GenScript Biotech was founded in 2002 and today has grown to be a successful biotech company in the United States, Europe and China. It was first known as a global leading contract research organization (CRO). More recently, its Legend Biotech division has become a cell therapy leader and turned heads in 2017 when it issued a global license to Johnson & Johnson to develop its chimeric antigen receptor T-cell (CAR-T) candidate LCAR-B38M. It also has a business that produces enzymes for industrial and agricultural purposes. GenScript had its initial public offering (IPO) on the Hong Kong Stock Exchange in 2015 and was added to the China BioPharma ETF (Nasdaq: CHNA) upon the fund’s launch in August of 2018. View all holdings of the CHNA ETF
While many people around the world are familiar with those previously mentioned established businesses, what they might not know is that this year GenScript has begun entering a new fourth line of business. This is called a contract development and manufacturing organization, or CDMO for short. CDMOs are service providers that help other companies develop drugs without the need for building the expensive infrastructure that has been traditionally required to do so. They are changing how drugs are developed, and China is a particularly promising home for this given the country’s low cost structure compared to the rest of the world and the birth of the biotech sector happening there.
Dr. Brian Min, CEO of GenScript CDMO at GenScript’s headquarters in Nanjing, China.
In November, we visited GenScript’s headquarters in Nanjing, China. Nanjing is an hour northwest of Shanghai by bullet train and is famous for having a deep pool of highly educated talent because of the many universities in town. There we had an opportunity to interview the man leading the new CDMO business, Dr. Brian Min, and also tour the company’s new antibody research and development (R&D) and production center that was inaugurated in July. In a wide-ranging interview, Dr. Min, CEO of GenScript CDMO, tells us more about the CDMO business, why he moved to China from Korea to help build this division at GenScript, and what some of the company’s future facilities will look like. Below is a transcript of our interview, which has been edited for clarity and length.
CHNA ETF: Can you please introduce yourself and tell us about your background?
Dr. Min: My name is Brian Min. I did most of my education in the United States, U.C. Berkeley for undergraduate and UCLA for my Ph.D., all in molecular biology. At the time, I was very interested in biotech, though biotech was still new. Everyone back then wanted to be a professor but I didn’t. I went to Amgen for a postdoc before getting a full time job there. I worked there for 11 years doing early discovery work all the way up to antibody engineering and optimization.
Samsung then recruited me around the beginning of 2008. At the time, Samsung had nothing in biotech, but they wanted to do something. I was part of a small team that got together. We started to write business plans and to try to convince the senior management to get into this business. Fortunately, we succeeded and our team helped to launch two companies, Samsung Biologics and Samsung Bioepis. When Samsung Bioepis launched, I was in charge of manufacturing process development and essentially development of all the products they have launched so far and also those in the pipeline.
CHNA ETF: What kind of products has the company launched and how big is Samsung Bioepis today?
Dr. Min: Samsung Bioepis has launched in very short time, the company was created in 2012, four biosimilar drugs. The first biosimilar was launched in just four years after the launch of the company. There are also many more biosimilars in the pipeline and I was central in developing those. The drugs are approved in major markets like the United States and Europe. These are very big businesses. In terms of capacity, Samsung Biologics has the biggest capacity in the world for the CDMO business.
CHNA ETF: Ok, then you received a call from GenScript?
Dr. Min: Yes, by that time I had worked at Samsung for about 11 years. When GenScript called, it sounded very interesting because they are starting out a new business. That is what I like, to build new businesses. It is what encouraged me to take the job.
CHNA ETF: With your experience, you could have chosen to work anywhere in the world. GenScript is a great company, but why did you choose to move to China and work here? Do you see a lot of growth ahead in China?
Dr. Min: Of course, I had been hearing a lot about how China is investing in biotech, both the government and the private sector, but I never had the opportunity to visit China. When I came for the interview, it was actually the first time I visited China. The second time, I came to take the job. Now I am having a great time here in China. The people are great and everyone works very hard.
CHNA ETF: Let’s talk about the business. First of all, if someone is reading this who doesn’t know what CDMO means, what is it?
Dr. Min: CDMO stands for contract development and manufacturing organization. Many companies that develop their own drugs these days don’t need all of the capabilities as they previously did. Especially if you are a smaller venture company, or even a midsize company, it is really hard to have all of the capabilities that are required for developing a new drug. What they will do is to collaborate with companies like us, CDMOs, to contract out certain work segments. That is what we do, providing services to the drug development companies so that they can succeed.
Dr. Min looks over a model of expansion plans for GenScript’s Nanjing campus.
CHNA ETF: It sounds like you save companies both time and money. GenScript for a long time has been in the contract research organization (CRO) business. How does CDMO differ from CRO?
Dr. Min: As you said, GenScript has a very long history as a CRO doing things like gene synthesis and protein synthesis. Because of that background, CDMO is the natural next step. The GenScript CRO business is not directly involved with drug development but all of the science is there. The question is how to translate all of that science into drug development, which is much more profitable and presents a bigger opportunity to help mankind.
CHNA ETF: If GenScript is getting into the CDMO business, the company must feel like there is a big unmet need for this. What is the unmet need in China for GenScript to get into the business today?
Dr. Min: During the early times of biotech with companies like Amgen and Genentech, it was fashionable to have all or most of the capabilities for drug development in house. This was mainly because there was a lack of expertise outside of major companies like that. Today there are pools of people who have the expertise in these things. As we covered before, not every company needs to have all of the capabilities in house today. It is that way in the United States and now that kind of environment is transferring into China as China is developing a big biotechnology industry.
CHNA ETF: How long have you now been here at GenScript and how far along are you on the path of building out the business?
