"Seven or eight years ago, we chose the JV (joint venture) incubation model to establish Visen Pharma", said Shan Fu, Managing Partner of Vivo Capital. "Looking back today, this path was suitable for VISEN Pharmaceuticals's development. Outstanding products require exceptional teams to dedicate time and focus, and Visen has delivered results."
On 21 March, VISEN Pharmaceuticals officially listed on the Hong Kong Stock Exchange (HKEX), with a star-studded lineup of cornerstone investors. Visen Pharma's IPO set multiple records as it was oversubscribed by more than 70-fold and became the first healthcare IPO in Hong Kong market history to implement and fully expand the size adjustment option that allows up to 10% increase in number of shares offered.
VISEN Pharmaceuticals's IPO milestone was underpinned by a solid industrial foundation. The Biologics License Application (BLA) application for its potential blockbuster, Skytrofa (lonapegsomatropin/growth hormone), had been accepted a year prior to the IPO, positioning it as a potential groundbreaking long-acting growth hormone product.
But even more noteworthy is the unique "JV incubation model" behind VISEN Pharmaceuticals's growth. Unlike the typical license-in model, Vivo Capital partnered with its portfolio company, Denmark's Ascendis Pharma, to establish Visen Pharma, granting it exclusive rights to develop, manufacture, and commercialise three endocrine products in Greater China. In exchange, Visen Pharma issued USD 40 million in Series A preferred shares to Ascendis Pharma, forging a shared-interest alliance to achieve milestone goals.
On the occasion of VISEN Pharmaceuticals's HKEX listing, PharmCube Invest conducted an exclusive interview with Shan Fu, Managing Partner of Vivo Capital, the controlling shareholder and cornerstone investor of Visen Pharma. Through this exchange, we learn why this model was chosen to incubate Visen Pharma, and glimpse the constants and variables within the intricate landscape of biopharma investment models.
Industry-leading JV Incubation Model
In 2018, when Vivo Capital incubated VISEN Pharmaceuticals, Ascendis Pharma was already Vivo Capital's portfolio company in Europe and the US. This established healthcare fund acted as a bridge, with the seller providing products and the buyer offering equity. Establishment, financing and pipeline introduction were executed simultaneously, bringing overseas high-quality assets through the JV incubation model.
At that time, with the launch of HKEX’s Chapter 18A rules for biotech companies and the Shanghai Stock Exchange (SSE)’s technology-focused STAR Market, listing mechanisms became clearer and the license-in model rapidly gained popularity in China's biopharma investment circles. However, Vivo Capital, with years of global biopharma investment experience, chose a differentiated path: identifying hidden irrationality amidst capital frenzy, it instead focused on discovering or incubating innovative drug companies with commercial potential and lower technical risk, taking stakes through product or technology rights to jointly establish more risk-resilient JVs for localised operations in target markets.
The advantages of this model are twofold: it avoids operational risks from R&D and pre-profit stages while reducing reliance on capital markets and potential pressure from market fluctuations. It was precisely this model that enabled VISEN Pharmaceuticals to maintain relatively stable and rapid development despite facing a prolonged downturn after early market highs.
Specifically, without milestone payment obligations, after completing a Phase III pivotal trial for Skytrofa treating paediatric growth hormone deficiency (PGHD) in 2022, VISEN Pharmaceuticals capitalised on this success in 2023 by completing both the double-blind part of a China Phase III pivotal trial for thyroid drug Yorvipath (palopegteriparatide) and a China Phase II study for navepegritide in achondroplasia.
Thus, with only one funding round since inception, VISEN Pharmaceuticals not only rapidly achieved key milestones for all three core products but also advanced preparations for its potential blockbuster Skytrofa's regulatory submission and commercial supply, breaking free from the "no listing, no commercialisation" dilemma and progressing smoothly towards becoming China's leading endocrinology-focused biopharma.
Shan's flexibility and foresight stem from his understanding of complementary needs between Asian and European/US healthcare markets. Asia represents typical rapid growth markets while Europe and the US possess abundant advanced applicable technologies. Their organic combination enables Vivo Capital to consistently capture growth opportunities in healthcare.
