China’s BVCF targets super bacteria
“Large pharmaceutical firms aren’t putting a lot of resources into developing antibiotics nowadays because they can make more money producing drugs for chronic-related diseases, or cancer treatments,” observes Zhi Yang, founder and managing partner of China life sciences-focused GP BVCF. “However, bacteria have grown resistant to most antibiotics.”
Opportunities presented by the need for next-generation antibiotics that combat infections created by "super bacteria" that have developed a resistance to mainstream drugs prompted BVCF to lead a $25 million Series B round of investment in MicuRx Pharmaceuticals. The US-based biopharmaceutical firm is developing MRX-I, an antibiotic that could treat infections caused by super bacteria. The round also includes existing backers Morningside Group and Devon Park Bioventures. The two VC firms committed $12 million to MicuRx in 2007.
BVCF - previously known as BioVeda China - holds about one third of the company and two seats on its board. The investment comes from its latest $200 million fund - BVCF III - which is scheduled to reach a final close in coming months. In June, International Financial Corp. (IFC) announced it would commit up to $20 million to the fund, having previously invested in each of BVCF's previous vehicles.
The VC firm focuses on investments in life science and healthcare sector in China with an enterprise value of $50-100 million. The first two funds are now fully invested.
MicuRx aims to capture both the benefits of US research expertise and high quality preclinical and development infrastructure in China. In addition to supporting R&D, the new capital will fund clinical trials in China and the US. In China, it will operate through a joint venture with Shanghai Mengke Pharmaceuticals and Shanghai Zhangjiang Biomedical Industry Venture Capital.
"We hope the new drug can be recognized in every country, so we have to conduct clinical trials in several places," he says, adding that the new antibiotic is expected to launch within three years.
BVCF's team includes partners with an academic background and operational experience. It will provide MicuRx with broad contacts in the pharmaceutical industry in both China and the US, helping the firm build out its commercialization plans.
Yang says MicuRx's growth potential will improve as similar products are launched into the market by other pharma players. These include Pfizer's Zyvox, which is used to treat serious infections caused by Gram-positive bacteria.
Ultimately, the VC firm expects to exit the company through an IPO. "An industry peer, TaiGen Biotechnology, launched an IPO in Taiwan recently and raised $800 million," Yang says. "We see MicuRx achieving an even higher than that valuation because it produces a high-end, next-generation antibiotic."
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