Shanghai Evans Investment Management Limited

Interview with Mr Scott M. Wheelwright, PhD, COO | Beijing BioInno Bioscience Co , Ltd.

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BioInno is a CDMO for development and manufacture of antibodies, cell therapies and gene therapies.

Script of Interview

Interviewee                                                Mr Scott M. Wheelwright, PhD   (SW)

Position                                                      Chief Operating Officer

Company name                                         Beijing BioInno Bioscience Co., Ltd.

Company website URL                   

Interviewer                                                 John D. Evans, CFA (JE)

Interview conducted on                           11th  August 2020

About Scott Wheelwright

JE : Okay, good stuff. So in the first section, the first two bullet points, why don’t you start off and tell us a little bit about yourself, where you grew up, what you studied and a little bit of your background.

SW: Okay, so I’m Scott Wheelwright and I have a PhD in chemical engineering from the University of California at Berkeley. I was a postdoctoral student at the Max Planck Institute of Biophysics in Frankfurt, Germany, and then worked in the biotech industry in the US for many years. First, at Abbott Laboratories and then in California for Scios. I worked for Chiron, which is now part of Novartis and Scios, which is now part of Johnson and Johnson. Then for sometime with small biotech companies. I came to China about 12 years ago to learn the industry here in China, understand what different companies are doing and how they’re doing it. The goal was to start a company, which we did. I had done some consulting for friends here in China; my consulting work was mostly related to manufacturing and what we call GMP or Good Manufacturing Practice. The manufacturing practice is the regulations defined by different regulatory bodies such as the US Food and Drug Administration the European Medicines Agency and in China it’s called the National Medicinal Products Administration, which used to be called the SFDA or CFDA.

JE: Like every profession, it has its own acronyms. Okay.

SW: It has a few.

JE: Okay, so you came to China 12 years ago, have you always been in Suzhou?

SW: So when I first came, I had a small grant from the city of Wuxi to do some training, and my partner and I tried to do that, but weren’t very successful. But in the meantime, we’ve learned a lot about the industry in China. My consulting before coming to China was in manufacturing and I helped some clients over here. So one of my clients was my good friend, Michael Yu. We had worked together in California, at a small biotech company called Calydon. And another client was Wison. We were on a project for Johnson and Johnson, in 2008 or 2009, it wasn’t a good year for projects. And it did not come through, but it gave us a lot of experience and my colleagues had their own company with Wison called Genor which become part of Walvaxs, a very successful company. And then after that, Michael and I set up a company called Innovent which is one of the most successful biotech companies in China.

JE: Okay. Very interesting. So I mean, I’ve looked at the website, I’ve looked at your bio, so is BioInno 100% of what you’re doing right at this time or do you have other activities going on separate from BioInno?

SW: My focus is on BioInno. We have a wide variety of activities that we provide services for and that includes consulting, which is something that I’ve done for the last six years and has been focused on quality assurance for Chinese pharmaceutical companies. The goal has been to improve the quality of pharmaceuticals made in China. We’ve done that for a number of companies. We’ve represented a number of US and European firms, as well, Japanese and Korean, Singapore, India. We work worldwide, but our focus is on companies that have partnerships with Chinese companies to ensure the Chinese partners are meeting the international standards for quality and manufacturing.

About BioInno

JE: Okay. Okay, so let’s turn now to the company. I think the full name is Beijing BioInno Bio Science Company Limited. We just abbreviated to BioInno. Tell us what is the status of the company right at this point time? Is it already in production? Is it still in development or where does it stand?

SW: So we started this company late last year and we’re still in the process of raising money. In order to fully fund it, we have raised initial funds and we have hired a few people. And we have incorporated my consulting business into the business. So that work is continuing. We have a facility acquired in Taicang, which is about an hour’s drive from downtown Suzhou and that is close to Kunshan. This facility is two buildings in an eight building business park, about 12,000 square meters. And we’re just finishing the design now of the manufacturing facility. We expect to be in operation early next year with the manufacturing facility.

