Shanghai Evans Investment Management Limited

Interview with Mr Scott Wheelwright, PhD | Opening of the New Taicang Plant

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As I said before, our focus is on building a facility that meets international standards for good manufacturing practice, to manufacturer biopharmaceuticals, other complex molecules that are used for medicine and treatment of disease states. We’re doing this here in Taicang, China, near Suzhou. And we’re moving forward with our construction and our activity for having the plant operational by the middle of this year.

You can see the first interview with BioInno here:

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                           23rd  March 2021

JE: Okay, good afternoon to the viewers out there. We have the pleasure to have our second interview with Mr. Scott Wheelwright PhD, who’s the Chief Operating Officer of Suzhou BioInno Bioscience Co., Ltd. The name has been slightly changed from the introductory interview when it was Beijing BioInno, Bioscience. So now being headquartered in the Suzhou area, there’s been that minor change. To see the introductory interview with Scott Wheelwright. You will get the link in the written transcript that will also be available on this broadcast. So, you can get a much broader general introduction to Suzhou BioInno Bioscience. Okay. So, with that, as a brief introduction, like to introduce Scott, and Scott, it was now seven months ago, we last spoke. In general terms, give us an overview of what has happened in BioInno since then, maybe with reference to those particular points below.

Details of the new Facility

SW: Great, well, thank you very much John. I appreciate an opportunity to be with you again and to talk about our company and what we’ve been doing. As I said before, our focus is on building a facility that meets international standards for good manufacturing practice, to manufacturer biopharmaceuticals, other complex molecules that are used for medicine and treatment of disease states. We’re doing this here in Taicang, China, near Suzhou. And we’re moving forward with our construction and our activity for having the plant operational by the middle of this year.

JE: Okay, so June or July, the complex in Taicang will be physically open.

SW: That’s right, we are doing the construction now. Most of the walls are up HPAC ductwork is installed, equipment is on order. And we expect the equipment to be installed in May, June timeframe with qualifications to follow. So, we’ll be able to operate third, third quarter probably

JE: The equipment for this. There’s a lot of manufacturing in the Suzhou area. Was it ordered locally? Or did you have to go further afield to get all the specialized equipment?

SW: That’s a fair question. Many manufacturers of this type of product source internationally. We have found that much of what we need is available locally at a very high quality. So, for example, and I should also mention that one of our strategies is to partner with international and well-known companies. Because we don’t expect to have all of the technical capability in the house. But we want all of it to be available to our clients. So, for example, our bioreactors are made by ABEC, which is one of the major manufacturers of large-scale bio reactors in the world. They are located in Bethlehem, Pennsylvania and in Ireland. And we are obtaining our bioreactors and fermenters from them. Our purification equipment is coming from Lisure, which is a local Suzhou company. Our filling equipment is coming from Toflon, which is one of the world’s top manufacturers, both in volume and in quality. And they are local here in Shanghai area.

JE: Okay, very interesting. So, by middle of the year, operational third quarter, but you’re still looking to partner with international providers. So, will it be sort of a phased opening where you will open in Q3 with a certain capacity and may be looking to add additional capacity or abilities over time?

SW: Yes, certainly, we will start with some initial capacity and fill that first. And over time, we will add and expand our capacity. So, in the biopharmaceutical industry, we typically refer to this as liters of capacity installed, we start with 1,250 liters to start with. We’ll quickly ramp up to close to 8,000 later this year, and then next year, more than double that to close to 20,000 liters.

JE: Now for people who haven’t seen the first interview, just give us sort of a couple of sentence summary of what your initial outputs would be. I know it’s a little bit complicated, big molecules, small molecules. You’ve told me about that before but what is your primary product that will be on offer in in this year?

SW: So, we work on behalf of other companies to manufacture their products for them. And our primary capability is the production of monoclonal antibodies, which are widely used throughout the world for treating cancer and autoimmune diseases such as rheumatoid arthritis. So widely used, widely popular, I’d say that six of the top 10 drugs sold internationally are antibodies.

JE: Okay. So very big part of, I guess we would include it in the pharmaceutical sector of healthcare. Is that correct?

SW: Biopharmaceuticals are a sub section of the pharmaceutical industry. About 1/3 of the total sales of pharmaceuticals worldwide are these biopharmaceuticals, macromolecules proteins made in cells.

JE: Okay, so that discusses the plant and the equipment. What about the recruitment of staff and other personnel to operate and run the plant?

SW: Yes, staff is always a difficulty here in China, especially in a growing industry where there are few companies that we can draw from where training is provided. We do a lot of training ourselves; we have a formal training program for our staff. We are up to about 30 staff at present, we expect to be double that by the time we’re in operation, in full operation, by the end of this year.

JE: So, is this clinical training for people with a biopharmaceutical background that there’s no general business programs? This is about training people in the development of the outputs that you will offer to your clients here in Suzhou.

