After 13 years dedication into new drug development, Oneness Biotech has become a leading biotech in Taiwan. Quantum International Corp. (QIC) is an expert in capital market and has conducted an interview for the “CEO Conversation” in August 2021. Mr. William Lu, the founder of Oneness Biotech has shared an insight into the new drug development and the core value of the company. The full interview is enclosed below for reference.
Don’t assume that only biochemistry PhD’s can run a biotech company. You’d be sadly mistaken. William Lu, the founder of Oneness Biotech, is an outstanding exception to this rule. He has proven that strong leadership, focused execution and an innate skill to spot the opportunities with the highest reward and lowest risk will trump technical skills every time.
Mr. Lu majored in economics in college, and started his career as a journalist, then spent some time in the import-export business. He subsequently became involved in the dietary supplement industry, before gradually establishing himself as one of Taiwan’s top players in the new drug development business. By April 2020, Mr. Lu led Oneness Biotech to accomplish the largest licensing deal in Taiwan’s biotech history – licensing out the atopic dermatitis (AD) and allergic asthma biologic drug FB825 to LEO Pharma for US$ 530mn. This was quickly followed up in January 2021, by the Taiwan FDA’s approval of Oneness’ proprietary first-in-class diabetic food ulcer (DFU) remedy Fespixon®. The magnitude of this accomplishment should not be underestimated. Prior to the approval of Fespixon®, it had been 20 years since any new drug for DFU had been approved anywhere in the world. Yet, the total addressable market for this drug, at US$30bn, is significant. Oneness is currently initiating its second Phase III trial for the drug in the US, and expects to launch the drug globally by 2025. At US$2.6bn, Oneness is the largest biotech firm by market capitalization in Taiwan.
This might lead one to wonder how Mr. Lu could achieve so much with no formal medical academic training in a field that generally requires a solid background in science. To find out, and to gain an insight into his vision for the future of Oneness, we met up with him for an in-depth conversation.
Only science can provide added value to a product
Alex Lee, Founder and CEO of QIC and I met with Mr. Lu via online video conference. Looking very spirited, Mr. Lu starts to recount his life story, “25 years ago, I started an import-export business. While scouting new products in Japan, I happened to notice that Japanese consumer goods giant Kao Corporation (4452 JP) had developed the world’s first cooking oil that could reduce the level of lipids in a person’s blood. I thought to myself, ‘how smart is that?’ Instead of taking a drug in the form of a capsule, a tablet or an injection, all one needs to do is cook with this oil, eat a normal diet and you can successfully reduce the level of lipids in your blood. At the time, I was already one of the larger suppliers of cooking oil to the Taiwan market. My product was the only cooking oil brand sold by Costco and I was the OEM supplier for the white label brands sold at several other supermarkets and hypermarkets. The Kao product really opened my eyes, inspiring me to find a way to make my own proprietary formula. After 4-5 years of cell testing and animal testing with various formulations, I was able to combine monounsaturated fatty acid, polyunsaturated fatty acid and saturated fatty oil. The final product was completely different than Kao’s but also was able to reduce the level of lipids in a person’s blood, becoming the second product in Asia, and indeed the whole world, to provide this benefit. As a result, it became the first cooking oil in Taiwan to be certified as a healthy product by the Taiwan government. Later on, Nissin Food Group (2897 JP), also from Japan, developed the third. I sold the patent to AGV Products Corp (1217 TT), a Taiwan-based F&B company, for NT$ 80mn. I was shocked by the value of the patent. Without selling a single bottle of oil, I was able to earn NT$80mn from an efficacy certification. From that point on I was enamored with the ability of science and R&D to add value through differentiation, and my career focus changed course.”
“So, I began to pursue opportunities in markets with a differentiated niche, avoiding commoditized markets characterized by perfect competition. Having been in the cooking oil market for so long, I knew how difficult it was to maintain success in markets with perfect competition. I saw R&D and science as the key to creating my niche.”
