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Interview with BeiGene CEO, John Oyler

Dec. 19, 2019

Brad Loncar, CEO of Loncar Investments, interviews John Oyler, Co-founder, Chairman & CEO of BeiGene in China.

BeiGene was founded nearly ten years ago in China with the goal of being a global leader in the development of new cancer medicines. After many years of hard work, the company is starting to see the realization of this dream. For example, BeiGene made history on November 14th when its BTK inhibitor BRUKINSA became the first new cancer medicine discovered by a Chinese company to be approved by the U.S. FDA. As both a Nasdaq-listed cancer leader and Chinese biotech company, BeiGene is the only equity currently held by both the Cancer Immunotherapy ETF (Nasdaq: CNCR) and the China BioPharma ETF (Nasdaq: CHNA). View all CNCR holdings and all CHNA holdings.

We visited BeiGene at its Beijing research facility in November. There we toured its research facilities and saw the science taking place at the company firsthand. We also met with BeiGene scientists, and visited with and interviewed John Oyler, Co-founder, Chairman & CEO. The visit happened shortly after the approval of BRUKINSA and you could feel the excitement in the air from the news. In a wide-ranging interview, Mr. Oyler tells us more about this new medicine, he explains the story of the company’s founding mission, and discusses BeiGene’s other oncology pipeline assets. Below is a transcript of our interview, which has been edited for clarity.

Loncar Funds: Can you please introduce yourself?

John Oyler: I’m John Oyler and I am one of the founders, with Dr. Xiaodong Wang, of BeiGene.

Loncar Funds: When did you found BeiGene and what were you doing before then?

John Oyler: BeiGene was founded almost 10 years ago, in February of 2010. I am a biomechanical engineer with an MBA. I worked many years at McKinsey. I have been a serial entrepreneur and have built and run companies both in oncology and the tech sector before starting BeiGene.

Loncar Funds: We are seeing a lot of important changes that are catalyzing China’s biotechnology industry today. However, back when you founded BeiGene not all of those things were visible. You could have founded an oncology company anywhere in the world, how did you choose China?

John Oyler: For me, I always wanted to be an entrepreneur and I felt that building a business background was important. I tried to build a skillset through school and through McKinsey. I wanted to do something I was passionate about. As I got to a later stage in life, I realized that my passion was fighting for life and it was from that perspective, in the early 2000s that I looked around. I did a little consulting work for startup companies and had been running a biotech company for oncology and had built a tech company and I thought the right way to build a company is to build something that can last. A lot of effort goes into building something from scratch and you put your heart and soul into it. Conversely, a lot of biotech companies at that time were being built to be sold. I wasn’t interested in that.

I think I realized that there was going to be a wave in China. So much great science was being done in the United States by scientists who grew up in China. The research team of some companies was maybe 30%-50% Chinese. I realized there was an opportunity to ride a wave as China builds its own industry and becomes part of the global system. Having come to Beijing about 15 years ago, I looked at building an organization here. The first company I built was a services company that was doing fully integrated research programs for pharmaceutical companies. After a few years, I moved on and started BeiGene with Xiaodong Wang.

Co-Founder, Chairman & CEO John Oyler and SVP, Research Head of Chemistry Dr. Zhiwei Wang.

Co-Founder, Chairman & CEO John Oyler and SVP, Research Head of Chemistry Dr. Zhiwei Wang.

Xiaodong is a good friend of mine. He is a humble man, but he is also known for his creative talents as a scientist and for being someone who can really solve intractable problems. He is very well respected around the world. About 10 years ago we had the opportunity to think about starting something together. I think we both believed that China would eventually make two major changes that would dramatically help patients globally.

The first was trying to remove some of the barriers that existed at the time to running clinical trials in China. This is very important because there is a lot of cancer in China and adding China to the global clinical science arena more than doubles the patients who can participate in clinical trials, which can accelerate the time and reduce the cost of getting therapies to patients. I think the second thing that we realized is that China will take care of its people – it really wants to get innovative drugs to cancer patients and its wants to reimburse them. We thought that when that happens, with just the sheer amount of cancer here, even if it is at a lower price point than the United States or Europe, this will bring in billions of dollars to help pay for additional resources and reduce prices for medicines globally.

In our industry, 90% of the time and cost is not around research, it is around clinical development. If we can find a way to reduce that cost, medicines can be much more affordable. In addition, if you spend all of this energy to develop a great medicine, then you want to get it to as many patients as possible and help them. Cancer is a global concern. It is not different in different countries. It is the same everywhere and we are all fighting it. If we spend a lot of money to develop something that is amazing and can help people, the more people we can get the drug to and who can help pay for the research, it can help lower the cost for everyone. We really believed in that 10 years ago and we set out to build an organization with this goal, in the right place and at the right time as those changes occurred.

