Biotechs have always kept the technical details of drugs under development confidential. Over the past year, however, the degree of secrecy within the US biopharma industry has reached an unprecedented height.

Recently, Endpoints News interviewed over 20 biotech founders, pharma executives, and investors. They generally expressed that, with the rise of China’s biotechnology industry, a wave of secrecy has swept through the US biotech sector. Chinese pharmaceutical companies have proven capable of quickly decoding experimental therapies developed in Europe and the US and optimising them into similar, sometimes better products. Consequently, keeping critical information such as early-stage pipeline targets strictly confidential has become a countermeasure.

Maha Radhakrishnan, executive partner at the life sciences VC firm Sofinnova Investments, stated bluntly: «Their agility at getting similar assets out faster is just mind-boggling. From a US standpoint, we have to be much more careful, much more guarded and much more serious when it comes to disclosing novel modalities, platforms, mechanisms of actions and approaches to delivering therapies».

«In speed, scale and agility, China wins», said Seema Kumar, CEO of the life sciences incubator Cure. «The moment you think you have invented or discovered something new, you can be assured 10 other people around the world have thought of it. The thing is, who is going to act on it first?».

The More Innovative the Drug, the More at Stake

The question raised by Kumar reflects the anxiety of US biotech firms, and its answer points towards China.

In today’s Chinese biopharmaceutical industry, small-molecule drug developers have mastered methods for the rapid synthesis of entirely new drugs, while developers of biologics can quickly screen for antibodies through iterative methods. This model of extensive trial and error is virtually unfeasible in the US, where the costs of laboratory personnel, reagents, and animal testing are far more expensive.

As innovative drugs move towards new frontiers, the question of who can bring ideas to fruition faster becomes even more sensitive. This is because in fields such as RNA and gene therapies, breakthroughs often consist of ideas such as new targets and mechanisms, whereas the actual development threshold is significantly lower.

For traditional small-molecule or antibody-based drugs, even if the target is known, designing an entirely new molecule still requires a substantial amount of time and laboratory development. However, for RNA therapeutics, knowing the target allows for reverse engineering. Combined with the fact that genes and drug targets themselves cannot be patented, it is easy to understand why US biotech companies in this sector are extremely tight-lipped about their discovered targets.

NewLimit, an up-and-coming company focusing on the research and development of anti-ageing therapies, serves as an example. The company claims to have identified a set of genes that, when encoded into mRNA drugs, can produce therapies that rejuvenate cells; however, it keeps core details, such as the targeted genes, strictly confidential.

Jacob Kimmel, co-founder and CEO of NewLimit, previously had experience in chemical drug R&D. By comparison, the R&D logic for RNA therapeutics is entirely different: «We would often disclose the target but we would never share the structure, because the structure was the novelty. We actually just kind of invert what is difficult and what is easy in this new world», he noted in relation to how the key now lies in identifying the gene, after which drug development is straightforward.

Biotech firms focusing on siRNA therapeutics share the same misgivings. For instance, Moonwalk Biosciences, which develops diabetes and obesity drugs based on siRNA technology, also keeps its core discovery – the genes capable of exerting specific effects – strictly confidential.

Alex Aravanis MD PhD, CEO of Moonwalk Biosciences, explains: «Because siRNAs are fairly easy to develop – you just need to know the sequence of what you’re targeting and then do some optimisations – I’m very concerned that if our targets get out and we’re not far enough ahead, there will be a lot of fast-followers».

Competition exists not only between Chinese and US biotech firms, but also among multinational pharmaceutical companies. Recently, several multinational pharmaceutical corporations – including AstraZeneca, Eli Lilly and Company, Genentech, and Novartis – have reached agreements with Chinese siRNA companies, such as Argo Biopharma, CSPC Pharmaceutical Group, and SanegeneBio.