“I had previously done some research on microbial fermented products and had a sense that their value could be higher than the cooking oil that I had sold to AGV, so I entered the fermented products industry in 1997, beginning with gut symbiotic bacteria. Back then, the only players were a few Japanese family businesses that had a long history of product development in the area. I gained entry by buying the intellectual property of one such family who no longer wished to continue in the business. There were many consumers taking these kinds of nutritional supplements for anti-oxidation purposes or to prevent cancer, but there was no proof of efficacy. So, I began running some experiments to seek scientific proof of their efficacy. In the year 2000, I founded the Microbio Group and began building a manufacturing facility. One year later, the manufacturing facility was ready, and we had gained our first approval from the Taiwan FDA to initiate a Phase III trial for the Chemo Young Oral Solution. That was my journey from being a trader to a developer of health supplements and finally to becoming the Chairman of a biotech company.”
A babe in the woods
At this point, Mr. Lu starts to laugh heartily, “At the very beginning we were so passionate; we had big dreams of success. Four years later, I realized that I was really just a babe in the woods because we were about to run out of money. It had always seemed that the company had more than enough cash on hand. But this time was different. It was the first time I felt like my business was going to collapse. I started my first business at 29, stepped into microbial fermentation at 41, founded Microbio Group at 44, and at the age of 49 my company was about to go broke. I realized that the drug development business was not as easy as I first thought. The clinical trials were ongoing, I could not sell the drugs that were still in the trial stage, and I had no drugs that had been approved. Yet, I was spending NT$ 4-5mn per month to operate and maintain the manufacturing facility and also needed to cover the costs of the clinical trials and general administrative costs. Yet, somehow, fortune smiled upon us. Just as our outlook seemed the most uncertain, we received efficacy certification for some of our previously developed products and secured a big order for our nutrition supplement product. The storm had passed and by 2009 Microbio Group obtained its first new drug approval (NDA). The drug, Chemo Young Oral Solution, is a powerful metabolite from gut microbiota. Now, with a steady source of revenue and several drug assets in trials, we finally felt that the company’s future was secure. But, with the struggles of the past still fresh in my mind, I was determined to diversify the risk in our drug development pipeline. In 2008, I founded Oneness Biotech and started to develop botanical drugs, including TFDA approved Fespixon® and new biologic drugs such as FB825 for atopic dermatitis and FB704A for asthma. We also began to strictly control our cash outlays and carefully plan our funding schedule to ensure that we would have the resources needed to develop new drugs and remain financially viable.”
Going all out to stay at the forefront of new developments in the field of medicine
When discussing pharmaceutical science, Mr. Lu seems like a battle-hardened general, serious and determined: “We have a very strong scientific team and once a week we hold a meeting to discuss key articles published in the world’s top medical and science journals, such as Nature, Science, JAMA, Lancet, etc. These meetings last 3-5 hours, and the discussion is earnest and passionate. As a result, we have developed the ability to quickly develop leading edge capabilities in our chosen areas of drug development. Allow me to be a bit bold on this – I believe my team can enter certain specific areas in drug development and quickly become one of the leaders. Recently we have been doing a deep dive study of all the trials of COVID-19 treatments globally. And based on our extensive knowledge in this field, we filed a clinical trial for our proprietary product. This is merely an example. When it comes to drug development, if you cannot clearly explain the science, you don’t stand a chance. Why? Taiwan only accounts for 0.4% of the global pharmaceutical market, and Taiwan’s National Health Insurance system is not in favor of approving new (and likely expensive) drugs. If one focuses only on the Taiwan market, the date that one gets approval for a new drug approval is actually your doomsday. So I needed to step into the global market. And in the global market, only first-in-class or best-in-class drugs have a chance of becoming blockbusters.”
To select a good new drug target to meet the requirement of first-in-class or best-in-class is extremely difficult. Some people have said we have had good luck to have each of our drugs develop into potential blockbusters with well-defined targets. To that, I say that if I struck gold only once or twice, then fine, you can say that I was lucky. But if I repeatedly select the right targets, then there is no luck involved. We carefully and extensively study our targets, studiously avoiding any target that is being worked on by big pharma companies. Drug development is high risk and can often require several hundred million US dollars. The drug market is winner take all. To invest in a given drug, and then see your competitors surpass you means that you have wasted your time, your money and the efforts of your team during their most productive years. The damage can be huge; and fortunately we haven’t made that kind of mistake up to this point. The key is that we select our targets carefully, either it is a first-in-class target, or it is a best-in-class target. If we believe a target is wrong after preliminary evaluation or even after we have begun developing it for a period of time, we just give it up. We won’t waste our resources on it.”