Loncar Funds: I’m going to fast forward a bit because this dovetails into what you just said. At the end of October, BeiGene signed a big partnership with Amgen. You are going to sell a few of Amgen’s medicines here in China, but I think another really interesting aspect of this is that you are also helping Amgen develop 20 of their cancer medicines globally. That partnership is not just about China, it is about helping them develop their cancer drugs for the entire world. Can you talk about the significance of that? What is it that you are bringing to the table and why were you such a great fit for a company like Amgen which already has global reach?

John Oyler: We have always been an organization that is trying to do world-class science and trying to meet the highest quality global standards. We do believe that if you make a great scientific discovery, it should get to everyone. From the very beginning as we started our company, we have had a unique global presence. We joke, but it is true…our company doesn’t really have a headquarters. Our headquarters is on Zoom. Sitting behind you is a videoconference screen and this is our method of communication. In the beginning we created a truly global culture. We believe there is only one cancer, and it is global. There is only one standard, and it is global. That is what we have pursued from the beginning to build.

I think clearly Amgen shares those values. They do great science and they want those medicines to get as quickly and as affordably as they can to people across the globe. We do have deep strengths in our organization in China, there is no question about that. We have built a clinical oncology team of more than 1,000 people globally. That is a very large team and a lot of it is in China where these new clinical opportunities exist. It is a very experienced team on the cutting edge of this opportunity. It is complemented with a clinical team that is in Australia and hundreds of people in the Bay Area and throughout the United States and a few dozen people in Europe. It has been global from a clinical perspective.

Loncar Funds: When Amgen is developing a new cancer drug, you are helping them run trials in China. But just to be clear, that is not only to help the drug get approved in China. The goal is to make it a piece of bringing that medicine to the entire world, right? Do you think that more companies like Amgen will start focusing on developing their drugs with China being a major component going forward?

John Oyler: Yes, I think every company now, certainly in the oncology space, realizes that if they want to develop drugs as quickly and as affordably as they can, they want to make sure they are enrolling heavily in China. The real issue is that this is a new capability and opportunity and there is limited talent at this point that has the background and expertise to execute against it. I think what is unique from BeiGene’s perspective is that we had the opportunity to build ourselves from scratch for the purpose of running and participating in these trials to accelerate development globally.

I think for our relationship with Amgen, it is exactly the same as when we have an internal program. I think with Amgen we are doing the same things and with the same quality, just with help from a different group of people globally ex-China. In this case, it is people from Amgen. It is an easy language and an easy set of experience and I think that they understand what we value. For our internal programs, we are operating in 34 countries and five continents with over 1,000 clinical professionals.

BeiGene scientists work at the company’s Beijing research and development center.

BeiGene scientists work at the company’s Beijing research and development center.

Loncar Funds: Let’s go back to the founding of the company. You decided that you wanted to focus on cancer. What were some of your early development programs back then?

John Oyler: I think from the very beginning we have always had at least 30% of our resources towards innovative programs. We have tried bold ideas, including oncology targets that no one else had ever heard of. For the remainder, we were working on things that we thought were impactful or important for China, and things that we thought could be important backbones for building an oncology franchise. Some of those programs included our BTK inhibitor, which has just been approved in the United States, a PD-1 that is Fc gamma sparing, and a PARP inhibitor. Those were some of the backbone opportunities that we looked at. I think at this point about half of the programs we are running are on the novel spectrum and the other half are in a potentially best-in-class realm.

Loncar Funds: You mentioned that your first drug, the BTK inhibitor, was just approved by the U.S. FDA about a week ago (this interview was conducted on November 25th). It is believed to be the first example of a Chinese company getting a new cancer medicine approved in the United States. That certainly speaks to the high quality of the drug and the trials you put it through. The most famous and first BTK on the market is called Imbruvica (Ibrutinib). It is marketed by Johnson & Johnson and AbbVie. You believe your BTK is differentiated from Imbruvica. How is yours different?

John Oyler: First of all, Imbruvica is a wonderful molecule that has helped a lot of patients and the world is much better for it. I think the hypothesis we had when we first started developing our drug BRUKINSA was that although Imbruvica is a wonderful drug, it might not be perfect. We didn’t believe Imbruvica was able to have drug available anywhere in your body for 24 hours a day 7 days a week to inhibit new BTK if it was generated. We ran some very interesting in vivo experiments and in those experiments we could see that even though you were able to inhibit BTK sustainably in the blood, it appears that in some of the tissues where the disease would originate like the lymph nodes, spleen, and bone marrow, you had substantial recovery of unoccupied BTK over a 24-hour period. We thought if this is true for people, you don’t want to treat cancer by fighting it part of the day and then taking a break. You want to treat it all of the time. So that was the goal. The hope was that we could build something that was more efficacious and have a faster and deeper response and then hopefully a more sustainable response.