Dr. Min: I have been here seven and a half months. When I arrived, GenScript had just launched this CDMO business with only 100 people and had no facility at that time. Seven months later we have close to 500 people, our first Bio research and development (R&D) center has also been put into operation. It has good manufacturing practices (GMP) capabilities for antibodies. Next month we are going to launch a GMP facility for virus production and three more facilities are in the works for GMP manufacturing capabilities. I have also been able to assemble a good number of senior staff who have international experience.
CHNA ETF: We are touring the new antibody building here on the Nanjing campus after this interview. Where will the virus building be located?
Dr. Min: The virus building will be located in a city called Zhenjiang, which is about an hour away from Nanjing by car.
GenScript Biotech’s headquarters in Nanjing, China.
CHNA ETF: How about the other facilities you mentioned? Where will they be located?
Dr. Min: All of the gene and cell therapy buildings will be located in Zhenjiang and all of the antibody manufacturing is right now planned for here in Nanjing.
CHNA ETF: The majority of biotech companies are in Shanghai and Suzhou and then there are others in various places around the country. Why have the antibody facility here in Nanjing, for example, instead of it being in Shanghai where those companies are? Do you not need to be next door, so to speak?
Dr. Min: Shanghai and Suzhou are close enough, half an hour or an hour by train. Whether you are located in Nanjing or somewhere like Beijing, it doesn’t really matter because you need to get business from everywhere in China. Nanjing is the location for GenScript’s established business in China and we decided to have the CDMO business here for many reasons.
CHNA ETF: How large is the business today. For example, on the antibody side are you able to say how many clients you have or how many antibodies you are helping to develop right now?
Dr. Min: We have in terms of chemistry, manufacturing, and controls (CMC) projects, the capacity to do at any one time about 20 projects. So that means 20 different drugs. We have about half of that capacity filled right now. I think that is pretty good considering that we just began this year.
CHNA ETF: Does that mean most of those projects are preclinical right now?
Dr. Min: Yes, they are mostly preclinical. In terms of GMP manufacturing, the capabilities that we have right now are mostly for phase 1 and phase 2 clinical trials. We will also have commercial capability in the next few years as our clients grow.
CHNA ETF: Is that the model for this business, to stick with the clients all the way trough from IND (when you first ask regulators for approval to start human clinical trials) to clinical and then to stay the commercial manufacturer once they start selling drugs? Is that how the business works?
Dr. Min: Yes, it is what I would like to have our clients do. The strength of GenScript comes from our established business that stems from the discovery piece. We have 15 years of experience there and people know us well and we can obviously leverage that. Our strategy is for the discovery clients to come to us for the next phase, which is cell line development, process development, and CMC for IND. Those people who succeed in phase 1, I’m hoping they will stick with us as well as for us to partner with new clients. I think we have the roots and will be adding new clients to those roots.
CHNA ETF: You are really at the forefront of how drug development has changed. If someone has an idea in their head for an antibody target, GenScript will help do the discovery work, and then the client can work with you to help build the molecule and start trials and then eventually commercialize it. The client does not need the infrastructure to do any of it. Your company is able to work with a person like that from start to finish.
Dr. Min: Yes, I can even say that we work with clients from the concept stage. People might have a great idea but they might not know how to proceed. We often discuss this with potential clients and give them advice on the way to do it and then go from there.
CHNA ETF: Let’s talk about the cell and gene therapy side. Cell therapy is big in China right now. In fact, there are more cell therapy trials happening in China today than the United States. What is it like being a CDMO partner to cell therapy companies? What services are you providing to cell therapy companies? How is it different from the antibody business?
Dr. Min: Antibodies are a mature sector whereas cell and gene therapy are very new. There are many ways this can go, I think. What we are trying to provide is an integrated service. For example, chimeric antigen receptor T-cell (CAR-T) programs are always going to need antibodies. Again, with our antibody discovery experience, we are able to provide the base CARs so that the client can produce CAR-Ts. Interestingly, we have been helping Legend, which is a subsidiary of GenScript, with their pipeline in this way. Another thing biotech companies need for CAR-T or gene therapy is to produce plasmids and viruses. We provide plasmid production and virus production. The later step, making cells, is too early for a CDMO to get into yet.
GenScript’s new antibody research and development and production center.
CHNA ETF: You mentioned that your facility for that is not finished yet. When do you expect it to be ready? Are you helping clients in the meantime in some other way?
Dr. Min: We have a process development facility right now. That capability is very important in China because China has investigator initiated clinical trials (IIT). These materials that we produce can be used in IIT trials. Our virus GMP facility will be ready next month (this interview was conducted on November 22nd). We have an opening ceremony scheduled on December 18th.
CHNA ETF: What will the capacity of that building be?
Dr. Min: We will have four lines. This is going to be either for IIT or phase 1 trials. The maximum size of our bioreactor is about 50 liters. But these days for those early trials people tend to use cell factories anyway. So we will have four independent lines and that is a pretty good capability.
CHNA ETF: How many trials could that support?
Dr. Min: It depends on a lot of things in the science like the yield and the virus titer, but I would say as small phase 1 trial can be anywhere from 30 people to 80 people and it is definitely enough for those types of trials. We can handle about 10 projects at a time.
CHNA ETF: You are taking GenScript’s past leadership in cell therapy and helping other companies in the business?
Dr. Min: I think we have a very strong background in this sector because we are one of the very first commercial producers of plasmid and virus. We have a lot of expertise and knowhow and a track record with producing CARs for our Legend subsidiary. I think that is a good edge over other competitors.
CHNA ETF: Thank you for your time today. This sounds like an interesting new line of business and we look forward to checking back in the future to see how it is progressing.
Dr. Min: Thank you!
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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. Amgen, Roche’s Genentech Division, and Samsung are not a holding of the fund or affiliated with the fund