant toxicity at high doses. Additionally, PSGL-1 blockade synergized with chemotherapy (doxorubicin) and antibody-based therapies (anti-CD47 and anti-CD38), further underscoring the translational potential of this strategy, particularly in treatment-resistant settings.

Hot Investor Mandate: VC Fund With US and China Operations Seeks to Invest in Seed to Growth Stage Medical Devices, Diagnostics, and Digital Health

This venture capital fund was established by a group of high-net-worth individuals in China and maintains operations in the US and China. The firm is actively seeking global investment opportunities, with a primary focus on China and the United States. Opportunities based in Canada, Germany, and Switzerland may also be considered. 

The firm invests from seed and early stages through growth, with flexibility on check size for early-stage deals. For growth-stage companies, the firm typically invests $1-5M in equity in businesses with valuations up to $18-20M. Investments at earlier stages may take the form of equity or convertible notes. Thanks to an evergreen fund structure, the firm is able to take a long-term investment approach. It usually syndicates investments and seeks to partner with local co-investors, particularly for overseas deals. 

 
The firm targets high-growth sectors, including medical devices, diagnostics (e.g., portable imaging, high-intensity ultrasound, point-of-care, molecular diagnostics), digital health (particularly connected devices, telemedicine, and patient-physician platforms relevant to the Chinese market), and consumer products, especially OTC products, nutritional and dietary supplements with proven efficacy and existing market presence. 
 

The firm is indication-agnostic and prioritizes serial entrepreneurs and complete, well-rounded founding teams. It relies on local co-investors to play supervisory roles in international ventures. 

If you are interested in more information about this investor and other investors tracked by LSN, please email salescore@lifesciencenation.com. 

Hot Investor Mandate: China-Based Investment Firm Backs Companies and Funds, with Strong Interest in Therapeutics and Medtech Companies With Local Market Fit

An investment firm headquartered in China invests in both fund-of-funds and direct equity opportunities. Life sciences and healthcare represent one of its primary focus areas, though the firm maintains a multi-sector approach. Its investment sweet spot begins at the pre-A stage and extends through to pre-IPO. While the firm primarily targets opportunities within China, it is open to global companies, particularly those seeking a soft landing in China or with a strong China angle. The firm is flexible on deal structure and is open to both leading investments and co-investments. 

Within the healthcare and life sciences sector, the firm is especially interested in biotech therapeutics and medtech. On the therapeutics side, it is open to a range of modalities (excluding mRNA) and indications, with particular interest in areas such as central nervous system (CNS) disorders and oncology. On the medical device side, the firm prioritizes innovative technologies, including invasive solutions, imaging platforms, and brain-computer interfaces. It does not invest in non-innovative categories such as consumables. 

The firm does not maintain strict requirements regarding the background of founding teams, though it has a strong preference for companies that are interested in expanding into Shanghai or the broader Chinese market. 

If you are interested in more information about this investor and other investors tracked by LSN, please email salescore@lifesciencenation.com. 

Hot Investor Mandate: Early-Stage VC Focused on Deeptech Innovation, Investing in Platform and Enabling Technologies from Pre-Seed to Series A

An early-stage venture capital firm focuses on deeptech innovation, with strategic emphasis on the Cleantech and Biotech sectors. The firm acknowledges the critical role that advanced materials play in promoting both planetary and human health. 

The firm typically invests from Pre-Seed through Series A, with average initial allocations around USD $500k and reserves for follow-on participation. Geographically, the firm targets North America and Asia, and is also open to public-ready companies or those preparing to go public. 

Within biotech, the firm seeks novel therapeutics and global health-enhancing medical breakthroughs. While broadly sector-agnostic, the firm prioritizes companies with a technology backbone. Preferred areas include: platform technologies, enabling tools for drug discovery & development, and synthetic biology 

The firm is indication-agnostic, though generally less interested in infectious diseases. 

There are no strict team or company prerequisites, though the firm prefers to have an investor presence on the board. 

If you are interested in more information about this investor and other investors tracked by LSN, please email salescore@lifesciencenation.com. 

Hot Investor Mandate: Canada-Based VC Invests in AI-Driven Technologies Including Medical Devices, Diagnostics, and Digital Health Across the Globe

A venture capital corporation is based in Canada with the government serving as a limited partner participates in Angel through Series A rounds, typically allocating CAD $100K to $200K for Angel rounds and CAD $500K to $1M for Pre-A and Series A rounds. It is open to co-investments and occasionally acts as a limited partner in other investment funds. The firm seeks innovative projects that align with the interests of its affiliated operating company, which specializes in immunology-based diagnostics. 

In addition to direct investments, the firm in-licenses intellectual property from universities and engages in joint ventures with other partners. With its own internal management and engineering team, the firm plays an active role in helping startups enter the market and commercialize their products. The firm is open to working with companies globally. 