To do that, we had to achieve a few things. We had to design a very selective molecule that would be safe. If it was going to be around longer and more distributed in your body, then it had to be safe. The second thing is that it needed to be a molecule that had exceptional pharmacokinetics (PK) so that it could stay in the body and be dosed to a high enough level and be distributed to all the tissue. That is always hard to do. From that perspective, a lot of energy went into developing what was first our compound BGB-3111 and then was zanubrutinib and is now BRUKINSA.

I think at this point in time, we have clinical data on the molecule from trials that have included over 1,600 subjects and we have been able to watch in many of those trials (some of them are blinded) the efficacy and safety supporting it and we believe strongly in that original hypothesis. I think that while you always need to be careful in cross trial comparisons, we are happy with our mantle cell lymphoma (MCL) label, for example. When you look at the data we have in chronic lymphocytic leukemia (CLL), follicular lymphoma, marginal zone lymphoma, and diffuse large B-cell lymphoma (DLBCL), we are very happy with it relative to what we have seen in other, non-head-to-head trials. That gave us the confidence to run two head-to-head trials against Imbruvica. One of them is in Waldenstrom Macroglobulinemia (WM) that should read out soon and the other is in CLL, which is earlier in the process. I think we have certainly put our money where our mouth is because those are very expensive trials to run. I think we have done the right trials and conducted the right science and we are quite hopeful that the data will support this hypothesis.

[Note: between the time our interview was conducted and published, the result of the WM trial was released. BeiGene’s press release says that the trial’s primary endpoint of statistical superiority related to deep response (very good partial response (VGPR) or better) was not met; however, Zanubrutinib demonstrated more frequent VGPRs (28.4% Zanubrutinib vs 19.2% Ibrutinib in the overall population). More details from the result of this trial can be found in BeiGene’s full press release issued on December 16, 2019.]

Loncar Funds: Just as BRUKINSA was approved in the United States, you have filed for approval here in China. What is the competitive environment like here? Is Imbruvica on the market? AstraZeneca also has a BTK so how about theirs?

John Oyler: Imbruvica is launched but AstraZeneca’s Calquence is not yet launched and is in a much earlier stage than our medicine.

Dr. Zhiwei Wang, inventor of BRUKINSA.

Dr. Zhiwei Wang, inventor of BRUKINSA.

Loncar Funds: Let’s talk about PD-1s. Our readers are very familiar with many of the PD-1s as these are a foundation of cancer immunotherapy. Some of the famous ones are Merck’s Keytruda and Bristol-Myers Squibb’s Opdivo. Just as your BTK is differentiated, you believe that your PD-1 might also be differentiated too. Can you talk about how it is different?

John Oyler: Yes, mechanistically it is engineered to be different. Most PD-1s have Fc gamma receptor binding activity. This activity can attract macrophages to the PD-1 and potentially deplete it as it is trying to fight the cancer. That of course would not be an ideal scenario because it is a dampening effect. Ours was designed specifically without this activity to try to ensure that it would not happen. There have been four different instances of preclinical data supporting this hypothesis. One was developed in our labs at BeiGene. This was, to our knowledge, the first discovery of the importance of this mechanism. Although we didn’t publish it, we built a medicine around it. Subsequently some very good labs have, through other experiments, confirmed those results.

One of the archetypic macrophage rich environments is classical Hodgkin lymphoma (cHL). In this setting, we have reported data that, although it is in a single arm trial and is not in a direct comparison (there have been single arm trials in the U.S. with Keytruda and Opdivo and some in China with some of the Chinese PD-1s), our data have compared favorability to others and perhaps this is indicative of that mechanism. The PD-1 is for us a very broad and deep program. At this point we have dosed over 2,900 patients. From that perspective, I think we have shown that we have a medicine that is safe and efficacious. We are also working on the differentiation hypothesis to see if it is confirmable in a statistical manor in different indications over time.

Loncar Funds: Another big class of cancer medicines is something called PARP inhibitors. In fact, Glaxo bought a PARP inhibitor company a year ago for over $5 billion USD. You are developing a PARP inhibitor as well. What is the status of that program? And is that one differentiated like the BTK and PD-1?