JE: Those are the two sort of seven or eight story red brick buildings I saw on your website. Is that correct, that were still being finished?

SW: Right. Right. They are about four stories each. There are eight buildings in the business park, we have two occupied and we intend to bring in other companies and partners to fill up many of the others. We’ve had a good relationship with the park here. This is an expanding area. We see this is a good location for our company.

JE: Okay, I know the whole pharma industry is very important to the Suzhou area. I mean, does the government help you get started or do you have to pay for all of the capital costs?

SW: So we’ve raised our own capital, but the government has been very supportive. In fact, just last month, the CEO of SIP declared that Suzhou will become the pharmaceutical capital of the country. And so they’re putting a real effort into this. They’ve done very well in the past. All of the major international pharma companies have plants in Suzhou, mostly SIP, some in Xiangcheng, and some farther out like in Taicang here. Taicang has also been very supportive. Most government support is in the form of reduced rent or delayed fee for buildings, with some capital support for equipment. We can talk about that later. That’s a concern I have about the way the government does this, it’s not the most eficient use of government money to give everybody equipment and expect them to do it themselves. It’s better to let the professionals do manufacturing, companies should spend their money and time doing what they do best, which is primarily research and development.

JE: Okay, okay. So, are you sort of making presentations to investors now to close the funding?  And then when that’s done, you will start finishing the buildings and hiring more staff. Is that the next step?

SW: So we’re in, we’re finishing the design now. So we have the conceptual design, this is what goes where, now the detailed design will tell us how big pipes need to be in which locations. And we’re doing that design now. That’ll be finished in another couple of months. And then we’ll start construction, probably in about a month or so. And once we have the construction well underway, we’ll bring in other money, probably not until the end of this year, we have enough funding that is going to require a few engineers, and we’ll continue. The goal is to have the first manufacturing batches done in some of the workshops before the end of this year and others next year.

JE: Okay, very good. Now, just for those who are not fully familiar, what is a CDMO? Is it different from a CRO and do you do one or the other or both?

SW: That’s a good question. Because of these acronyms it’s sometimes confusing in the industry. CDMO stands for ‘contract development and manufacturing organization’, which means we focus on processes and making drugs. A CRO is a ‘contract research organization’, which focuses on primarily either primary research to come up with a new drug or to do clinical research, which is to test the drug in animals and people. So we focus on the manufacturing side. Now, the pharmaceutical industry is divided into several types of products. Historically, it’s all been what we call small molecules, like aspirin, which has the molecular weight about 150 times that of a hydrogen atom. And that’s our standard reference, the hydrogen atom. Biopharmaceuticals are the new drugs and they are made in genetically engineered cells, whether mammalian cells or bacterial cells or yeast. And these drugs are much more complex and cannot be made by chemical synthesis at the rate small molecules are, this is too expensive. So, we manufacture in genetically engineered cells, which is very efficient way to do it. A monoclonal antibody for example, is about 1000 times the size of aspirin. So, it’s like a basketball versus a golf ball.

JE: Okay, Okay, because I thought I noticed on your website, there was some reference to CRO services. So I just wondered, is that something related that you also offer maybe in the future?

SW: So, there are a number of services that we partner with outside companies. We have a partner in Beijing that helps with the contract research, that will be animal testing and testing in people and regulatory barriers to entry, all right, and working with the government. The goal is to find the best way to get your product to market as soon possible.

JE: Okay, so BioInno is a CDMO but it has relationships in an ecosystem with companies that do other parts of it, regulatory, CRO and things like that.

SW: Right. We recognize that we can cannot do everything, we don’t tend to do it, even companies like Wuxi Biologics doesn’t try to be everything. And so we focus on those things where we have the primary skills and we work with partners that are also very skilled in what they do, and it’s a synergistic partnership.

JE: Okay, okay. So let’s take as of the first of January 2021. Hopefully, you’re up, things are getting better with the Coronavirus, what’s the company going to be like three years down the road in terms of size and activity, focus etc.