Its core areas of interest include AI-driven digital health, medical devices, and diagnostics – particularly those involving antigen and antibody pairs. The firm favors companies that are nearing commercialization and can be integrated into its existing AI platform. A board seat is typically preferred in investments. 

If you are interested in more information about this investor and other investors tracked by LSN, please email salescore@lifesciencenation.com. 

Pullan’s Pieces #4 – China, Japan, Europe, Korea vs US- Collaborate or Compete?

As a deal maker, where should I go for a deal?  Where is my competition?

There is so much written about China, I thought I would try to put it in the context of other countries.

DEMOGRAPHICS:  China is Big but low GDP per capita, Japan has the oldest population.  Both Japan and China may have reached peak population, while the US has immigration to continue growth.  China and Japan have more big cities (making clinical trial recruitment easier).

The Medical Culture varies tremendously.  

The US, with the 3rd largest population and private insurance, has the biggest market

But there are even bigger differences in the magnitude of sales of new drugs. In the US, to be in the top 10 in 2031 means double digit billions.

The biggest company R&D budgets per company are in “Global companies”.

The biggest European and Japanese companies have become global companies. 

The biggest companies in the US have 45%-70% of their Rx sales in the US.

The biggest companies in Europe have 15%-30% of their Rx sales in Europe.

The biggest companies in Japan have <10% (Takeda) to 39% of their sales in Japan. (Smaller Japanese companies have most of their Rx sales in Japan)

The biggest Chinese companies have 80-95% of their sales in China.

2024 saw a surge in approvals: In 2024, China first-approved 93 innovative drugs, with 42% being domestically developed. But China is losing domestic market share to MNCs.

The biggest Korean companies with biologics (Samsung and Celltrion) have 10-20% of their sales in Korea.  The other big Korean companies have 70-90% of their Rx sales in Korea.

But China has almost as many drugs in Phase 1 thru 3 as the US, in almost as many companies as in the US.  

There are more companies getting series A in the US and in China but the dollar amount is smaller in China. 

The US leads in IPOs

But the Hong Kong Hang Seng Biotech Index was up 87% year to date (while the US XBI was down 6%).  

Europe is active in company acquisitions, but Asia is not.  

For companies with headquarters in the US, Europe, Japan and Korea:  most partnering deals are early and with more in-licensing than out-licensing. 

China does more out-licensing than in-licensing.  

So as a deal-maker, what do I think this data suggests?

1)  You need to capture value from the US, the biggest market and home of blockbusters.

2) US companies do the most in-licensing. US and Europe do the most M&A.

3) The most deals in 2024 and 1st Half of 2025 are still done at discovery and preclinical.

4) Japanese companies are increasingly global companies and do more in-licensing than out-licensing.

5)  China is a source of drugs to bring in, with many drugs in the pipeline and new series A companies needing partners to maximize their value. China does more out-licensing than in-licensing.  Presumably, the huge China vs China competition is pushing Chinese companies to innovate more to compete and to do deals.   And more exits (IPOs and M&A) encourages more VC funding of innovation.

6)  But the low cost and the high populations cities (for fast recruitment) means China should be considered for collaborations for your drug development.  (Just remember you need 20% of patients in the US for FDA approval).

7) Korea is a high-income market but small.  In-licensing deals are often early or at market stage.

Pullan’s Pieces #3 – January – A Corner on Market Sentiments – Seed to Series A

As the saying goes, “What’s in a name? That which we call a Series A by any other name would smell as sweet.” Er… something like that, right? Hmmm, maybe it went a little bit differently.

But whatever it be, or not to be😊, the Seed Round is the new Series A. Clearly. I think we’ve all felt it for sometime but the data is in and the good ‘ole Series A just don’t buy what it used to. Nahhh… the Seed round does that, and it may buy more (equity) than it used to as a Series A (more data hunting and crunching required but one gets a sense that the venture capitalists are, well, capitalizing).

Labiotech does a really nice job collecting and summarizing a variety of topics related to financings and dealmaking in the biotech sector and the 2024 breakdown of funding offers the following approximations (roughly, with some rounding made by this author):

The internal breakdowns for amounts invested look like this:


Readers of this corner will know that we keep a close eye on the XBI

As usual, the outliers can skew the numbers (more on this in a moment) but the median amounts invested into these rounds puh-rihhhty much drive the nail in the coffin of the old thinking about Series dynamics. This data could be charted in another way in which an inverted bell curve would appear and a GAPING hole between $20M and $50M would stare back at you. Think about that for a moment… if you can’t get to value inflection for ~$15-20M, you better be raising $60-75M and have multiple reasons to do so as a cursory view of the companies listed in the dataset further indicates that the lower outliers (sub-median) on the Series A were generally geared for “finding out” about a single asset in the clinic.

Back to that previously mentioned outlier that can skew the averages… it also happens to bring even more of a spotlight to those famed words from Shakespeare which began this Corner on Market Sentiments. One of the companies in the 2024 data set raised a whopping $100,000,000 … as a Seed Round!! Indeed, a rose by any other name…