CEO Conversations Installment VII: Dr. Ko-Chung Lin, Founder & CEO, PharmaEssentia (6446 TT), Part I
Pioneers like TSMC, Roche, Pharmacia and Amgen guide KC Lin’s vision
“Some business models can be very successful in Taiwan, but can’t be duplicated elsewhere, not even in the US. PharmaEssentia is based in Taiwan, so we need a mixed business model that is uniquely our own, and which does not simply copy existing models in the US biotech industry.” - PharmaEssentia, CEO and Founder, Dr. Ko-Chung Lin.
The founder and CEO of PharmaEssentia, Dr. Ko-chung Lin (KC Lin), is an earnest man, and he wastes no time getting to the point.
“TSMC is a good example, ” says KC. “It is the world’s 14th largest company by market cap. The company invests a huge amount of capex each year and is very successful. You can’t find any other company like TSMC in the US, or anywhere else in the world. This is the reason that I tell my employees, we must create a business model in Taiwan that no one can replicate. ”
The founding team named the Company “藥華” in Chinese because they believe the conditions are suitable in Taiwan to support 1-2 global biotech companies. “藥” means ‘medicine’; while “華” is a term which represents the entire Chinese race and its thousands-year-old, rich culture. KC points out, “Roche and Novartis are two biotech giants in Switzerland. The two companies are located so close to each other, and both booked more than US$45bn in revenue last year – it is so impressive! There are also many biotech companies with US$1bn or more in revenue surrounding them, forming a true biotech cluster. Sweden is not a big country, but they were able to incubate Pharmacia, which later went on to merge with Upjohn, to form Pharmacia & Upjohn. The company subsequently merged with Monsanto’s Searle division before being acquired by Pfizer. There is another orphan drug company called Sobi in Sweden, which has been very successful.”
It is likely that Taiwan will have 2-3 global scale pharma companies in the future
KC continues, “These examples have strengthened my belief in the idea that Taiwan can be a biotech hub in Asia. It is very likely that Taiwan will have 2-3 global scale pharmaceutical companies in the not-to-distant future. In the past 20 years, many scholars and scientists have come back to Taiwan with knowledge and experience. PharmaEssentia certainly is a bellwether, but it hasn’t been easy blazing this trail.”
“But being a pioneer is difficult, right?” KC asks rhetorically while pointing out that Amgen’s early road was anything but smooth. Dr. Lin Fu-kun, one of PharmaEssentia’s co-founders, developed Erythropoietin (EPO) early in his career, while still at Amgen. In the mid-1980s, he came to Taiwan to look for US$ 19mn in funding to push EPO to phase II trial. They approached a reputable Taiwanese electrical appliance company for investment. “Back then, Taiwan’s leading home appliance producer didn’t understand EPO or why people needed it. They were happy with the sales of their signature home appliance product lines. So, they didn’t invest. Then Amgen turned to Japan and Kirin Holdings invested in the project. After a few years, the project entered Phase III trials, but they ran out of money yet again! So Amgen licensed out all indications except anemia caused by dialysis, to Johnson & Johnson (JNJ) for US$ 40mn. JNJ was well aware of the potential applications for EPO, in particular that there was a huge market for anemia caused by chemotherapy. In fact, this was JNJ’s first step on the road to becoming a successful biotechnology company.”
New drugs in an existing market often expand the total addressable market
Shifting the subject to new drugs in an existing market segment, KC continued his biotech history lesson, “After Amgen’s Epogen and Neupogen successfully launched, the company’s revenues exceeded US$ 1bn in 1990. Later on, Biogen introduced Avonex, otherwise known as interferon beta-1a, for multiple sclerosis. By 1998, sales exceeded US$ 1bn. When Biogen began developing Avonex, there was only one drug – Betaseron (Bayer) for multiple sclerosis in the market, and annual sales were US$ 500mn. Biogen’s entire management team believed that – as the 2nd drug in the market – Avonex’s peak sales would not exceed US$ 500mn. Only the President and CEO of Biogen, James Vincent believed that Avonex would become a billion-dollar drug – and he was right. His theory was, ‘You can expand the market rather than compete with existing drugs.’ Now, the total multiple sclerosis market is worth US$25bn.”
KC’s eyes brightened as he drove home is next point, “PharmaEssentia is working on 2 indications, polycythemia vera and essential thrombocytosis. These two indications can be compared with EPO and GCSF, which helped to forge Amgen. They have the potential to turn PharmaEssentia into a global biotech company of scale.”
PharmaEssentia’s target is to reach US$ 1bn in sales in the US market within 5 years
When investors visit PharmaEssentia, the most frequent questions they ask are:
1) What are polycythemia vera and essential thrombocytosis?
2) Why does PharmaEssentia believe there is huge market potential ahead for its flagship drug, Ropeginterferon?
Polycythemia vera (PV) is a rare blood disease. Along with essential thrombocytosis (ET) and myelofibrosis (MF), these diseases are categorized as myeloproliferative neoplasm (MPN). PV and ET each currently affect about 160,000 patients in the US, putting both diseases in the orphan disease category (hurdle = less than 200,000 patients). “Although the occurrence is low, but for patients who get it, it’s 100%,” says KC empathetically.