Earlier this year, China’s National Medical Products Association (NMPA) announced a new policy draft for solicitation of opinions: ‘Guidance for Value-Oriented Anti-Tumor Drug Clinical Trials’. The spirit of the guidance, in short, is to deny approval of applications to trials of drugs that are not designed to surpass the efficacy of the best known treatments. The policy is designed to avoid wasting the precious clinical trial resources of the government, pharma companies and the investment community on 2nd and 3rd tier drugs with mediocre efficacy. This guidance is effectively an endorsement of our drug development strategy, which in short could be summed up as ‘be the best or go home.’ I applaud China’s new policy, and feel it is the right direction for them to move in.”
The Oneness Pipeline is made up exclusively of first-in-class drugs
“When we look at Oneness’ pipeline (see graphic below), diabetic foot ulcer remedy Fespixon® (ON101), atopic dermatitis treatment FB825, neutrophilic asthma antibody agent FB704A and our in-development nucleic acid anti-virus drug are all first-in-class. We won’t be anyone’s follower. In fact, we could generate 20-30 candidates from our fully humanized antibody bank at any time if we wanted to repeat other company’s targets or if we wished to develop biosimilars. But we have no interest doing it.”
A Robust Pipeline of First-in-Class Drug Assets
Changing the Face of the Diabetic Foot Ulcer Market
“There have not been any new DFU drugs approved globally over the past 20 years; and the current first line drug has poor efficacy, as well as high risk of harmful side effects” says Mr. Lu.
Diabetic foot ulcers are most commonly caused by neuropathy and peripheral artery disease. Patients will not be aware of the wound on their foot, which often leads to the development of a bigger sore or ulcer and, with progression, infection or necrosis. The most severe ulcers can eat out the bone, eventually resulting in amputation. On a global basis, a lower limb amputation is performed every 20 seconds on a diabetes patient due to lack of effective treatment for DFU wound care. The 5-year survival rate of DFU amputees is less than 60%, and DFU is the leading cause of death for diabetes patients. The biggest reason for this is that there are no reliably effective treatments for the disease. Current treatments are surgical or rely on medical devices, such as hyperbaric oxygen therapy, negative pressure wound therapy, grafts, or specialized dressings. There are very few drugs available, such as Regranex, which was launched in 1997, but which has limited efficacy and potentially harmful side effects.
Fespixon®, developed by Oneness, has demonstrated better efficacy than other treatments. During the observation portion of the Phase III trials, 60% of patients achieved wound closure within 16 weeks and over 50% of patients experienced wound closure within 14 weeks. These results imply that if Fespixon® is adopted globally, it could result in a massive decrease in the cost of DFU care, as well as greatly reducing the number of amputations and subsequent deaths.
Says Mr. Lu, “We are talking about excellent results on all types of DFUs, including the most difficult cases. Fespixon® demonstrated outstanding wound closure capability for patients with a high BMI, smokers, ulcers over 6 months old and large ulcers.”
A 15-year study published in Diabetes Care in 2020 calculated the cost of treating diabetic foot ulcers in Taiwan and found that average annual cost per DFU is more than NT$140K. On average, Fespixon® can reduce this cost to below NT$50K, which is roughly a 60% reduction.
Says Mr. Lu, “Seeing the effectiveness of the medicine with my own eyes was extremely gratifying, because its healing effect on the ulcers was very obvious. Some patients had been living with these open ulcers on their feet for up to 6 years, and were suffering significantly. After taking Fespixon®, the ulcers healed within 3 months. I can’t describe how it made me feel to see the joy on their faces, and the look of disbelief on the doctors’ faces. It was a humbling experience that made us feel grateful for having the chance to have such a positive impact on people’s lives. It also built up our confidence and resolve to continue on this road of developing new drugs. I admire doctors’ dedication to their patients, and we are proud to provide them with this new weapon to fight an illness that previously had them at their wits’ end. It is a great feeling.”
Fespixon® is in its second Phase III clinical trial in the US. The drug’s first Phase III clinical trial has been completed and the drug has obtained full marketing approval for the Taiwan market. Oneness has also filed new drug applications in China and the ASEAN region. The company expects to file a new drug application with the US FDA after completion of its 2nd Phase III trial in 2023, and to achieve a global launch in 2025.
Atopic dermatitis – a global partnership with LEO Pharma
Besides Fespixon®, people are curious about FB825, which was licensed out to LEO Pharma for US$ 530mn.