SW: So, by January we expect to have about 80 people on board and they will be primarily manufacturing staff. Our operations include multiple different factories that make different types of products. So the largest of these is recombinant proteins like antibodies. These are difficult to make, they are complex. There are a number of competitors in the field today, our focus is on the more difficult ones to make, those called bi-specific, as it has two modes of actions instead of just a single mode of action. And our goal is to bring the cost down. So many people can do this and do it well. Our goal is to do it for our clients at a lower cost on a per gram of protein base, so that the drug costs less in the marketplace. It’s going to be a very competitive marketplace. As more of these drugs come to market, the push we saw started here in the market a year ago in China. And that’s an interesting thing to think about with this industry and what sets China apart from the rest of the world. There will be time in terms of adopting these types of protein based drugs, antibodies. So, for example, worldwide antibodies and other protein based drugs account for over 20%, maybe 30% of the total pharmaceutical market, and that’s from zero thirty years ago. And in China, these drugs only account for about 10% of the total pharmaceutical market, which means there’s this substantial opportunity for growth of these products in the Chinese market. But the big barrier is price. Even a biosimilar, which is a drug similar to the brand name, but it’s a lower cost product. It may sell for 1/10th the price than the US but it’s still In many cases not reimbursed by the government’s health service. And it’s very expensive, and patients have to pay for it themselves and our goal is to help companies to reduce that price.

JE: Will all your activities, or maybe I should say your production, be for the domestic China market then?

SW: No, we expect that our market will be primarily Chinese companies, and that’s where the growth is now. But we expect we will be a low cost producer. That then, because I will explain later, some of our partnerships for technical skills, we think that we have a good opportunity to support our clients in the US and Europe as well. I was going to say, in addition to the antibodies, which are the largest of the recombinant protein drugs, other drugs that we may include are gene therapies, which are a virus based therapies. It’s typically a one time solution as opposed to repeated doses to cure a rare disease. Cell therapies are also one of our workshops, and these are often patient based, we manipulate those cells so they produce a therapeutic entity that fits the disease in the patient. And then by using the patient’s cells, the patient’s body doesn’t recognize it as foreign, and it has a better chance of success. So things like arthritis and some cancer products fit into this category.

JE: Okay. And, and I know at the beginning, you explain there’s different regulatory entities in China, Europe and America. So as you were saying you might be able to sort of export or assist in the American market, does that require complicated additional regulatory approval? Or if you’re approved and everything in China, can you export to the other markets with your regulatory approvals here?

SW: So every country, regulates its own market. And so any product that is within that market must be approved by that country’s regulatory agency. So in the US, that’s FDA registration, and every product that’s sold in the US must be approved by the FDA, before it can be sold and in order to get that approval, one must conduct clinical testing in people to verify safety and the dose and the efficacy of the drug. Each country is the same. So we and our clients are responsible for that activity, we will help them and we will ensure that the manufacturer meets the standards of the market, which it is going to be sold to. That’s one of our leading areas of expertise, regulatory requirements for manufacturing in the US and Europe. And we expect that our Chinese clients will benefit also from having this higher standard of quality. We do not actually require regulatory approval in China in order to make our products and send them abroad. That required approval is granted by the host company.

JE: Okay, okay. Now I understand. I think there’s three other founders with you, sort of four key persons listed on the website, who are the other three persons? And how did you come together as a group?