The extra red blood cells produced by the body because of PV make the blood thicker than normal. When one compares a PV patient’s blood with that of a healthy individual’s blood after centrifuge, there is much less blood serum, and a proliferation of blood cells, left over in the sample from the PV patient. Symptoms include blood clots, heart attack, stroke, headaches, blurred vision, blind spots, gouty arthritis and an enlarged spleen. Some patients even develop a spleen the size of a bowling ball. The condition not only lowers one’s quality of life, but can also be life threatening. Over time, PV can develop into myelofibrosis, and also sometimes leads to other blood cancers, like acute myelogenous leukemia. Median survival in patients with PV is approximately 14 years overall, and 24 years for patients younger than 60 years of age.
“No first line drug has been approved for PV in the US and most other countries so far” says KC. Some doctors treat the disease with phlebotomy (bloodletting) + low doses of aspirin to lower the red blood cell count, and reduce the risk of clots. But this is just an initial treatment and cannot stop the progression of the disease. For high-risk patients, some doctors use Hydroxyurea (HU), a chemotherapy drug approved in 1967, to inhibit red blood cell proliferation. However, the drug was not designed for long term use. “We’ve seen patients who take HU for an extended period develop serious rashes and even stomatitis. Some patients develop holes in their mouth, and find eating difficult. It is so sad.” Moreover, HU loses its efficacy quickly. Within 2 years, less than one-half of patients still respond. As soon as HU fails, most doctors turn to second line drug Ruxolitinib. Ruxolitinib is the only drug approved for PV, and it provides excellent control over spleen size. But it cannot fundamentally change the progression of the disease. The drug has also been found to suppress immune response in patients, leading the UK’s MPN Voice (mpnvoice.org.uk) to issue a warning that Ruxolitinib can make patients more vulnerable to COVID-19 and/or worsen the outcome of contracting COVID-19.
Ropeginterferon is the most advanced form of interferon
Ropeginterferon is a new, long-acting interferon. Compared with similar drugs in the market, the duration of efficacy is doubled and there are less adverse events. Clinical trials show Ropeginterferon is better than Hydroxyurea in controlling blood cell count, controlling symptoms and in reducing side effects. And it has much longer efficacy as well. Close to 70% of the patients show molecular response, which means the gene mutation causing PV cannot be detected anymore.
KC proudly says: “One of the hematologists, also a key opinion leader, reviewed our data and was surprised to finally see a drug that really can treat polycythemia vera with low side effects, after so many years of practice. For me, hearing that is very exciting.” In the future, PV patients will have a safe, effective and convenient treatment option.
Data from a ground-breaking new study and the outbreak of COVID-19 are likely to drive a paradigm shift in the treatment of MPNs.
Ropeginterferon obtained approval from the European Medicines Agency (EMA) in February 2019. Says KC, “We are pleased that patients in 13 countries in Europe can now enjoy the benefits brought by Ropeginterferon. We also believe that the outbreak of COVID-19 and a ground-breaking study conducted by Dr. Tiziano Barbui will lead to increased use of Ropeginterferon in the treatment of MPNs.”
Ropeginterferon can up regulate the body’s immune system response
As COVID-19 has spread around the globe, it has become apparent that the disease is highly infectious, its mortality rate is higher than influenza, and that there are no reliable and effective vaccines or treatments so far. MPN patients are mostly elderly people with higher cardiovascular risk, with greater vulnerability to COVID 19 than those with healthy immune systems. As a result, the use of drugs that inhibit immune response is even riskier now than in more normal times. In addition to treating PV and alleviating its symptoms, Ropeginterferon can up regulate the body’s immune system response, rather than inhibiting it. This is a clear advantage over Hydroxyurea and Ruxolitinib, both of which have been shown to inhibit immune system response.
Ropeginterferon has the potential to greatly improve quality of life for all PV patients
In line with KC’s point that innovative new drugs can expand the size of the market for a given indication, a 2019 phase II trial on low-risk PV patients conducted by MPN expert Dr. Tiziano Barbui indicated that Ropeginterferon has the potential to improve quality of life for up to 100% of PV patients. Previously, it was believed that only high-risk PV patients (60% of all PV patients) need Ropeginterferon, HU or Ruxolitinib, to control their illness.
In the past, the standard of care for low-risk polycythemia vera (40% of total cases or about 60,000 patients in the US) has been to avoid the use of advanced drugs, and to treat the disease with low doses of aspirin plus bloodletting to manage cardiovascular risk. Dr. Barbui used Ropeginterferon combined with standard of care and compared the results with standard of care only. The results showed that the combined treatment provides better control of blood cell count and no progression of the disease. These patients’ quality of life and prognosis can be greatly improved if the standard of care for low-risk patients is upgraded to Ropeginterferon.
Says KC “What we have just discussed are developments that have occurred in only the past 12 months. We believe Ropeginterferon can bring a paradigm shift into MPN, to enrich the tool set that physicians have to help defeat this disease, and to bring the patients more comfort.”
More about PharmaEssentia:
PharmaEssentia is attending QIC’s CEO Week on Air, which began on 8/31. Click here to find our CEO Conversations Special Edition for CEO Week On Air and to learn more about PharmaEssentia. Click here to find an introduction to the company and basic financial data.
If you would like to arrange a meeting with Dr. Ko-Chung Lin, please contact yvonnehuang@qtumic.com