Allergic reactions are induced by allergens. When allergens are introduced into the body, they interact with B cells, which then produce Immunoglobulin E (IgE) and stimulate mast cells to secrete histamine. Tissues that come into contact with histamine will then present a variety of allergic reactions. After the initial reaction to the allergen has occurred, the immune system will then continue to produce the allergen-specific IgE antibodies, and maintain them at a certain level in order to retain the ability to react quickly if the allergen is introduced again in the future.
Giving the patient a medicine with an anti-IgE antibody can neutralize those free allergen-specific IgE antibodies, and ease allergy symptoms. IgE-mediated allergic asthma treatments are an example of such a drug. But for some patients, the efficacy of anti-IgE antibody treatments are limited, so the free IgE levels remain high and the symptoms of the allergy continue unabated.
Mr. Lu explains to us how FB825 is different from the traditional mechanism of anti-IgE antibody, “FB825 is an Anti-CεmX antibody. Its key function is to lyse mIgE-expressing B cells and to prevent the allergen-induced generation of IgE-producing plasma cells. To make an analogy, the anti-IgE antibody is like a wash cloth. It can wipe up water that has leaked out from a faucet. But if the faucet keeps leaking, the wash cloth will not be able to soak up all of the water that is on the floor. FB825 is designed to stop the faucet from leaking in the first place, thus preventing the leakage, and providing a better result for the patient.”
“JP Morgan matched Oneness with LEO Pharma at their annual JPMorgan Healthcare Conference. Before that, we already started talking to several different pharmaceutical companies about this product, and we met with many more investors and potential partners at the JPMorgan Conference. LEO took our materials back to their headquarters for further study after our first meeting in January of 2020, and we continued to talk to other potential licensees. By then, our first-in-human trial had shown clear evidence of efficacy for atopic dermatitis. Around the same time, it became known that Sanofi/Regeneron’s sales of Dupixent, another atopic dermatitis drug, had surged dramatically, reaching US$ 2.32bn for all of 2019. Because of this, many companies began looking for new opportunities in the area of atopic dermatitis. LEO Pharma came back to us in April and asked to continue the dialogue. While talks with other potential licensees continued, we eventually reached a win-win licensing agreement with Leo Pharma. The bridge was built by JP Morgan, so we are very thankful to them for helping to introduce FB825 onto the international stage.”
LEO Pharma appreciated the potential of FB825 for treating atopic dermatitis. Elevation in IgE levels can be detected in 70%-80% of AD patients and FB825 can effectively tackle the allergy at its source, improving patients’ quality of life. The 2020 sales of #1 blockbuster AD treatment Dupixent were US$ 3.86bn and according to projections published by the Jefferies health care team, the peak sales of Dupixent could reach US$ 12.5bn. There are 2.2mn AD patients in the US alone, which means that Dupixent’s market share in 2020 was only 6%. So, the potential market for atopic dermatitis treatments is astonishingly huge. In fact, the Global R&D Head of LEO Pharma said, ‘Having seen the first-in-human data of FB825 and the reduction in Eczema Area and Severity Index scores (an indicator of AD severity), we feel that we are welcoming a promising novel drug candidate into our development pipeline’.” Mr. Lu, pauses to smile and says, “We were very proud to hear that.”
Currently FB825 is in the Phase IIa stage in the US and the results are expected to be published in 2H21. After that, LEO Pharma will take over the Phase IIb and Phase III trials.
Oneness has a comprehensive pipeline of asthma drugs. Among them, the licensed drug FB825 can also target IgE-medicated allergic asthma; a Phase IIa trial is ongoing and the results will be published in 2022. LEO Pharma will take over the subsequent trials or sub-licensing.
FB704A is the first and only drug that targets neutrophilic asthma
Most antibody drugs for asthma target IL-4 or IL-5, which are on the Eosinophilic non-allergic asthma pathway, or they target free IgE for allergic asthma. There is no biologic drug targeting neutrophilic asthma. In the guidelines for severe asthma biologic drug assessments, both allergic asthma and eosinophilic non-allergic asthma have drugs that target their treatment, but there are no known treatment options for neutrophilic asthma.