SW: Well, we have a good story behind this, I think, David Zhao who is our CEO. He and I have known each other for over 15 years, and we’ve been toying with the idea of doing something like this together since then. We didn’t do it 15 years ago, we didn’t think the market was right. It’s interesting that the company I started with here, Innovent, in China is called Xinda. It’s a very big biotech company. Our initial business plan was as a CDMO. That was rejected by Fidelity, that was our funding agent at the time. And we re-wrote the plan, as an antibody production company, and we got funding and developed that but I have always wanted to go ahead with this CDMO because I think there are great opportunities. I think the market is far away from being saturated here in China. Our other partners include Dr. Rolf Werner who was head of the CDMO business for Boehringer Ingelheim. Now, Boehringer Ingelheim is one of the top three international CDMO’s. Rolf ran that business for many years. Their first product was distribution in Europe of Activase which was developed by Genentech, which is now owned by Roche. And they built a very large facility in Germany to produce that product and sell it throughout Europe. They’ve expanded many times. They have, I’m thinking they have 150,000 liters capacity worldwide. They have a facility in China. Rolf has been a friend of mine for 20 years, we investigated another company I worked at, we looked and contracted out, to the CDMO. And Rolf was one of the people who talked to me; we went with the Novartis facility in Austria but Rolf and I have been acquainted since that time, and when we invited him to join us as our CTO he was very happy to do that. He’s actually just come to China now, but he’s stuck in quarantine for 14 days. We look forward to having him be part of our activities. The fourth member is our CFO, and she’s in Beijing. She is a financial person with experience in the national banking industry.

JE: Okay, okay. I mean, in terms of the key, the core business, when December comes, when you get your 80 persons, who are the other companies in this ecosystem that you will be most working with is sort of the regulatory compliance people, the CRO’s. Who’s, what’s the whole package?

SW: Yes. So, there are three different groups of companies. First of all, there are our clients. And we are recruiting clients now. We’ve talked to several people and we have several proposals under discussion. We have a small laboratory at bioBAY where we can do cell line development, subculture media development, and early stage development of the process. So our clients are very important. The second group is our partners. Now, mostly the CDMO is focused on the clients and they focus on their own technology. We decided that we don’t want to have to be experts in everything and that we recognize that bringing the expertise in house for everything is going to be very expensive and difficult. And so we have set up a series of partnerships. So, for example, these include equipment and services. So our bio reactors, that’s the large tanks that we use for growing the cells, then producing the protein. These are being manufactured by one of the leading bio reactor manufacturers in the world, this happened to be the units that we’re buying. We have a partnership with the manufacturer, and they are, they will be the largest of this type in China. That is a single use bioreactor of 6,000 liters.  Nobody else has a unit like this in China. We will be the first and this is what enables us to bring prices down to lower the cost of manufacturing for our clients. Other partnerships include purification materials for recovering the proteins of high purity. We have a group in Europe, we have two groups in Europe, they have two different types of materials for different purposes and they are the leaders in their industry. So they are the best at what they do and we have access to their people, our clients, make sure that we’re giving our clients the best possible process for the clients process. Okay, so clients, and then partners, and then there’s our competitors. Okay. So, in this industry in China, Wuxi Biologics is by far the largest. They have maybe 10 or 15 times the volume of anybody else in the industry. And I don’t know if we’ll ever be able to catch up to them. But that’s not our goal. Our goal is to specialize in areas where they don’t do it. And one of these is price competition. And the other is in these, some of these technologies where we have partners, and we don’t try to bring it in-house ourselves. There are other very big competitors out there. I think the market has lots of room for opposition. I’m not worried about competition. Competition is a good thing. It helps keep us on our toes.

About the Industry

JE: Okay. Okay. I think that really covers off the whole second section, about BioInno, the company and touches on the industry, such as your competitors. You’ve, you’ve talked, you’ve touched on the regulatory system. So for manufacturing in China, for Chinese customers there is sort of two regulatory processes, one approval for the output and then there’s also the CGMP, those are sort of the two areas of focus from a regulatory point of view.

SW: So, regulatory covers, as you say, two aspects, one is the drug itself, and that is its safety and efficacy. And the second is how it’s made. So, for Chinese clients, the same as the client in the US or Europe, they must have approval of the regulatory group in the market for which they want to sell. So Chinese clients want to sell in China or foreign clients who want to sell into China, we hope to manufacture those products also. Those have to be approved by the NMPA. Now, China has two different routes of approval for drugs to be sold in China. One is as an import, that is the drug is made outside the country and then imported into the country and sold in the country. And in the past that has been a faster route to approval. But there have been changes in the last two years by the NMPA which has sped that up, the goal being to bring in new therapies to Chinese patients sooner. The second is as a domestic manufactured product and that requires the manufacturing be performed here in China. And that manufacturer is something that we can do for foreign companies, who want to register as domestic. Now the advantage of a domestic registration is that you have a much better opportunity to get reimbursement by the National Health System. Otherwise, patients may have to pay for the drug themselves.