SW: Right. So, our finished product is a drug in a vial or syringe, packaged ready to be delivered to the doctor, or to the patient directly from the pharmacy. We hire all sorts of different skills, quality assurance, quality control analysts, manufacturing specialists with experience in all types of different areas, including aseptic processing, and fermentation and purification. We hire engineers who understand how utilities work and high purity water systems. So, we’re also looking for marketing people and salespeople. This is a good opportunity, we think, in a developing company that has lots of we have clients already. So, I think we’re moving right along.

JE: Now, when it comes to starting a new process and hiring people, and you say some of them may be difficult to find, it’s a bit of a chicken and egg with training. If you’re providing a lot of training, do you have to get those staff in first? How does the training and the recruitment go hand in hand?

SW: We tend to train our own people. And we have training programs that we have in place. So, we hire people that, where possible, have background in the field, or background in biological sciences, or in pharmaceuticals, so they understand most of what we’re doing. They may not be trained in the particular equipment that we use, but we provide that training. We bring in people with many different backgrounds. And we teach them what they need to know in order to do their job well.

JE: Any places for new graduates either at the BA, Master or PhD level in any of these functions?

SW: We certainly welcome new graduates. We have formal programs with two different schools in the Taicang and Changshu-Changzhou area to bring in students. We have half a dozen students on site now as part of an internship program, and we welcome new hires who are enthusiastic and want to work hard.

JE: Okay, interesting. Presumably your business, you know, except for maybe at the CEO level is all being done in domestically in Mandarin. So, you’re looking to hire Chinese people as opposed to expats. Is that correct?

SW: That’s correct. I’d say that about a third of our staff speaks English well.

JE: Okay.

SW: I have a translator on staff, my assistant who helps me in some of the meetings, but everybody else than me speaks Chinese very well.

JE: Okay, good. And you’re now permanently, have you got your office set up and Taicang? I know you previously had an office in Suzhou, have you moved up there permanently, now?

SW: Yes, we are currently located here. All of our people are here. Although we do have a laboratory at BioBay in Suzhou. And we have about half a dozen people there who are doing development work and supporting our clients and current projects. We also have our financial offices in Beijing.

JE: Oh, okay. They’ve remained in Beijing. And I think that’s where you also have your, your regulatory expertise. So, the people that apply for the government approvals, is that correct?

SW: We work with regulatory staff in Beijing. It’s convenient to be able to talk to the government people directly.

JE: Yeah, okay. Very interesting. So, we’ve talked about premises, we talked about staffing. What about business development, client’s contracts? How is that progressing?

SW: It’s progressing quite well, thank you. We have several contracts in now, in progress now. So, the standard process is that people come to us or we seek out friends, we will let people know that we’re available. The initial work is typically development work, understanding what the product is to be made, and how to make it, we need to develop often a cell line that is efficient at producing the product. We want high amounts of product made in a short time span. And so, we have expertise in developing cells and engineering the cells, manipulating their DNA so that they will provide the product of interest and in high quantities, and then we develop a process for growing the cells and purifying the product, and then filling it into the final format. We do a lot of that work in our laboratory in Suzhou, which is up and operational, and has been for months now. And as soon as our manufacturing facility is ready, then we will begin transferring that into our manufacturing operations. Writing the quality assurance documents, everything is very closely monitored by our QA and QC team to make sure that we meet international standards. And then we’ll be able to produce product that will actually be used to people

JE: Will the lab in BioBay, at some point in time, physically move up to the plant in Taicang?

SW: We will expand our development capability in Taicang so that we have increased capability here. But I expect we will keep the facility in Suzhou because it’s a very convenient location for our clients.

JE: I can even walk there. I agree. So, who are the initial clients? Are they mainly China, Mainland China located, or might some of the initial clients be international? How is that starting out?

SW: We have both international and domestic clients. Our clients tend to be well, I can’t say that. Our clients include both new startup companies, companies that don’t have their own manufacturing capability. But we had a very good meeting this week with a client that is a very large manufacturer, and they need additional capacity. And so we hope to be able to provide that capacity for them at a price that makes it well worth their while to work with us, rather than build additional capacity.

JE: Okay, okay. Now, it’s a bit of a follow up question. But I think it’s relevant. I mean, there’s so many discussions on the trade side. I mean, since we talked, and in the middle of last year, has there been any significant change in the industry globally, that makes your position in China, in the global world, different from what it was one year ago?

