China genomics: Coded messages

When NextCode Health spun out of Iceland-based DeCode in 2013, the company took with it a large-scale IT platform built on the world's biggest single set of genome data, covering 400,000 people. These data form the basis for virtually all of the world's population genomics projects. 

Now merged with Chinese giant WuXi AppTech, the company wants to monetize this database globally: selling its services to research institutions and clinical centers, and also to mass-market consumers.

Last year, the company – known as WuXi NextCode – launched three direct-to-consumer products for the Chinese market, providing diagnostic tests for rare diseases, carrier screening for unborn babies, and whole-genome wellness scan that can help identify generic risks early on. It plans to assemble a new set of genome information from the Chinese population, and use it to find more clues on tackling diseases.

For instance, Amgen, of which DeCode is a subsidiary, developed a drug that treats heart disease, but in doing so found that it turned off a gene called TCSK9 that is active in the human body. Using DeCode's data collected from individuals in the West and the East, and analyzing it with the IT platform that WuXi NextCode is now developing globally, Amgen was able to check if disabling TCSK9 had side effects on different groups of people.

“This is the power of the big data – even before you develop a drug, you know what its effects will be. The data can help companies identify better drug targets more efficiently” says Hannes Smarason, CEO of Wuxi NextCode. “That’s also why our strategy is focused on data analytics. We place greater emphasis on monetizing the information than providing genetic tests.”

Precision solutions

The global precision medicine market generated about $56 billion in revenue last year, with China accounting for about 8%, according to a Persistence Market Research report. Precision medicine – sequencing genes and customizing new drugs based on genes – is a priority for the Chinese government, which plans to invest RMB60 billion ($8.7 billion) in the space by 2030.

The latest round of funding raised by WuXi NextCode – $75 million from the likes of Temasek Holdings and Yunfeng Capital – reflects this increased interest in genome-based precision medicine, although it remains to be seen how the industry develops. Not all of the strategies being pursued will prove economically viable.

“It is a huge market. Generally it’s divided into two lines of businesses: genome sequencing and precision medicine,” says Alex Zhang, founding partner at Hosen Capital. “Precision medicine is more complicated because it involves more targeted and accurate technology. For example, it sequences only a certain portion of genome to assess whether a drug is suitable for that patient.”

Genome sequencing accounts for two of the three strands in China’s five-year-old genomics industry: gene sequencing equipment manufacturing, which features foreign players such as Illumina and Life Technologies as well as local representative BGI; and gene sequencing and testing services. Precision medicine involves data generation and analysis – exemplified by Amgen’s work with WuXi NextCode – and it is seen as having the most potential.

Hong Kong-based AID Partners recently bought GeneSort, an Israeli molecular diagnostics company that analyzes genomes in order to help doctors develop treatments tailored to unique genetic profiles. It plans to implement the technoligy with doctors in China, Japan and Taiwan, and when it has built up a strong patient database, license the data to groups developing drugs specifically for Asian populations.

“Genome-based precision medicine technology has grown rapidly over the last 10 years. We have seen a lot of new biotech companies emerge thanks to constant upgrades in computing technology and IT systems. It’s a good time to get into this industry,” says Kelvin Wu, chairman and CIO at AID Partners.

Early detection

In recent years, the most common genetic test performed in China has been the non-invasive prenatal test, which costs about RMB2,000 a time and determines whether a fetus is afflicted with a genetic disease. This segment is dominated by two companies BGI and Berry Genomics, which have formed partnerships with thousands of women and children’s hospitals to provide this service, leaving few opportunities for newcomers.

One potential opening is personal gene tests, which offers a snapshot of an individual’s health, lifestyle and personality – provided companies can access enough data from other patients to form the basis for comparison. WuXi NextCode, for example, conducts rare disease tests in conjunction with hospitals in Shanghai and Beijing, and is also assembling a team of in-house experts to provide genomic counselling services to consumers and physicians.

With personal gene testing expected to become a mass-market phenomenon, the cost of sequencing will fall, eating into providers’ margins. WuXi NextCode intends to respond by reducing the human cost, combining its database with artificial intelligence in order to automate genome reporting.

A third area of interest is early tumor gene detection. This segment is still relatively undeveloped in the US but Grail, which spun out from Ilumina, raised more than $1 billion in its most recent round of funding. The company is developing blood-based cancer testing services – with a view to spotting cancer before the symptoms appear – by collecting data on cancer patients and healthy individuals. It is also conducting clinical trials.

A clutch of oncology-focused Chinese players want to capitalize on this opportunity as well, including Novogene, Amoy Dx, Burning Rock Biotech and Geneseeq. BGI is also interested, having spun out its cancer prevention and early detection unit last year. The company, Gene+, subsequently raised RMB200 million.

“The technology for early-stage tumor detection in healthy people isn’t mature,” says Jack Li, a vice president at C-Bridge Capital. “If you’re healthy, the chance of identifying tumor cells and detecting cancer early on is very low. If you’re actually a cancer patient, it’s relatively easy to test bad cells in your blood. As such, today’s genome technology is more focused on cancer assessments and using the genome data for personalized therapies, getting to know how to get the best use of existing oncology drugs.” 

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• Topics
• Greater China
• Expansion
• Healthcare
• Buyouts
• China
• Venture
• AID Partners
• C-Bridge Capital
• Growth capital