John Oyler: Within the class of PARP inhibitors, our pamiparib is an investigational PARP 1 & 2 inhibitor that has been demonstrated preclinically to be highly selective with DNA trapping activity. It is an excellent pharmacokinetic molecule. We like it very much. To that end, it is not first and it is not early in the process. PARP inhibitors have been a space that is a little more competitive. In China we are pursuing a strategy in ovarian and breast cancer that is very similar to what you have seen in the United States. We expect those trials to read out in the future and we hope to have approvals here. From a global perspective, because we are a little late to the game in those indications, we have taken a slightly different approach, looking more at combinations and unique biomarker approaches, for example in prostate cancer. We think it is the right approach from a global perspective given the challenges to registering a molecule in a short timeframe in some of the other spaces.

Loncar Funds: Those are drugs that you are developing on your own internally, but you also partner with other companies. You in-license and you do collaborations. Are there some of those you can highlight?

John Oyler: There are a number of partnerships we have. Our clinical and research teams love great science and they love things they think can have a lot of impact. We don’t have the bandwidth to be working on all of those things or the bandwidth to be successful even if we try in all of those things. I think that although we have a very high hurdle in what we are interested in, we have been fortunate to find some wonderful things to work on. The largest portfolio is the 20 clinical assets we are collaborating on and co-developing with Amgen. We love those programs. At the same time, there are other partnerships we have including Zymeworks, Seattle Genetics and Mirati, where we love the science, we love the people we are working with, and we think there is a chance for a very high impact to benefit patients.

Loncar Funds: Are you looking to bring more assets in? If there are companies reading this right now, should they give you a call if they have something interesting?

John Oyler: Yes, we are absolutely interested in exceptional science that can have a big impact. It is a pleasure to have an opportunity to be involved in anything like that. Certainly you don’t discover it all yourself.

Loncar Funds: What do you think makes BeiGene a good partner for them and what do you look for in companies that make them a good partner to you besides good science?

John Oyler: The thing that makes us a desirable partner is that we are truly a global leader running highly China-inclusive global clinical trials. There is no other truly global organization built for that purpose with a clinical team anywhere near the size of ours. I think this is a very unique capability that other companies will not be able to easily recreate for years. I think the second thing is that our commercial team in China is headed by Dr. Wu Xiaobin. Anyone who comes to look around in China and understands the commercial landscape here will see that he is the godfather and he is exceptional. People want to work for him and work with him. The organization he is building, with an incredible pipeline and great leader that is fit for innovative science-based products, is a compelling formula. I think those things together are the primary reason why people want to work with us.

I think there are other reasons as well. It can be that they have an asset that might be combined well with one of ours. Hopefully they are a company that wants to work with an organization that is going to be very honest and transparent and frank with them about what the opportunity is, and what is and isn’t possible on all fronts. I think that is something we look for from them as well. You don’t always want to hear what you want to hear…you want to hear the truth. You want to accept challenges and work together. I think a lot too is about building a culture of honest and open communication. It is very easy in these partnerships to have a partner that tells you everything you want to hear, which in the long run is more of an injustice than a good thing.

BeiGene scientists work at the company’s Beijing research and development center.

BeiGene scientists work at the company’s Beijing research and development center.

Loncar Funds: When you started this company over a decade ago, you had a very clear vision of where you thought China was going and what you wanted this company to be. As you look over the next decade, how do you see this playing out both for BeiGene?

John Oyler: We approach this believing that there has been a problem in the industry where you could not build sustainable companies and also that there has been a problem where you could not develop impactful drugs affordably. I think we feel that with these changes coming to the industry, the industry will transform. We do think we are at the right place and right time with an incredible team and great assets. We want to be working for that transformation because we think it is great for patients and great for science. We think that in the long run it is great for the industry. There might be some growing pains as we move from one world to the next. But it is an area where we want to look at it and say we were impactful, we did a lot of good for patients, we created a great work environment, and we were a positive force for the industry. I think we are on the way to doing that, but we won’t be truly satisfied unless we achieve all of those things.

Loncar Funds: Thanks a lot for giving us a tour today and for being a gracious host. BeiGene is currently the only company held by both our CNCR and CHNA ETFs. Congratulations on getting BRUKINSA approved and keep up the great work for patients.

John Oyler: Thank you so much, and we appreciate you visiting!

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Opinions expressed are those of the author, interviewee, or Funds and are subject to change, are not intended to be a forecast of future events, a guarantee of future results, nor investment advice. Fund holdings and allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security. AbbVie, Amgen, Glaxo, Johnson & Johnson, and Mirati are not a holding of the funds or affiliated with the funds.

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