How This New Biotech Billionaire Outmaneuvered Merck In China

Key Concepts

• Biotech Innovation in China
• Drug Development Lag Time
• Aeso (company) and Michelle Shia
• Lung Cancer Drug: Ivanab
• Merck's Keytruda
• Licensing Agreements
• Combination Therapy
• Chinese Biopharma Success
• US Biotech Competitiveness

Michelle Shia and Aeso: Outmaneuvering Merck in China

• Background: Michelle Shia, after 12 years in US biotech research, returned to China and recognized the significant lag (8-10 years) in access to new medicines compared to the US. She observed limited innovation, with China primarily producing copies of US drugs.
• Aeso's Founding: In 2012, Shia, along with three co-founders (two former Crown Bioscience colleagues), launched Aeso in Jang Shang, China, aiming to accelerate drug innovation. She assumed the roles of CEO, Chairwoman, and President. Aeso is named after the Greek goddess of healing.

Ivanab's Success and Market Impact

• Phase 3 Trial: Aeso's lung cancer drug, Ivanab, demonstrated superior performance compared to Merck's Keytruda (a $30 billion drug in 2024 sales) in a Phase 3 trial in China.
• Financial Impact: This success led to a near tripling of Aeso's share value in the past year, making Shia a billionaire with a $1.2 billion fortune based on her family's 8.5% stake. She is one of only nine Chinese women billionaires in healthcare and one of 13 self-made women billionaires in healthcare globally.

Aeso's Innovation and Combination Therapy

• Innovative Approach: Aeso's cancer compound combines two existing methods into a single injectable drug: stimulating the immune system to attack cancer cells and starving the cancer by cutting off blood supply to tumors.
• Licensing Agreement with Summit Therapeutics: In 2022, Summit Therapeutics licensed Ivanab from Aeso for markets including the US, Canada, Europe, and Japan.
• Robert Booth's Quote: Robert Booth, a board member at Summit Therapeutics, highlighted Shia's confidence in her scientific judgment, stating, "Usually that strategy of combining two methods is significantly ignored. Michelle wasn't afraid to try that. She is confident in her own scientific judgment."

Rise of Chinese Biopharma and US Concerns

• Increased Licensing: Nearly one-third of drug candidates licensed by large pharmaceutical firms in the past year originated from Chinese companies, a significant increase from zero in 2019, according to Deal Forma.
• US Congressional Commission Warning: The National Security Commission on Emerging Biotechnology warned that the US risks losing its edge in biotech and recommended $15 billion in funding over 5 years to support biotech research and manufacturing.
• PWC's Perspective: Ro Vander Aker of PWC noted that China has transitioned from a "nice to watch market" to a "central pillar of global biopharma innovation" in the past 5 years, fueled by scientists like Shia who returned to China after studying or working in the US.

Aeso's Deal with Merck

• Licensing Agreement: In 2015, Aeso licensed an immunotherapy drug candidate targeting CTLA4 to Merck for $200 million. This was the first time a Chinese company licensed a lab-developed monoclonal antibody to a global big pharma firm.
• Shia's Quote: Shia stated, "That was a very good validation for us. We won that deal because of our quality and our speed."

Synthesis/Conclusion

Michelle Shia's journey exemplifies the rise of biotech innovation in China. Her company, Aeso, achieved significant success with its lung cancer drug, Ivanab, even outperforming Merck's Keytruda in clinical trials. Aeso's innovative combination therapy approach and strategic licensing deals have positioned it as a key player in the global biopharma landscape. This success, along with the broader growth of Chinese biopharma, has raised concerns in the US about maintaining its competitive edge in the biotech sector, prompting calls for increased investment in research and manufacturing.