"European and US biopharma innovation leads technologically but requires internationalisation to recoup high R&D costs. Meanwhile, China's demand is upgrading, needing solutions for unmet clinical needs that provide vast application space for innovative technologies. This is a mutually beneficial dynamic", said Shan.
It was observing this phenomenon that led Shan and Vivo Capital to focus on China's rapidly growing market: "investing in China means investing in the future". This aligns perfectly with his consistent investment logic: applying advanced applicable technologies to meet the demands of the largest market.
Focusing on "Underserved, Uncrowded" Markets
As Shan stated, Vivo Capital chose to bring Ascendis Pharma's three products to VISEN Pharmaceuticals for development and commercialisation through the JV incubation model precisely because it recognised the enormous unmet clinical needs and high growth potential in China's paediatric growth hormone market.
"In 2018, China's growth hormone market wasn't this large yet. But we observed that on one hand, the incidence rate of childhood short stature remains constant at 3%, with extremely low treatment penetration among Chinese patients. On the other hand, Asians, especially Chinese, place far greater emphasis on height than overseas populations. We concluded this market would grow faster than European and US markets, particularly in paediatric growth hormone. Moreover, China's growth hormone market is primarily paid out-of-pocket with few competitors. Such an 'underserved, uncrowded' market absolutely requires more diverse, higher quality products".
China has indeed become the world's largest human growth hormone market. VISEN Pharmaceuticals's prospectus shows that in 2023, China accounted for the largest share (34%) of the human growth hormone global market, surpassing the US. According to Frost & Sullivan, China's human growth hormone market reached RMB 11.6 billion in 2023 and is projected to grow to RMB 28.6 billion by 2030, representing a 13.7% CAGR.
Beyond market potential, another decisive factor was Vivo Capital identifying and facilitating the incubation of superior, potentially unique technologies and products to meet these needs - namely Ascendis Pharma's TransCon (transient conjugation) technology and its three endocrine drugs developed using this platform.
The TransCon technology platform temporarily links inert carrier molecules with biologically active drugs through unique conjugation structures to form prodrugs. These prodrugs release effector drugs at predictable rates after entering the human body, enabling specific therapeutic goals while maintaining natural physiological activity.
Shan noted this technology's greatest advantage lies in extending drug half-life for sustained efficacy while preserving the active drug's natural activity, potentially optimising both efficacy and safety for long-acting formulations. The long-acting growth hormone developed using this technology addresses the critical compliance issues in current growth hormone treatments while maintaining daily formulation safety, offering substantial commercial potential.
"Short-acting growth hormone often leads to missed injections which affects treatment efficacy, while previous long-acting technologies using macromolecule encapsulation caused painful injections and poor patient experience. Those older technologies also potentially raised safety concerns by altering the growth hormone's molecular structure", Shan explained. "The TransCon platform represents a revolutionary breakthrough in long-acting technology, enabling weekly dosing while improving injection experience and compliance. Moreover, maintaining the effector drug's 'natural activity' ensures both therapeutic efficacy and safety".
Indeed, leveraging these technological advantages, all three Ascendis Pharma products have become best-in-class or even first-in-class therapies in their respective indications, with particularly pronounced competitive advantages in China.
Skytrofa, approved in the US in 2021 for paediatric growth hormone deficiency, remains the world's first and only long-acting growth hormone clinically proven superior to daily formulations - reconfirmed in VISEN Pharmaceuticals's China Phase III trials. With no innovative long-acting products launched domestically in nearly a decade, Skytrofa could become the first-line treatment of choice.
Navepegritide, for treating achondroplasia in children aged 2 to 10, has received orphan drug designation in Europe and the US. It may become the world's first long-acting (weekly) C type natriuretic peptide (CNP) therapy for this condition. Following Visen Pharma's introduction, it currently represents China's first clinical stage achondroplasia treatment in development.