JE: Okay. Okay. Now, for as long as I’ve been able to read, there’s been big pharmaceutical companies in the world. And yet in taking a few of your comments, I sense there’s still a lot of growth potential in your industry. So I mean, is it is your sort of focus still at an early growth stage? Or is it just that China is a big untapped opportunity where, where is the real growth and in business potential in your industry in general?

SW: Yes, that’s a good question. That’s something that I mean, everybody’s aware of the big companies like Bayer and Abbott regardless, but 40% of new drugs are developed by small startup companies. So most of new development occurs at the startups, it does not occur at the big companies, and the big companies acquire the drugs by acquisition. So that’s how they maintain their, their large position, they acquire companies like Millennium or somebody and become a much larger company. And they acquire that company’s pipeline in new drugs and new development. So if you look at the industry in China, you’ve got big companies, like Novartis which has a large very large Research Center here in China, and GSK has a research center. And then you’ve got a group of homegrown companies like BioThera, Innovent, etc., each of these companies has about 15 products under development. They have two or three on the market. They’re getting more every year, they are doing very well. Innovent has I think 400 people, a market cap of about 3 billion US dollars. So I mean, it’s a very competitive and very successful. Yes. But there are a number of small companies, that’s where a lot of research is being done. And China is in a very good position today in that it has a lot of good researchers who have been trained overseas and come back to China. And a lot of good research for new drugs is being done in China.

JE: Okay, it sounds somewhat analogous to what I read about the tech industry in Silicon Valley that, you know, the big four or five are, are always looking for good startups to sort of bring into their system and work with them. It sounds like there’s a similar relationship with Big Pharma and then a lot of much smaller companies that maybe sell to them or interact with them.

SW: Yes, I think that’s a good analogy. And the biotech industry has been using the analogy with the semiconductor industry for 30 or 40 years. Startups, small, clever, fast, they use less money, they use some very sharp people to figure out what needs to be done and how to do it. And then they get a lot of the development work which is to bring it direct to market is very expensive. But the initial discovery work is not the expense. The patient testing is expensive. So if you need 1,000 patients, and you were going to spend 10, 000 dollars per patient, that means 10 million, just for one study. And you can you could easily spend 100 million dollars on a phase three study for a new drug. And that money comes from the big players. So the initial startups, they’re doing the small discovery work, they’re getting the product demonstrated. You know, if you look at the value, then about for every drug that gets to markets, there are 10,000 drugs that show eficacy in laboratory. So it’s a one to 10,000 success rate. All the others fail to get to market, either because they’re too toxic, they’re too expensive to make or for some other reason, we can’t prove that they work as well in people as they do in the laboratory.

JE: One in 10,000 that makes the roulette wheel seem like a good bet.

SW: So, high gain, so I mean, if you get a really successful product, then you’re looking at a billion dollars in sales every year. Okay, so that’s worth spending a billion dollars to get that product. But you could easily spend, you know, 200 million dollars on a product that fails.

JE: Yeah. Now I’m, I’m interested to know longer term, how China will fit potentially as an international provider for pharma or related things, because I’ve heard that there’s also a big industry in India for producing generic drugs and other things like that. Is that sort of competing with what you’re doing in China? Or is that sort of something very different?

