Deal focus: Medilink chases global ADC opportunity

PD-1 is one of China’s most popular emerging classes of cancer drugs. In fact, these checkpoint inhibitor-based treatments have become so common that developers claim the space is overcrowded. With gene and cell therapies still in the early exploratory stage, antibody drug conjugates (ADCs) are seen as an attractive alternative.

“ADCs have been developing for about 100 years, but they have reached maturity only relatively recently with the emergence of next-generation technology from Daiichi Sankyo and Immunomedics,” said Tongtong Xue, founder and CEO of Suzhou Medilink Therapeutics (pictured). “It has better therapeutic effects on existing targets and it allows more targets to be developed and converted into drugs.”

ADCs kill tumour cells while sparing healthy cells. They comprise an antibody linked to an anti-cancer payload. Antibodies attach themselves to an antigen – typically proteins – that is only found in or on tumour cells. A biochemical reaction between the antibody and the antigen triggers a signal in the tumour cell, which absorbs the antibody and the anti-cancer payload. This kills the cancer.

It is a relatively new market, with only 14 ADC drugs currently approved for sale globally. However, iHealthcareAnalyst, a healthcare market research and consulting firm, estimates ADC sales will see compound annual growth of 28.5% through 2027, reaching USD 30bn. This will be driven by rising prices and rapid approvals of new treatments.

China to the world

Xue established Medilink in 2020 to address this opportunity. As CEO of Kelun-Biotech, he had overseen the development of two ADC drugs. Both are in phase one clinical trials in the US and China, and they are said to have demonstrated strong efficacy. Xue teamed up with two fellow Kelun-Biotech alumni: Jiaqiang Cai and Liang Xiao, who serve as chief science officer and COO, respectively.

Their goal is to create a global player capable of competing with Daiichi Sankyo and Immunomedics. It was thought this would be more easily achieved with a nimble start-up than a legacy drugmaker.

Medilink recently closed a USD 70m Series B led by Qiming Venture Partners and Lyfe Capital. Other investors include Legend Capital, Loyal Valley Capital and HighLight Capital. It follows a USD 50m Series A raised last year across two tranches. The first was led by Apricot Capital, a local healthcare investor; the second came from Qiming and Loyal Valley Capital.

“They are progressing very, very quickly and showing great results since the founders have extensive experience in this space. We're seeing more and more companies in our portfolio that are competing on the global stage rather than just playing in the China market. Medilink is one of them,” said Nisa Leung, a managing partner at Qiming.

RemeGen is the most advanced player in China’s ADC space. It received USD 100m in funding last year to accelerate the development of RC48, the first ADC to enter clinical trials in China. It was awarded breakthrough therapy designation status by the US Food & Drug Administration (FDA) in 2020.

Last year, US-based Seagen – formerly known as Seattle Genetics – entered an exclusive licensing agreement with RemeGen to develop and commercialise RC48 in the US and Europe. The Chinese company received USD 200m upfront with the potential for USD 2.4bn more in milestone payments.

Medilink is using newer technology than RemeGen and selecting novel rather than well-known targets. It is looking to address many of the problems encountered by Daiichi Sankyo and Immunomedics, such as plasma stability and limited release in the tumour environment. It is also exploring whether, after entering and killing one tumour cell, the drug can move on to another.

In addition to technological innovation, Xue emphasises the importance of a good clinical development strategy and a focus on clinical efficacy. Medilink submitted a formal clinical application for its first product to the FDA this month. The plan is to launch clinical trials simultaneously in China and the US later this year.

“If you make a very wide product line based on your first intellectual property, you have no energy or resources to develop the next generation of technology,” Xue said. “You must think carefully about which projects are likely to enter clinical stages over the next two years.”

Strategic positioning

Medilink is collaborating with various partners on a new generation of ADCs, with a view to out-licensing its technology and IP. While some biotech companies focus on the two main qualification criteria for a Hong Kong listing – a valuation above HKD 4bn (USD 511m) and projects in phase-two trials – Xue believes that is insufficient. Companies must be able to generate cash flow, and out-licensing is one of the best ways of doing this.

“For a biotech company, after early development of your core IP, you can work with industrial partners on clinical and commercial transformation, leveraging their resources to complete the development and verification of products,” he explained.

Medilink will also tap into the expertise of its VC backers as it positions itself to address the global ADC opportunity. Qiming, for example, has seen 23 healthcare portfolio companies go public in the past 24 months. The investor’s in-house resources include a team that offers guidance to Chinese biotech players looking to launch clinical trials in the US.

“We have so much experience in helping companies build from nothing to an IPO and beyond. There's a lot of complexity in healthcare and we are familiar with the regulatory environment not only in China but also internationally,” said Leung. “Just yesterday, we ran a training session for some of our companies seeking WHO [World Health Organisation] qualification.”

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• Topics
• Greater China
• Healthcare
• Early-stage
• China
• Qiming Venture Partners
• Lyfe Capital
• Loyal Valley Capital
• HighLight Capital
• Legend Capital
• Pharmaceuticals