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XIEYI Characters丨Youzhi Tong: To be listing on HKEX, victory at a steady pace over a long 11 years’ journey!
XIEYI Characters丨Youzhi Tong: To be listing on HKEX, victory at a steady pace over a long 11 years’ journey!
(Summary description)On the last day of 2019, Kintor’s application for a HKEX listing had attracted industry attention. It was reported that with this Hong Kong stock IPO listing on May 22nd 2020 and the global sale of 92
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Editor’s Letter
We only admire the beauty of blooming flowers, while its neglected former sprout withers, saturated in tears of struggle and perfused with sacrificial blood.
---BingXin
On the last day of 2019, Kintor’s application for a HKEX listing had attracted industry attention. It was reported that with this Hong Kong stock IPO listing on May 22nd 2020 and the global sale of 92,347,500 shares, Kintor would raise a sum of 240 million USD.
In summary of Kintor’s 11 years of development, there are five clinical candidates currently in the pipeline, all of them are first class innovative drugs, and many products are designated as special projects having “significance in the area of drug development” in the national 12th and 13th Five-Year Plans. The fastest project Proxalutamide is reaching maturity and about to launch. Monoclonal antibody ALK-1, which was obtained through an exclusive global license from Pfizer in 2018, is currently undergoing phase II clinical trials in Taiwan and is projected to grab a huge share of the market.
Kintor Pharma will start a new journey with its public listing on HKEX. We spoke with CEO Dr. Youzhi Tong, Kintor’s indispensable pilot, about his experiences in the turbulent and fast changing decade of new drug development in China.
Forging ahead during untimely start
Dr. Youzhi Tong received his Ph.D degree in pharmacology from Cornell University/Memorial Sloan-Kettering Cancer Center, and finished his undergraduate and master’s degree study in the Department of Chemistry at Peking University. Angion, a new drug company, was established. He was as the vice president with his department head in 2002, when he was an assistant professor at the Albert Einstein College of Medicine. Dr. Tong resigned and returned home to start a business despite the economic devastation of the 2008 global financial crisis.
Like the majority of repatriated scientists, Dr. Tong had multiple offers from multinational pharmaceutical companies that would make him the head of R&D. Instead, Dr. Youzhi Tong, together with co-founder Dr. Chuangxing Guo, decided to pursue his dream by creating his own company. The two established Kintor Pharma in 2009.
When Dr. Youzhi Tong recalled the early days of the company, he would often give a small smile and summarize those years with a single understated word - “untimely”. The first obstacle was to raise the enormous amount of money necessary to do novel drug research, in an economy that was still struggling to recover from the 2008 recession. During those early days, China’s research capacity was still quite limited, and few people showed interest in funding new drug research. Even in 2015, when the pharmaceutical industry started to receive first wave of financial assistances from the national policy, investors still remained tepid towards small molecular novel drugs R&D companies. As a result, Kintor’s financial status continued to be precarious, even after the economic recovery.
Fortunately, the six years of executive experience accumulated at Angion gave Dr. Tong multitudes of courage and experience that helped him build Kintor from the ground up. Unlike star start-ups that are often favored with capital in China, novel drugs companies in the US still have low valuation even if they have conducted phase I or II clinical trials. Which means unlike their Chinese counterparts, small American companies actually don’t have much VC support.
Reasonable use of resources, economization of every penny, and better risk control, was Dr. Tong’s philosophy for getting Kintor through its early stage of development. The company’s equipment in the beginning was bought from bankrupt US companies at auctions, second-hand HPLCs and LCMSs were all scavenged in this way.
In 2011, Kintor’s?preclinical androgen receptor?(AR)?antagonist project was?selected for the national "Twelfth Five-Year" major new drug creation plan, and received a special award of more than 4 million yuan. Then Origin VC and Legend Star contributed 2.5 million and 9.5 million angel investments respectively.?Although the hardships that plagued the first few years became history and the financial difficulties of development begun to ease, these investments were still a lukewarm sum compare to the enormous expense of novel drug development.