“FB704A is an anti-IL-6 antibody. In any medical textbook written over the past 20 years, if inflammation is mentioned, then IL-6 is also mentioned. Any expert in this field will know about IL-6, TNF-alpha and IL-1 beta. However, there are no blockbuster drugs that target IL-6. Other than drugs targeting Rheumatoid arthritis, all the drugs approved to date that target IL-6 are orphan drugs. We are targeting IL-6 in neutrophilic asthma indications, but it was not until 2018 that doctors found neutrophil in mucus and discovered this type of asthma. The Superintendent of the Taipei Medical University Hospital Dr. Han Bin Kuo is our Lead Principle Investigator for this drug asset, and he told me: ‘Mr. Lu, we previously estimated that 10% of severe asthma cases globally can be categorized as neutrophilic asthma, but now we believe it accounts for 20% of all cases, because more doctors are aware of it and able to diagnose it.’ Oneness is developing the first and only anti-IL-6 antibody for neutrophilic asthma. If successful, we will likely dominate this market. This is the type of result that we aspire to. Oneness is at its best when we successfully apply our two core competencies – drug development expertise and the careful assessment of untargeted, but potentially large, market niches. FB704A is the first drug targeting the upstream modulator of the neutrophilic asthma signal transduction pathway: IL-6. The drug could potentially benefit up to 110mn people who suffer from neutrophilic asthma globally and among this group there are 5.5mn patients whose condition is severe. If we succeed, this will no longer be a disease without remedy. More importantly, there are no other drugs on the market for the disease, meaning that we are the first mover in this space. Moreover, the diabetic treatment giant Novo Nordisk acquired Corvidia Therapeutics for $2.1B in May 2020 mainly because of the successful Phase II trial results for its anti-IL-6 antibody drug. This transaction is a clear demonstration of the potential future value of FB704A. ”
Oneness is also developing a new antibody drug that can treat allergic asthma and eosinophilic asthma. The comprehensive asthma pipeline of Oneness covers 3 different types of asthma, accounting for 70% of asthma patients globally.
“If Oneness can develop and market 5-6 new drugs, then I will feel that we have made a positive contribution to mankind, and my life will have been well spent.”
To conclude, Mr. Lu shares key lessons he has learned during his career in the drug development industry, “If one wishes to successfully lead an innovative drug company, it’s necessary to have a complete understanding of the challenges the development team is facing, to clearly define the milestones and to have an intimate knowledge of the risks in taking a chosen path. It’s also necessary to give the team the resources they need to find the right solutions to a given challenge. The CEO should be very honest with himself or herself about the expected future value of the market for the target and the key factors driving the market’s growth. For example, if you decide to develop an asthma drug, and you know that the market for asthma drugs is already very crowded, you will be leading your team and shareholders straight to the edge of a cliff, unless you have a clear vision of the niche you want to address.”
“I know the asthma market is swamped with drugs, like a patch of sea filled with a school of sardines. Not only are there sardines in this sea, but there are also whales in it, even blue whales. So if you jump in, is there any opportunity left for you? Actually I believe there is more blue sea than everyone thinks and my team and I have worked hard to find it. A blue sea can be hidden behind a narrow fjord; and too many people see the narrow fjord and just assume that it does not lead to open waters.”
Whether it was my devotion to the developing health supplements from gut microbiota or my ambition to develop antibody drugs, so many people told me that I would never succeed. But I have a strong will, and I found niches that other people didn’t see, and that’s become the blue sea of my business. My mother was a produce vendor when I was a kid and I am the youngest child in my family; so when my brothers and sisters went to school, I stayed with my mother. We woke up at 3:30 am every day, even on typhoon days. We rode over 10 km on a worn out bicycle, carrying several large empty bamboo baskets. After filling them with produce, we carried the heavy baskets back on the same bicycle. I always wondered why the tires never blew out. We wore raincoats when it rained, and we were often chased by wild dogs. At 7am, we’d arrive back at our house, and then go to our stall in the wet market to start selling. As far as I am concerned, nothing is harder than that. Now I can sit in my air-conditioned office, have meetings, join conferences and discuss the science of drug development. I don’t find it exhausting at all. Having witnessed my mother live that kind of life, never missing even a single day in 20 years, I don’t give up easily. How can I? My parents never gave up, never. So, to think that I would give up on achieving success in my chosen field of drug discovery and development just because other people think I won’t succeed? That’s nonsense!”