Yorvipath extends parathyroid hormone half-life to 60 hours. Approved in Europe in November 2023 and in the US in August 2024, it is the world's first hormone replacement therapy for adult chronic hypoparathyroidism and remains the only parathyroid hormone replacement therapy in clinical development in China.
With both Skytrofa and Yorvipath already approved overseas, VISEN Pharmaceuticals's domestic approvals seem highly probable. Having mitigated R&D stage risks, Vivo Capital's unique ecosystem strategy further safeguards Visen Pharma through commercialisation and localised production phases post-approval.
Quality Products, Quality Team, Quality Network
For VISEN Pharmaceuticals's strategy of introducing clinical stage products with potential for rapid commercialisation, Shan had already identified the ideal chief executive candidate before the company's establishment - Pony Lu, then President of Takeda Greater China.
At that time, Lu possessed over 20 years of experience in the global pharmaceutical industry, particularly as a China head for multinational corporations. During his time at Takeda, he led the company's critical growth phase in China, achieving more than 10-fold revenue increase. For a company like VISEN Pharmaceuticals aiming to transplant cutting edge international technologies and products into the Chinese market, Lu was indeed the perfect leader.
"Different scales require different expertise, but management principles remain universal. This is especially true for biopharma companies in late-stage clinical development approaching commercialisation, where management effectiveness evinces the similarities", said Shan. "We needed an exceptional management team with international vision and proven corporate management capabilities".
Now, as VISEN Pharmaceuticals's core products enter commercialisation, the company has established partnerships with WuXi Biologics and United Family Healthcare (UFH) during 2023 to 2024 - both part of Vivo Capital 's China portfolio.
Specifically, WuXi Biologics will serve as the local CDMO for technology transfer, conducting process development and validation to achieve localised drug manufacturing. This helps ensure supply chain stability while potentially reducing costs and improving accessibility. The collaboration with UFH will focus on jointly developing diagnostic, treatment and service capabilities for children with growth-related medical needs, helping VISEN Pharmaceuticals access the premium market for Skytrofa.
"VISEN Pharmaceuticals began discussions with UFH three years ago about product promotion through their platform. We plan to initially target high-end consumers, aligning with UFH's positioning while supporting their transition from obstetrics to broader paediatric services", Shan explained. "Our consistent emphasis on ecosystem strategy aims to foster collaboration among our portfolio companies across industrial chains and market dimensions".
China Market Recovery Is Predictable
VISEN Pharmaceuticals's listing coincides with the Hong Kong market recovery. Shan stated directly: "We began preparing for the listing four years ago, experiencing market fluctuations including the HKEX's earlier downturn. However, we predicted last year that the Hong Kong market would improve in the first half of this year, so we accelerated the listing process from the second half of last year".
Shan's judgment that the China market's recovery is predictable is based on three observations, the main one being China's current position in biopharma innovation: "Everyone must recognise that after a decade of development, China's biopharma innovation now ranks among the world's best. When discussing global biopharma innovation today, it's undoubtedly the US and China. Therefore, both the STAR Market and HKEX Chapter 18A have strong industrial foundations, which is the main reason we believe recovery is possible".
Meanwhile, China's market including Hong Kong remains one of the world's most stable and secure markets. Combined with HKEX Chapter 18A's prolonged downturn in recent years, the timing is ripe for quality assets to regain their value. "With industrial foundations and clear commercial logic, plus capital market cyclical patterns, the recovery represents a tangible and foreseeable change", Shan said.
For this listing, VISEN Pharmaceuticals ultimately raised net proceeds of HKD 672 million (USD 86 million), with over 84% allocated to commercialisation advancement, technology transfer and localised production of its core product Skytrofa. Shan expects this will quickly generate positive cash flow for Visen Pharma and drive profitability.
"We've always said the HKEX Chapter 18A market deserves our gratitude. Its establishment created an alternative to US listings for Chinese biopharma companies while raising substantial funds to support these companies and the entire industry's development", Shan remarked. "VISEN Pharmaceuticals's choice to list in HKEX also represents our reciprocation and confidence in the Hong Kong market. We believe such mutually beneficial stories will become increasingly common".