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A little-known Chinese biotech firm’s effort to develop a COVID-19 vaccine got a big shot in the arm this week when Beijing granted the company permission to conduct large-scale human testing on Chinese soldiers.
As Grady reported Monday, Tianjin-based CanSino Biologics said in a statement to the Hong Kong stock exchange that China’s Central Military Commission has cleared the way for the People’s Liberation Army to inject soldiers with Ad5-nCoV, the company’s leading vaccine candidate, for a period of one year.
The announcement makes Ad5-nCoV, an adenoviral vector, a clear front-runner in the global race to develop a COVID-19 vaccine. CanSino conducted Phase I and Phase II clinical trials of Ad5-nCoV in Wuhan, China, in March, becoming the first drugmaker in the world to test its vaccine on people. In May, the company notched another global first by publishing a full scientific study of those tests in The Lancet medical journal, reporting that blood samples from a group of 108 vaccinated adults showed that Ad5-nCoV is safe and induces a rapid immune response.
It’s not clear how many soldiers will get an Ad5-nCoV jab, but the potential sample size is huge; with more than 2 million active-duty personnel, the PLA is the world’s largest military. Nor is it clear whether getting injected will be optional or mandatory for China’s troops. But it seems safe to guess that collaborating with the Chinese military will let CanSino streamline the myriad legal and ethical restrictions that can slow large-scale clinical testing in other countries.
CanSino has worked closely with the Academy of Military Medical Sciences, the PLA’s medical research institute, to develop Ad5-nCoV. The organizations’ COVID-19 effort reprises their previous collaboration on an Ebola vaccine, which won Chinese government approval for widespread use in 2017.
The partnership is extraordinary in many ways. CanSino, founded by a group of China-born researchers who worked for global pharmaceutical companies in Canada, is a private company listed on the Hong Kong stock exchange. Chief executive Yu Xuefeng earned his doctorate from McGill University and is the former head of vaccine research and development at Sanofi Pasteur Canada. The PLA’s medical research team is led by Chen Wei, a major general who has become something of a celebrity in China for her work on the Ebola vaccine and for developing a therapy used by Chinese health workers to combat China’s SARS outbreak in 2003.
As this excellent Bloomberg profile notes, Yu has made the most of his relationships in Canada and China even as geopolitical relations between the two countries have soured. CanSino is working with researchers at Dalhousie University’s Canadian Center for Vaccinology, to launch Phase III trials of Ad5-nCoV as early as this fall. If those tests prove successful, Canada’s National Research Council will produce the vaccine for the Canadian market at a manufacturing facility in Montreal.
CanSino has yet to generate revenue and posted a $22 million loss last year. But its nimble pivot to develop a coronavirus vaccine has lifted the company’s stock price to HK$217, up from HK$60 at the beginning of the year—boosting its market capitalization to over $6 billion.
In the global race for a vaccine, CanSino leads a pack of Chinese competitors. Among them: China National Biotec Group, which has secured approval from health authorities in the U.A.E. to conduct Phase III testing; Beijing-based Sinovac Biotech, which has signed a deal to do final tests in Brazil; and Shanghai Fosun Pharmaceutical, which is partnering with German immunotherapy company BioNTech and Pfizer to develop an mRNA vaccine.
Of the 19 coronavirus vaccines to have conducted human trials, seven involve Chinese entities, according to the New York Times‘ coronavirus vaccine tracker.
For years, skeptics of China’s ability to innovate have pointed to pharmaceuticals, along with semiconductors, as a sector where Chinese technology would never match that of the West. In this week’s Eastworld Spotlight interview, I asked Gary Rieschel, founding partner of Qiming Venture Partners, an early CanSino investor, his take on that. His answer: “I would suggest that anyone who’s ever competed with Chinese entrepreneurs probably has many stories on how they underestimated what they’re capable of doing.”
More Eastworld news below.