SW: So we need to divide the industry between new drugs and generic first, yeah, okay. So generic drugs are drugs that have been on the market long enough that the patents have expired, and they’re typically the small molecule drugs, and they’re typically much easier to make and so you’re right, India has a very big, generic drug manufacturing business. And there are several companies, Indian companies that sell directly to the pharmacies in the US and in Europe. And China does not have this, this group, but China has a group of companies that manufacture the active ingredient for these generics, many of which are sent to India for tableting. And China also makes a lot of intermediates. They’re not the final product, but there next to the last stage of the active. Again, it’s a small molecule, and they’re sent to US or Europe for that final activity. Okay. So those, we don’t compete with them at all, okay, because those are small molecules. Those are commodity business. It’s a very challenging business. One of the largest generics companies is Teva, an Israeli company. And only within the last year they started to come out of a slump that they were in for several years because of competition on generics. Now for the biopharmaceuticals, there is competition of biosimilars. Now when you look at a generic the price when a product goes from a marketed product, I will think of an example here in a minute. But when it goes from marketed product, a brand name product to generic, the price usually drops by a factor of ten. So, the generic product sells at about 1/10th of a branded product. But a biosimilar tends to sell for about half and doesn’t drop nearly as far and the reason is that there’s still a lot of development work required even to get a biosimilar to market, so it’s not as cheap as bringing in a generic.

JE: Is a biosimilar also under a patent, is that a patented project?

SW: So no, no biosimilar is a biopharmaceutical that is out of patent.

JE: Okay. Okay. So a little bit of a different market, you’re not competing with the generic industry in India really at all in any direct way. Okay.

SW: But there are biosimilars companies and CDMO’s in India that are manufacturing for the international market.

JE: Okay. So we put the big pharma companies aside, you said in your industry segment, the Wuxi company was the largest one. How many in China are there like you and the Wuxi one? Is it half a dozen? Is it 20? What’s the number of competitors in China?

SW: So they’re about half a dozen strong competitors that we, I don’t say we work with, we don’t collude with them. But we don’t go head to head, usually either. That’s a good standing here. You know, it’s a small industry in China, we all know each other. It is amazing to me it is a small industry in China, and it is in the US and worldwide its a small industry and you run into the same people time and again. But in China it is a really small industry.

JE: Okay, so what is the nature of the contract or revenue model? I mean, if you look to produce something as a CDMO, is this sort of like a three to six month relation, three to six year relation? What sort of the time horizon of these projects?

SW: Well, that’s a good question. So, because the clinical testing takes many years, and the initial testing is the smaller number of patients, most clients connect with an CDMO early in the development stage, but the amount that’s needed for that early testing is very small. And it’s not very expensive to make. Our goal is to be the long term commercial provider for these companies. But historically, in the industry, about 50% of clients change CDMO’s for one reason or another, during the course of development, before commercialization. Usually that change occurs before the final stage of development because if you change after that, then there’s a risk you may have to do additional testing which could increase your expenses considerably and delay your market entry. And market entry speed is always the number one goal in these companies. Think, because if you look at your patent, your patent is good for 20 years and you’ve usually consumed between 13 and 15 of those years before you ever get to market.

JE: And you said fifty, 5–0 percent change?

SW: Yeah, about 50% change.

JE: That is a lot.

SW: So, it’s pretty high. For one reason or another. Many of the CDMOs I mean, you know, when I was working in the US, and consultant for biotech companies who are doing manufacturing outside, I recommended that they stay local, because it’s much easier to resolve issues within the same time zone. It’s much harder if there’s a 12 hour difference, but at commercial scale, and there are a number of small CDMO’s in the US and China, they really can’t do large commercial scale. And therefore, some change that occurs just because of that capacity constraint. Other change occurs because of the change in technology, or some issues related to client service, it is a service industry, not a strength of most Chinese companies.

JE: Okay, so what I know is it’s always difficult to say what’s typical, but what would be sort of an expected contract length that you have with your client that you’re commercializing For how long? How long does your process in this whole supply chain for one particular product?

SW: Well, this first stage would be one year, that’s the time it takes to do the initial development and get the material or initial prep for testing. Now hopefully, we’ll continue on for two or three years, we’ll do all the clinical testing and if it continues on to commercial, that’s what we really hope for and everybody hopes for. And that’s the goal. But that means that it’s going to continue on for six or 10 years.

JE: Okay. Okay. One to 10 years is the sort of the parameter and the nature of a contract. I’m trying to think how that would be structured. Is it sort of like a consultancy contract with monthly or quarterly payments? Or is it just paying when you deliver the final product or hurdles, how is a contract structured?