SW: That’s, that’s a good question. I recently, actually participated in a supply chain seminar moderated by some folks from the Harvard Business School Alumni Association. There have been changes and they are significant changes and they affect both our Chinese clients and our foreign clients. So, for example, one of the challenges is to supply materials. That is, if you’re manufacturing in China, some of the materials that are needed for manufacturing use are imported, and primarily imported. So, for example, the bags that we use, we use the single use container, which is a polyplastic bag that’s used to contain the cells, it’s sterile, it grows, and then it’s a liner that goes inside the tank. And after we use it, then it’s disposed of so that makes it easier to clean the tank and prevent cross contamination between products. But these bags come from overseas and all of the film that’s used to make these bags is produced in Europe. And that supply chain, of course, is a concern. So, we work with our suppliers to ensure that there are adequate materials stored here domestically, to provide us and reduce our risk of running out. Another material that’s widely used in the industry, throughout the world is a nutrient media that’s used to culture the cells. That is, our goal is to start with a small number of cells, about a million to start with, and then grow this up to many trillion cells, over several days, several weeks, until we have enough cells to produce the protein we need in the quantities we need. This culture media is primarily imported into China, but we have set up a manufacturing facility that will make this material in China, and we expect that to be popular. Again, because the potential supply chain disruptions internationally, we will be supplying the Chinese market with this material.

JE: So, building up the domestic sources of supply to insulate you against the risks of being cut off internationally.

SW: That’s right. But we still have commercial, we still have clients who are developing products, and these clients are located overseas. We work with them to ensure that we can supply their products and not have any risk of their supply.

JE: Okay, okay. Whenever you hear the discussions about trade these days, it always seems to focus on technology companies. Would you say that supply chain disruption to the pharmaceutical or biopharmaceutical industry is of a lesser concern than that? We don’t seem to hear as much about this industry.

SW: Yes, and I think that’s partly because the technology that we use is not so much trade secret, as it is skill based. And so everything that we use has been published, it’s widely available in the literature, we don’t have these massive expensive instruments. But it’s not like the semiconductor industry in that way at all. So much less risk for disruption that way. And there’s much less risk to our clients, whether they be Chinese or foreign, in not being able to supply them.

JE: Okay, so other than these potential supply chain issues, since last summer as a CDMO, your business strategy is relatively unchanged.SW: That’s correct. Our focus is on providing what the clients need in these specialty markets. We provide not just antibodies, but also cell therapies and gene therapies. And many of the materials that are used in cell and gene therapies. And we do this, again, through partnerships with experts around the world, in different materials and processes that we rely on for help when we need it.

Conference in Taicang

JE: Okay, it’s interesting. Now you’ve advised me that that you are holding a technical
conference, I don’t know if it’s Suzhou BioInno all by itself or whether there will be many 
other participants, but in Taicang on the third or fourth of July. Tell us a bit about that event, who will be there, who is allowed to register? What will the discussions be about etc.?

SW: Well, I’m glad you asked about. We have a very good relationship with the Taicang government. And they are sponsoring this conference, will be held at the Sheraton Four Points in downtown Taicang. We expect two days of presentations from industry leaders in the area of drug development and manufacturing, and new companies that are expanding in this area. It’s open to the public. We welcome inquiries. We are putting the schedule together now. We expect large government support. We expect government speakers to talk about the benefits of Taicang, of course. I mean, that’s why we’re here, is because there are definite benefits to being here in Taicang, including the workers and local business park support. And during this conference, we will take this time to offer a tour of our new facility, to anyone who like to come visit. Again, we have, because we have a partnership with many of the manufacturing equipment manufacturers, we have built and designed the facility, as a showcase, so that people can come and see this equipment in use. Our suppliers send their potential customers who are other manufacturing companies, we are quite open to viewers to come in and see the equipment in use and see how it’s operated and what it looks like. And talk to our workers about challenges and how to succeed with the equipment. We see all of this as an opportunity to reach out to the community, to reach out to potential clients and help them improve what they’re doing. And really, our goal is to reduce their costs is the main factor.

JE: Interesting, and I believe the third and fourth of July are a Saturday and a Sunday, it’s being held on a weekend.

SW: That’s right it’s actually quite common in our industry. The whole days on weekends, we decided that was more attractive, people are so busy getting their own products developed. But this becomes a social event. It’s an opportunity for experts in the different companies to come together and meet their colleagues and their friends from other firms and to learn new technologies and see some new equipment that may be a benefit to them.

JE: Okay, have you already set up the online links for this conference? Or do they still have to
be set up?

SW: We haven’t set those up yet. But we will be sending those up in the near future. 

JE: Okay, so when we get those from you, probably this video will be produced and out before that, but we can always update it with the video links and send a reminder, because that I’m sure would be very fascinating for people in the local industry to attend to. I know the Sheraton Four Points in Taicang, that seems to be the favorite Convention Center.

SW: Yes, we’re fortunate that the city has been very supportive here, you know, in Taicang, there about 1000 German companies in China and about 300 of them are located in Taicang. We’re fortunate that one of our senior advisors is from Germany has connections with the German community here. And we’re just very fortunate to be in this location.