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
A chill over Hong Kong
At the strike of midnight on Wednesday, Beijing implemented its new national security law in Hong Kong. The details of the law were only made public upon going into effect, and it provides Beijing with sweeping powers to arrest and prosecute those in Hong Kong that it sees as engaging in separatism, subversion, terrorism, or foreign collusion. Beijing says that it will only use the law in rare cases that threaten China’s national security, but critics argue that the law overrides Hong Kong’s legal system and erodes the freedoms and relative autonomy city residents have enjoyed since the 1997 handover. In protests against the law’s passage on Wednesday, Hong Kong police arrested roughly 370 protesters, 10 of which were alleged to have violated the hours-old law. New York Times
Beyond the battlefield
In the wake of a border standoff that killed Chinese and Indian soldiers, Asia’s two largest economies are re-examining their economic ties. In India, a 'boycott China' campaign has gained popular support, and this week the Indian government took the step of blocking 59 (mostly Chinese) apps from Google and Apple app stores. Calls in India to take aggressive measures to stem Chinese economic influence in the country are only growing, and some Indian firms have pledged to stop buying from China entirely. India’s government is also considering other options to restrict Chinese goods and capital from flowing across its borders. At the same time, India's economy is deeply reliant on China, meaning India's efforts to decouple may result in self-inflicted wounds. Fortune
Chinese hackers and Canada's fallen tech giant
In 2000, Nortel Network Corps was Canada’s flagship telecoms firm and one of the world’s largest companies with a market valuation near $250 billion. At the time, the company dominated the fiber-optic data transmission sector and seemed perfectly suited to lead the charge in building 4G and 5G networks across the globe. But in 2004 Canadian authorities tipped off Nortel that Chinese hackers had infiltrated the company’s computers and stolen valuable documents and data. Former company executives say the hack played a major role in the downfall of Nortel, which went bankrupt in 2009. They also allege that the Chinese government, along with Chinese telecoms giant Huawei, may have brought down Nortel in order to scoop up its contracts and become a global telecoms leader. Huawei denies the allegations, but the story raises further questions about the relationship between Huawei and the Chinese government. Bloomberg
A (fake) gold rush
Kingold Jewelry, China’s largest privately-owned gold processor, is being accused of pretending that its copper was gold. In an investigation published on Monday, the Chinese outlet Caixin alleges that Kingold used 83 tons of gold as loan collateral with several companies—but the gold was nothing but gilded copper. Kingold denies the allegations, yet its stock on Nasdaq plunged by nearly a quarter in the wake of the report. According to Caixin, Kingold’s alleged fraud came to light in February, when Dongguan Trust, a company that had purchased gold reserves from Kingold, attempted to liquidate its assets with Kingold. Three other companies have since made claims that their Kingold gold reserves turned out to be copper. Caixin
A billionaire dreams of soccer
Asia’s richest person is facing off with India’s top soccer body over the future of the sport in India. Mukesh Ambani, the CEO of India’s largest conglomerate Reliance Industries, created the Indian Super League soccer competition in 2014 with dreams of helping transform India into a major global player in the sport. In its first five years, however, the league has struggled to make money and gain fans in a cricket-obsessed nation. Ambani and his affiliates are now hoping to employ more foreign players to help boost the league’s popularity, yet India’s top soccer governing body believes India should be focused on developing local talent since it ranks 108th in soccer, even with the world’s second-largest population. Reuters
Coronavirus by country
Since May 28, Nepal has reported over 11,000 new cases of coronavirus after recording less than 1,000 up to that point. The problem is likely twofold: the country began to relax relatively strict lockdown measures in mid-June after imposing them in March, and thousands of Nepalese workers are now returning to Nepal from India. Meanwhile, the country is on the verge of an economic crisis due to the pandemic. Nepal relies on remittances from abroad for a quarter of its annual output, and the World Bank projects that the payments will drop by over 14% this year. What's more, Nepalese youth have been taking to the streets in anti-government protests in recent weeks, alleging that government authorities have mishandled the coronavirus response and are misusing coronavirus funds. The Diplomat
For individual stories about how Nepali citizens have experienced the pandemic, check out Stories of Nepal, which features photos and testimonials of people across Nepalese society.
Markets and movers
Pinduoduo – Colin Huang, the CEO and founder of China’s fastest rising e-commerce company, announced on Wednesday that he is stepping down as chief executive and will give his job to Lei Chen, a top executive and co-founder of the company. Huang says he's stepping back to work on the company’s longer-term strategy. Bloomberg
Beyond Meat – On Wednesday, the plant-based meats company announced a new partnership with the Chinese tech giant Alibaba. Beyond Meat said its products will now be sold in China by Freshippo, a supermarket chain owned by Alibaba. Financial Times
SK Biopharm – In South Korea’s largest IPO since 2017, the South Korean pharmaceutical company raised $800 million at a market capitalization of $8.25 billion in its debut on the South Korean stock exchange on Thursday. Nikkei Asian Review
Final figure
1.6%
The International Monetary Fund (IMF) said in a blog post on Tuesday that it expects Asia’s economy to contract by 1.6% in 2020. This will be Asia’s first economic contraction in “living memory,” the blog stated, and has been revised down from an April growth projection of zero due to a weaker global economy and longer-than-expected quarantine measures across the continent. The IMF predicts a strong rebound in 2021 in the absence of a second wave of COVID-19. To fulfill that expectation, Asian countries need to allocate resources to prevent widespread bankruptcies, ensure credit flows to households and small businesses, and expand social safety nets so growth isn’t further concentrated among the elite. International Monetary Fund