Drugs development firm Vectura has set up a business in China to tap into the country’s growing market for respiratory products.
The new company will initially exploit Vectura’s Clickhaler and Duohaler dry powder inhaler (DPI) technology platforms to address current unmet needs in the Asian asthma and chronic obstructive pulmonary disease (COPD) markets.
Chippenham-based Vectura says recent estimates suggest around 25m in China suffer from asthma and a further 42m from COPD, with this forecast to increase to nearly 56m by 2021.
The new business, Tianjin Kinnovata Pharmaceutical Company Limited has been launched with two partners – Tianjin KingYork Group Company Limited, a leading Chinese pharmaceutical company and specialist manufacturer of corticosteroid based products, and Zendex Bio Strategy Inc, a private equity investor based in Hong Kong.
Vectura chief executive Dr Chris Blackwell said: “There is a clear, large and growing need in China and other Asian markets for more affordable, locally-produced asthma and COPD products and, for some time, we have been looking for the best means of entry.
“Combining Vectura’s established technology with KingYork’s local regulatory expertise and experience in corticosteroid products, Kinnovata has an opportunity to capture a significant market share of the growing Asian respiratory market.”
Kinnovata will be an independent company with its own development and manufacturing operations located in Tianjin.
KingYork is expected to hold a 50% equity share; with Vectura holding 35% and Zendex and partners 15%. Vectura’s holding is expected to have a nominal value of RMB 140 million (£14.6m) on close. Vectura will also receive royalties through to 2030 on certain products sold by Kinnovata. The equity stake and potential future royalty streams equate to the value attributed to the intangible and tangible assets relating to the Clickhaler and Duohaler devices. The assets include manufacturing equipment, formulation know-how and the regulatory dossiers for European approved products including salbutamol and budesonide delivered in Clickhaler.
KingYork and Zendex are expected to contribute assets of RMB 260m including cash of £19.8m, certain technology assets, intellectual property and land at KingYork’s pharmaceutical business park in Tianjin where Kinnovata will establish its manufacturing facility. Chris Chan, previously an advisor to Zendex, has been appointed CEO of the company.
Vectura has been working with KingYork and Zendex since late 2011 on the development of the product pipeline. Vectura is also providing training and other expertise to Kinnovata as the company prepares to undertake its first Clickhaler clinical studies in Chinese patients. An application for the import of Asmasal Clickhaler (salbutamol) has been filed with the Chinese State Food and Drug Administration (SFDA).
In addition, a separate R&D cooperation agreement has been established between Kinnovata and the Shanghai Institute of Pharmaceutical Industry to undertake the development of a number of DPI products on behalf of Kinnovata.
Completion of the transaction is subject to final Government clearances in China. Kinnovata is expected to be loss-making for at least 24 months following establishment.