Amazingly，under the leadership of Dr.Youzhi Tong, Kintor Pharma completed pre-clinical research and filed IND application of its first novel drug Proxalutamide（GT0918）within 5 years，not an easy task in the that environment. Proxalutamide is a potential first-in-class small molecule AR antagonist for metastatic castration-resistant prostate cancer (mCRPC) treatment. At currently time, Proxalutamide is undergoing two phase III clinical trials for mCRPC in China, phase II clinical trials in the US , and phase Ic clinical trials for Breast Cancer in China. It is about to be submitted NDA as a monotherapy for mCRPC this year.
As reported by Hong Kong financial news during Kintor’s listing application, Kintor Pharma has extremely high cost effectiveness, receiving a valuation of 700 million USD while costing only US$ 100 million. In Dr. Youzhi Tong’s experience, the two factors for success in this area are: first, scientific research ability and second, the ability to select promising projects. He indicated that the research and development of novel small molecule drugs is more difficult than biological drugs. Even if there is a target, a small molecule drugs have far more patents to break through, and more research effort is necessary in order to ensure that the product is better than existing therapies.
“Unintentionally serendipitous” alopecia drug
Pyrilutamide（KX-826) for the treatment of androgenetic alopecia arouses curiosity, as it stands out among the anti-tumor drugs in Kintor’s pipeline.
The China androgenetic alopecia drug market grew at a CAGR of 8.4% from 2014 to 2018, and is anticipated to grow at a CAGR of 15.3% from 2023 to 2028, reaching an enormous 4.722 billion drug market. This is a very large market, but also an unsatisfied market.
Pyrilutamide is a potential first-in-class topical AR antagonist developed by Kintor. Currently Pyrilutamide is undergoing phase II clinical trials for androgenetic alopecia in China and the first batch of patients will be enrolled in the second half of 2020. In the US, the phase Ib clinical trials are expected to complete this year as well. In comparison to the side effects and limitations of current treatments for androgenetic alopecia, Pyrilutamide comes out on top.
According to Dr. Tong’s introduction, the discovery of Pyrilutamide was “Unintentionally serendipitous”. Pyrilutamide is an androgen receptor (AR) antagonist which was developed while searching for a prostate cancer drug. In prostate cancer, over active androgen receptor pathway is the driver of cancer, however in hair loss and Acne, it also plays a key role.
During the compound screening process of the first project (Proxalutamide) the R&D team found Pyrilutamide. Due to its poor stability in human body, it was not suitable to be formulated as an oral drug despite its high activity. Instead, Pyrilutamide was developed as topical drug. In this way, it could be effectively used in treatment of alopecia and acne. At same time, its external application could greatly reduce side effects and risks. Based on these considerations, it was determined that Pyrilutamide was a candidate for topical use.
There are currently two hair loss treatments on the market. One is Minoxidil for external use, and the other is oral Finasteride. Minoxidil lacks clear evidence for its mechanism and has possible adverse reactions (allergy to propylene glycol and orthostatic hypotension), leading to its limited usage. Finasteride is an androgen antagonist will reduce internal androgen level after oral usage, also leading to side effects including sexual hypo-activity, erectile dysfunction, and impotence.
Compared with the existing androgen alopecia treatment drugs, Pyrilutamide has significant advantage. Topical medication directly acts on the affected area and produces a pharmacological effect at the targeted site without affecting systemic hormone levels, on top of having better safety profile.
Pfizer extends an Olive branch and Kintor enters biologic field.
Novel drug R&D is like sailing against the current; either you keep forging ahead or you end up falling behind.
In the environment that the development of China's biopharmaceuticals is in full swing, Kintor Pharma constantly adjusted its strategy. In 2018, Kintor Pharmaceutical reached an agreement with Pfizer. For the first time, Pfizer granted the right to develop a new antibody drug to a local Chinese company, and ALK-1 monoclonal antibody was developed.
During the early stages, the focus areas for Kintor were mainly centered around independent research and development of small molecule novel drugs. Dr. Tong also expressed in the previous interview that he hopes to introduce clinical development products including biological drugs. After Pfizer took the initiative to extend an olive branch, Tong Youzhi and the team reconsidered. The introduction of pre-clinical projects is a big challenge for Chinese pharmaceutical companies, so it might be better to develop products that already have early clinical data. The ALK-1 monoclonal antibody drug had completed phase I clinical trials, and preliminary antitumor activity had been observed in patients with advanced liver cancer.
