The recent $2 billion DEAL between Cheng Yi Bio and AZ has caused a big stir in the industry. However, in a burst of domestic VC, PE cheers, Xiaoyue found a very interesting phenomenon: U.S. local funds almost did not participate in the investment of several popular diet drugs.
In the case of Cheng Yi, for example, from the angel round established in 2018, to the A round in 2020 and the B round in 2023, the only US dollar fund that can be traced in the three rounds of financing is Kang Xi (Delos), and none of the US domestic funds participated.
I. This should be the favourite story of the US dollar fund.
This situation is not general: the founding team of Cheng Yi are all from MNC, and the certainty of what they are doing is also high, such a background, such a story, is the type of project favoured by American PE, VC.
If the sincere benefit can be explained as a team in Shanghai, the United States local funds can not reach (in fact, it is also very far-fetched, even if the domestic biotech, MNC background team to get the United States local institutions financing quite a lot, who do not have a few friends in the United States to do vc docking down).
Then look at another star project Struceture (Shuo Di biological) is obvious: this is also a diet pill star project, background is more prominent, well-known AI pharmaceutical listed company Schrödinger + industry bigwigs Raymond Stevens. Ray itself has rich entrepreneurial experience, or GPCR field well-known scientists, you can go to search the resume.
The company itself is headquartered in the U.S., and it’s still a popular track for diet pills, so it should be able to raise money in the U.S., right? No, Third Rock, MPM, F-Prime, all of them didn’t make any money. Company has been unable to raise money in the United States, it is China’s dollar fund to save it: from its inception in 2016 to the IPO in 2023, the investors are Sequoia China, Stowe Capital, Qiming Venture Capital, WuXi AppTec and so on.
Ditto for checking local US biotech financing news, there are indeed very few diet pill projects. In the U.S. venture capital is highly developed, no company means no one is willing to pay money.
US local institutions are more familiar with overseas new drug market. And the story of diet pills was first validated in Europe and the United States. It can be said that the A-share speculation on the concept of diet pills, than the U.S. stock market is at least 2 years behind. ** Regardless of investment preferences, from the track market space judgement, in the diet drug track, the U.S. fund has more reasons to go out than domestic funds. **
Shodi’s stock price is all the way up after the listing, and I think it must have made the U.S. institutions that didn’t invest very depressed. From 2016 to now, in the domestic institutions have stepped in the weight loss investment opportunities, why the U.S. domestic funds nearly collective missed this track in the weight loss drug?
Is it that U.S. funds do not like to invest in innovative drugs? No, over the past five years the U.S. funds have placed heavy bets in the field of innovative drugs, the scale of which is much larger than the domestic.
ii. Behind it is the difference in the perception of the disease field between China and the United States
Is it because the U.S. fund is not professional enough, can’t understand clinical data, and can’t judge the molecular value? Obviously not, their team is professional enough, and GLP-1 oral small molecule, it is not difficult to judge. There must be a reason behind it:
The point of this, I think, is that the difference in market perceptions of disease areas is really a huge difference between the two major drug markets in the US and China.
In the view of the United States local pharmaceutical investment institutions: the field of oncology is very suitable for biotech survival and development, the field of rare diseases biotech also has a very good opportunity to bend the road to overtake the car, and chronic diseases, especially in the field of metabolism, pharma occupies a dominant advantage, small biotech has no opportunity.
After decades of competition in the U.S. local drug market, there are abundant cases of biotechs having more opportunities: many drugs in the field of oncology come from biotechs, and in the field of rare diseases, there are small companies such as Shire, Alexion, Vertex, and so on, which have grown up to be giants. M&A in these two fields is also the most.
In the view of domestic pharmaceutical investment organisations: the king and his majesty, would rather have seed, big pharmaceutical enterprises do well, I can also go to grab the cake, big pharmaceutical enterprises do not do well, I have to go on.
On the contrary, rare diseases are generally less popular because of affordability issues.
The domestic pharmaceutical industry, so far, has not yet established a pattern, giving biotechs the opportunity to overtake in various disease areas. In the oncology sector, RMB funds are more cautious than USD funds due to the difficulty of setting up a sales force in China.
I think there are 2 reasons why US funds missed the diet drug wave:
- more concerned about oncology projects
- Feel that there are not many opportunities for small companies in the metabolic field
III. The more specialised you are in metabolism, the more scared you are
There is a saying in the investment world that the more you know about metabolism, the more you are afraid to invest in projects in this field. Why? Metabolic field attaches great importance to long-term safety and dosing cycle advantages, phase III requires a large number of people, large investment, and long follow-up time, several MNCs led by Eli Lilly, Novo Nordisk, with the first mover advantage of insulin, have established a dominant hegemony in the field for more than 10 years, which is mainly embodied in the following:
Clinical data crushing: The giants are relentlessly attacking each other with head-to-head clinicals of nearly 10,000 people, showing no mercy, and in this kind of battlefield where billions of dollars are being invested, small biotechs can’t even be counted as cannon fodder. Calculating how rich the current clinical data of Simeoglutide, the amount of money invested behind the scared to death, the small Yue sold itself for a million years may not be enough. biotech financing small hundreds of millions of dollars, completely insufficient ah!
Pipeline layout comprehensive leading: Big pharmaceutical companies on the one hand, the existing drug dosage optimisation, drug delivery cycle extension, improve competitiveness and life cycle, on the other hand, advance the layout of the next generation or even the next generation of drugs, such as the GLP-1 triple target. biotech what to take and MNC to go to the PK, you only have five threes, other people have a straight flush + king of bombs ah.
In the metabolic field, the more specialised you are, the more fearful you are. Especially the dollar funds, most of them know Eli Lilly and Novo Nordisk very well, see the metabolism of new drug projects equal to the bottomless pit of clinical development, the psychology of these two MNC indestructible, naturally unwilling to pay too much attention to metabolism projects.
In a sense, this argument also holds true in the Chinese market, but only for the diabetes field. Koshi also believes that it is difficult to invest in diabetes projects in the domestic market. Because in the diabetes field, also formed a stable pattern, Eli Lilly / Novo Nordisk + Gan & Lee / Tonghua Dongbao, 4 big giants have occupied the market for many years.
Diet drugs are different, due to regulatory approval of diet drugs for indications later than the foreign market, the future data PK will not be as intense as abroad, clinical investment will not be as outrageous as the United States, the Health Insurance Bureau also welcome more entrants, the proportion of domestic fat than abroad, and not as fat as the fat abroad. Under the superposition of all these reasons, the domestic market for weight loss drugs can be said to have just sprouted, and the pattern has not yet been determined, and biotech still has a lot of opportunities. This is also the reason why domestic institutions dare to go out.
**People can only ever earn money within the scope of their own perception, and this, already enough. **When investing in the metabolism field, you still have to be very vigilant. Don’t be like NASH and get directly affected by GLP-1.