JE: Now, I remember being at a conference there and learning about the German community, and that it was also a very big location for Industry 4.0 technology. Now, is there any major intersection between Industry 4.0 and the factory and processes that you will set up? Or is it just coincidental that both biopharmaceuticals and Industry 4.0 are in Taicang?

SW: Yeah, I’m not sure how coincidental it is. There is some overlap in that, you know, Taicang has focused on and you know, Taicang is part of the greater Suzhou area. And Suzhou has a goal to be the leader in biopharmaceuticals in the whole country. And they’re putting a lot of effort into achieving this goal. Our business being a process industry is different from most of the automobile companies that are and support companies that are located here. They’re making discrete components. We were going over cost accounting this morning with our financial staff and talking about how are we going to get this set up because it’s really quite different from most discrete manufacturing. But there are commonalities in that we’re all manufacturing and manufacturing is taking inputs and processing them in order to make them more valuable and so we have commonalities. Yes.

JE: Very interesting. Management and cost accounting. I haven’t dealt with that for a few decades, that used to give me shivers. Okay. I believe you have recently gone through a funding activity? Can you tell us a little bit about that? Give us some details?

Funding Update

SW: Yes, thank you. Funding is always very important in a capital-intensive 
business such as ours. We have a lot of equipment and it’s expensive equipment. And we have, we’re fortunate to have, some very good investors. We started with some angel investors here locally, we have extended our fundraising into a broader group of investors, including some outside of the Suzhou area, in the Beijing area. And we raised enough money to get us started to the point where we can install the equipment and get it operational. We have clients in house, so we have money coming in. We will probably do another fundraising later this year, which will be our A-round. And that will probably take us through to profitability.

JE: Okay, so this is, I guess you got some assistance from the local government in the property and plant. So, is it fair to say that this more recent financing is financing the equipment now going inside and then down the road? At the end of the year it’s more sort of growth financing? Is that a proper analogy?

SW: We’re blessed that our partnerships with our equipment manufacturers have also provided funding for our equipment. That is that by partnering with these companies, such as a ABEC and Lisure, that we’re able to install the equipment at a much lower price than what our competitors have been able to do. And we believe we have a better capacity than most of our competitors. And that also enables us to make, because it’s the process, right? So, we can batch size matters. And so larger batch size means lower cost of goods per unit produced. And we think we’re in very good shape, there to be very competitive in the marketplace, and to provide benefits to our clients that our competitors cannot.

JE: Now that’s very interesting. So, let me just clarify, because I know in capital goods industry, like you know, Caterpillar, and these big, heavy movers, often the company provides a lot of supplier financing, but it’s just sort of like installment or credit to buy the thing. You’re talking about something like that, or something different, where the people are becoming a partner in your business as opposed to just providing financing?

SW: Well, I really can’t go into much detail on that, other than to say that you’re right on both counts, we have several types of partners. We have partners who also provide technology support, and process expertise around the world, who provide superior materials that we use and consume in manufacturing, and the equipment suppliers who provide financing for the equipment, as well as even more involved in business relationships.

JE: Okay, very interesting. So, a lot of very different relationships, different business
arrangements, with these different people, interesting.

SW: We think that provides an advantage for us. That’s part of our strategy. Our goal is to provide the best technology that our clients can find anywhere in the world. And we do that through these partnerships because we know we can’t possibly afford to bring all of this expertise in house, but we want it available for our clients. The founders are very well known worldwide in this industry. We have the capability to make connections and build partnerships with many different companies with different expertise. And so that’s what we bring to our clients.

JE: Okay, interesting. So, just to summarize what we’ve talked about so far. So, physically, the plant and equipment should be ready by the middle of the year. Around third or fourth of July, you will be holding a specialized conference at the Sheraton Four Points there at which time people will be able to take a tour of your new facility. You expect to be fully operational in Q3 of this year. You’ve completed one financing which should carry you through to the latter part of this year.

SW: Very good summary, John, thank you very much.

JE: Is there anything else you’d like to add just before we sign off, Scott? Anything else that you would like to mention at this time that perhaps I didn’t think to ask about?

SW: Well, I appreciate that, John. I appreciate your taking time to spend with me today. And, and I’m grateful to those who listen to this interview. And if they have questions, they’re certainly welcome to contact me directly. I’ve been in China now for 10 years, I was one of the founders of Innovent Biologics. You know, it’s just a great industry to be here with a lot of great people to work with, here in China. And I’m just very grateful to be part of this industry at this time.

JE: Okay, great. So, when we put the interview out, which will also have a written transcript to it, they will have the contact details for yourself for someone who’d like to speak with you directly. And when you get the link for the conference in July, then we can go back and add that and just put another little update out so people can perhaps register directly through the conference who just want to come to the conference for general interest.

SW: That’s great, John. We appreciate that very much.