To demonstrate incremental improvement, a reasonable products pipeline layout should introduce new project every year or so. Kintor’s products pipeline happened to have a blank period after Proxalutamide. Additionally, it’s a rare chance for a local Chinese company to cooperate with a big pharmaceutical company like Pfizer. Now, Monoclonal antibody ALK-1 is about to undergo phase II clinical trials, and is anticipated to be a flagship product that will drive Kintor’s R&D on the biologics front.
For the phase II clinical trial of monoclonal antibody ALK-1 in combination with Nivolumab (PD-1 antibody) for metastatic HCC, Kintor will directly use drugs product manufactured by Pfizer. It will undergo international multi- center phase II clinical trials, focusing on the Asian market.
In the subsequent clinical development of ALK-1 monoclonal antibodies, Dr. Youzhi Tong would like to develop more combination therapies. Besides the PD-1 combination therapy, it also has the potential to have an additive effect with VEGF. The team thinks that due to the antibody’s anti-angiogenesis effects, it could be a suitable partner for many VEGF drugs, such as wAMD. If it succeeds, it will be another direction for non-neoplastic indication.
Rome was not built in one day, and similarly, establishing a complete closed-loop pharmaceutical company including small molecule and biologic drugs R&D, clinical development, production and commercialization, remains to be a challenge. In reference to whether there will be wider layout of biologic drug projects in the future, Dr. Youzhi Tong stated that Kintor has the ability to do the R&D, but lacks the production capacity for the early-stage biologic drugs. He says that the R&D portion is basically the same between biologic drugs and chemical drugs.
Many domestic small molecule pharmaceutical companies want to make this transition. When talking about what he can share in this regard, Dr. Tong Youzhi said that the transformation actually includes two levels, one is the transformation of the technical level, and the other is the transformation of capital investment.?In terms of technology, it is fairly hard for talents in small molecule to shift to biologics. He suggested starting from clinical trial products while establishing an early-stage R&D team. It’s an arduous process to set up a complete industrial close-loop company.
Going to market in Hong Kong, the first step towards a global Kintor
At present, the risk in the domestic market is high. Evaluation bubbles for Chinese pharmaceutical companies come from overly optimistic expectations for the domestic novel drug companies. In addition, with the continued changes of national policies and the control of drug prices, the profit margin for domestic innovative drugs has gradually declined. And at this time, it has come to be in line with international standards.
To be in line with international standards is to test the two capabilities of a company, namely the scientific research capability and the BD capability mentioned above. These two capabilities determine whether a company can stand out from the crowd.
In mentioning Kintor’s future performance in Hong Kong stock market, Dr. Youzhi Tong indicated that in general, biologic companies draw more attention than small molecule companies. It is difficult for companies working with small molecules to be successful in the market. Dr. Tong says that kind of sentiment is an outsiders’ perspective, knowledgeable players will remain focus on the core business.
The best way for a company to develop is to take each step firmly. Solid growth entails both the increasing of core capabilities and also the increasing the company’s valuation and future return to its investors. Companies should aim for steady growth without too many surprises. We should learn to apply public perspective since the opinion of the masses decides the company’s value.
Kintor Pharma has introduced three superior cornerstone investors including Gree Group, Highlight Medical, and Foresight Orient when it was listed on HKEX. Their subscribed shares totaled to115 million USD, showing full recognition of the company’s potential for growth.
In the end of this interview, Dr.Youzhi Tong’s outlook was that novel drugs are not only for Chinese patients but also serve global patient population as well. He hopes that Kintor will be a company that not only meets Chinese medical and medicine needs but also has a global outlook. At the same time, he hopes to build a complete platform for the entire industry chain of innovative medicines, from the early research and development, production and future sales, etc.
The construction of Kintor’s manufacturing base in Suzhou Industrial Park is nearly complete and will be fully functional in 2020. Nowadays the Chinese pharmaceutical market is so trendy, it is impossible to achieve more while swimming against the current. Dr. Youzhi Tong spoke of bigger dreams, including the construction of an API manufacturing base.
Let’s congratulate the Kintor’s anticipated listing on HKEX this week and the beginning of new journey.
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