«Global pharmaceutical companies, including those based in the US, are generally cautious about disclosing targets and indications during the early stages», observed Na Meng, vice president of capital markets at Sanegene. «This trend is also reflected in our collaborations with Genentech and Eli Lilly; at the request of our partners, the potential targets remain confidential», she revealed.

Craig Gordon MD, founder and CEO of GordonMD Global Investments® LP, predicts that the trend of secrecy regarding pharmaceutical pipelines will become an industry norm, with small-to-medium startups following in the footsteps of Big Pharma, which has always kept early-stage R&D strictly confidential.

However, he also pointed out that this trend may lead to a divergence among investors: it will become increasingly difficult for secondary market investors to access early cutting-edge scientific progress; primary market VC firms will still sit in the front row to participate in startup R&D, even if their information is no longer as transparent as before.

US Pharmas Fasten Their Patent Defences

It is clear that the anxiety of US biotechs is directed more towards Chinese pharmaceutical enterprises.

Gang Lu, CEO of GluBio Therapeutics Inc, admitted bluntly: «If you decide to work on a first-in-class program, then you can’t avoid competition. No matter which target the US biotech startup works on, the moment they publish the patent, there are much better, fast-follow programs in China with a much cheaper price». GluBio specialises in novel molecular glue degraders and has established two R&D centres in China and the US, setting up biology and chemistry teams respectively.

Lu pointed to patent disclosure as a key point. In the current competition within the Sino-US biotechnology industry, patents are viewed by US biotechs as the last line of defence.

Several executives expressed to Endpoints News that Chinese competition has been incorporated into their companies’ patent filing strategies. Two response strategies have emerged in the industry: first, substantially delaying the time of patent filing; second, submitting provisional patents first, then withdrawing and re-filing them before the deadline.

John F. Crowley, CEO of the Biotechnology Innovation Organization, also believes that patent reform is key. He envisions that patents could be published three to five years after submission rather than the current 18 months, whilst the first-to-invent system could be restored to replace the current first-to-file system. «Maybe, like in the defence industry, we can have protected patent filings, either redacted or classified».

Amidst this industrial atmosphere, Endpoints News also pointed out that there are currently almost no publicly credible accusations of direct technology theft. At the same time, the US industry’s description of the Chinese biopharmaceutical sector remains one-sided and simplistic.

Judith Ng-Cashin, M.D., chief medical officer at Novotech, is responsible for coordinating global clinical trials, which include a large number of Chinese projects. In her view, many misperceptions about China exist; US companies overestimate China’s advantages in clinical trial speed and low costs, or hold onto outdated prejudices, believing that Chinese companies will steal US innovation.

«Protection of IP in China has been an issue in the past. I think that it’s much better now. And I think that there is a geopolitical climate in the US that gives license to scapegoat China», she stated. «It’s such an American ethos to think, 'Well, obviously, we’re the best and fastest and bravest'», Ng-Cashin added.

The anxiety within the US biotech industry reflects that Chinese developers are expanding from outsourced manufacturing to clinical development by leveraging advantages in population, infrastructure, and efficiency, and are now pioneering towards cutting-edge innovation.

In June this year, a report comparing the competitiveness of the Sino-US biotechnology industries published by Cure pointed out that the US leads in the metrics of capital, commercialisation, and talent reserves, whilst China holds a clear advantage in clinical development and supply chain resilience. Meanwhile, in terms of scientific discovery, the US holds only a marginal advantage over China. This is perhaps the reality that the US biotechnology industry most needs to confront.

Lu stated bluntly that at this stage, US companies still maintain an advantage in the arena of first-in-class new drugs, but this advantage will not last forever.

«Things are changing. If you look at publications in top-tier journals, there are more and more Chinese academic labs publishing breakthrough discoveries in every field. You’re going to see that wave of drug discovery coming, and I can guarantee the US scientists will be surprised at how the Chinese companies are catching up and taking over», he noted. «We have the knowledge, we have the technology, and we have the expertise, we have even more commitment to success», he said, referring to Chinese pharmaceutical companies, before concluding: «You can’t prevent that».