Ascletis Takes $100mm To Span The Pacific

For all the new business opportunities China presents in the 21st Century, it's been difficult for start-ups to find a new pharma model that brings together the best aspects of Western expertise and Chinese growth. The latest, best-funded endeavor will come from newly-launched Ascletis Inc., with lofty goals and a massive $100 million Series A round to match its ambitions.

Ascletis hopes to fund a drug pipeline that eventually flows both in and out of China, according to CEO Jinzi Wu. For now, its North Carolina-based management team plans to in-license drugs to be approved and sold in the Chinese market, selectively choosing first-in-class opportunities in that country with a goal of bringing at least one drug to market within three to five years. Meanwhile, over the next two years, it plans to build a Hangzhou-based discovery team of about 100 scientists who will identify drug candidates that can be partnered globally. Ascletis will focus on oncology and infectious disease.

Interestingly, Ascletis has chosen to eschew working with traditional VCs, tapping angels to raise its mammoth first round, which will be delivered in two $50 million tranches. On the hook for a good chunk of the Series A is billionaire Chinese real estate mogul Jinxing Qi, co-founder and lead investor of the start-up. Via his firm Hangzhou Binjiang Investment Holding Co. Ltd., Qi has worked to pull in additional unidentified private backers from China, the U.S., and elsewhere.

Wu describes Qi's financial contribution as a gesture of trust, given the investor's relative lack of expertise in the life sciences, but says the arrangement also affords the start-up a longer growth timeline than it would have with comparatively impatient VCs, who might press for an exit after a few years. (That's an increasingly familiar sentiment as we noted in this recent Start-Up feature.) Ascletis won't rule out working with VCs eventually, but Wu says the company has cash to support five years of activities.

Formed initially in December, the still-tiny Ascletis has an eight-person staff, but could have 50 scientists on board a year from now, Wu says. Alongside Wu, a veteran of GlaxoSmithKline's HIV drug discovery team, are longtime Novartis drug discovery team member Emil Fu and ex-GSK chief scientist Jun Tang. Most of the new hires will be in China, with about 20% of staff remaining in Research Triangle Park, N.C.

Ascletis's emphasis on angels and the significant cash raised make the deal stand-out. But it's desire to be a hybrid East-West play echoes a model that remains attractive to investors wary of a China-only approach. Still despite the interest in the model (especially by VCs based in Europe and the U.S.), there are few successful examples to point to. In late 2007, California-based LEAD Therapeutics Inc. raised $17 million with the goal of using China-based scientists to discover new compounds. Last year, the company was sold to BioMarin for a disappointing $18 million up front, although an earn-out could add as much as $79 million to the deal. Other hybrid companies, none funded at Ascletis's scale, have operations underway as well: ChinaBio Therapeutics is seeking to in-license drugs for development by Chinese scientists, while NovaMed Pharmaceuticals has built sales and marketing infrastructure to bring drugs to China from outside the country.

Ascletis stands to receive the second tranche of its Series A when it needs resources to manufacture and market its first drug. In the meantime, the company if focused on adding staff in the U.S. and China and in-licensing its first compound. According to Wu, Ascletis is already kicking the tires on a Phase IIb drug in an unspecified area; given Wu's stated areas of interest that may mean HIV, tuberculosis or cancer. Whichever compound it licenses, it'll be a test for Ascletis' hybrid model, and a potential bellwether. We'll be watching.

Image from Flickr user Pingouino used under Creative Commons license.