Hedge Fund Launches LianBio, Aims to Bring New Drugs to China, Other Asian Countries

Aug 13, 2020 | Investor Watch, News

Hedge Fund Launches LianBio, Aims to Bring New Drugs to China, Other Asian Countries

Perceptive Advisors, a hedge fund known for investing in biotech firms, has seeded its first startup, LianBio, with the goal of bringing new drugs to China and other Asian countries. LianBio has launched with partial rights to multiple drugs for heart disease and cancer, including one close to a Food and Drug Administration review. More deals are likely coming, and the company could have upwards of 100 employees next year, said Perceptive chief investment officer Adam Stone.

Recent government reforms in China have allowed for drug development and approval timelines to move quickly. This has made it easier for foreign companies to win clearances for drugs they had tested abroad and has created new opportunities for drug makers to enter the world’s second-largest pharmaceutical market. At the same time, China-based biotechs have flourished, and biotech investors have taken notice of the changes. Alongside large pharmaceutical companies, multiple startups have formed in the past few years to help bring new medicines to China.

Stone concedes that Perceptive, which was formed in 1999, historically had a “big blind spot” when it came to China. The firm has spent the past two years rectifying that, doing the due diligence that ultimately led to the creation of LianBio.

“We thought the best way to gain the exposure into China that we were looking for was actually to start our own company,” he said.

The mission of LianBio is to acquire rights to medicines in later stages of development, commercialize them in China, and help run additional studies to expand their use. Perceptive will be charged with picking the prospective assets, which LianBio will then take forward under a team with experience developing drugs in China.

LianBio’s management team includes CEO Bing Li, who has worked at Chinese entities including Fosun Group and large pharmaceutical companies like Eli Lilly and GlaxoSmithKline, and Chief business officer Debra Yu, who worked at the venture arm of Pfizer and was the head of cross border healthcare investment banking at China Renaissance Securities.

LianBio’s current portfolio includes mavacamten, developed by MyoKardia, which recently succeeded in a Phase 3 trial for hypertrophic cardiomyopathy, a genetic form of heart disease, and could be approved in the U.S. next year. LianBio expects to run a “bridging” study — similar to the successful Phase 3 trial, but smaller — in China either before approval there or as a post-marketing study, said executive chairman and Perceptive managing director Konstantin Poukalov.

Another investment, BridgeBio, has granted LianBio rights to two cancer drugs. One of them, infigratinib, is in Phase 3 testing for bile duct and bladder cancers. LianBio also has a “first right of refusal” to buy rights to 20 drugs currently within BridgeBio’s portfolio or to those that the company acquires within the next four years, Stone said. 

LianBio will pay nearly $27 million to BridgeBio in the near term and send another $40 million to MyoKardia. Conditional payments between the two deals could add as much as $652 million to the \bill.

BridgeBio and Myokardia also hold equity stakes in the newly created company.

According to Stone, Perceptive has primarily been a “passive” investor in life sciences companies since its 1999 founding. The firm started out exclusively backing publicly traded biotechs, before dipping into “crossover” rounds and then early-stage companies through an investment in startup accelerator Xontogeny. The formation of LianBio represents an effort toward the evolution of the company. 

LianBio has already required a “significant” amount of cash — Perceptive won’t say how much — to get going. The bills will likely only increase as the company looks for other deals to add more drugs and expand into areas like inflammation and ophthalmology.

“This sort of model is capital intensive,” Poukalov says, “especially considering the pace and vision of what we’re trying to build.”