SW: There are typically two parts to that. One is the development part and the other is the manufacturing part. So the development part is a fee for service. So we’re getting a bill for our development engineers, at so much rate per hour or so many hours in order to develop a cell line, and develop a cell culture process to grow the cells, and then another purification process to recover the protein, and our analytical scientists to do the analysis and develop the QC methods, and then so that’s the basic fee for service with some materials, the expensive materials on top of that. And the other part of the contract is the manufacturing. Manufacturing is basically a fixed fee, because we pay for the equipment, we pay for the facility. And the labor is operated as a fixed quantity. It takes a fixed number of people to do a batch. So a typical fullscale of that, in Europe, of a monoclonal antibody is going to cost about 3 million euros per batch. And that’s the commercial scale. Now maybe more than that, or maybe less than that, maybe some incentive for the work. So I worked on a contract where we gave an incentive to our manufacturer. If they could reduce the cost of manufacturing, we split the savings in half. Okay, we want some incentive for them to do it. But we didn’t want them to just make wholesale changes without telling us. There are regulatory rules here.

JE: Can a batch be quantified, what is a batch?

SW: A batch is usually quantified by the volume of the reactor size. So a 3 million euro batch is the same 10,000 liter or a 5,000 liter batch. It’s about the same cost, same price, independent of volume, because most of the cost is in the amortization of the equipment and the instruments and the testing. And the people and it’s not in variable costs. So you can reduce your, your cost of goods by increasing your batch size. Okay, it’s pretty strongly dependent on that. And that’s a challenge because most of the CDMO’s in this country are 2,000 liter batch size. And that’s it. They can’t do bigger than that but we will go up to 6,000 liters, which gives us an opportunity to be much less expensive on a per gram basis of protein produced.

JE: Economies of scale apply in your business.

SW: Economies of scale, absolutely, commercial scale.

JE: Okay, okay. It’s five to three. I’m conscious of the time. Any sort of concluding comments you’d like to make? I guess the typical question I always ask and certainly in the medical field is, you know, how is COVID–19 impacting the plans that you were making last year? Is it having any material impact on your projections?

SW: So it has slowed us down a little bit because we have less capability in meeting people face to face. But in China, it really has less impact than in other areas. Now in the US manufacturers of critical materials are not under requirement to work from home, okay, they are able to keep your operations open. So for example, the company that we partnered with for our bioreactor they’ve not had a slowdown, and we have been able to have conference calls with vendors and suppliers. And that wasn’t that much of an impact on us. Where it has an impact on the industry is in clinical testing because people who are patients are not able to go to the hospital to participate in clinical trials, so the whole industry has been slowed down, and drugs are being delayed getting to market because patients cannot go to the hospital for routine treatments.

JE: So nobody’s immune to the effects of COVID–19. It’s impacting everyone, even the medical industry in a negative way.

SW: That’s right.

Concluding Remarks

JE: Okay. How much, how long do you expect to be in China? What’s your long term horizon? This is my final question looking to the future. Well, how long do you think it will be until the company is really set up? How long do you see yourself staying in China? Is it back to California when it’s all over? What’s your future hold for you?

SW: So I enjoy working here in China. I have a great time working with the various different staff of these different companies. I think that it’s been great to see the reception of these young people on wanting to improve their abilities through the capabilities of their companies to meet the international standards. We recognize that they get as frustrated as I do about the scandals for the vaccine industry and other things in China. The poor performance, the greed that follows, that drives people perhaps, to trade off poor quality, for monetary benefit. You know, I’m very encouraged by what I see here in China, among the people I work with, the way they rise to the challenges. I see BioInno having a great opportunity. I like to start companies. This is how many for me, BioInno will be very successful, Innovent was very successful. Some of the others were not successful. We don’t talk about those, just those who are successful. I have a permanent residence visa here so I don’t have to leave. I’m looking forward to traveling again this year. China is a great place to live and work.

JE: Sounds like you have an optimistic view of the future.

SW: I do.