China’s New Stem Cell Guidelines To Shake Up Industry?

SHANGHAI - China has shown determination and focus by introducing a series of policies and measures this year to actively encourage and promote the development of the stem cell therapy sector, with the aim of better regulating the area and the clinical use of such therapies.

The efforts are being jointly taken by the Ministry of Health, the China State Food and Drug Administration (CFDA), Ministry of Science and Technology, and National Health and Family Planning Commission (NHFPC).

The raft of newly released policies are focused mainly on specifying clinical research subjects of stem cell studies, detailing relevant rules in conducting stem cell research, and accelerating translational research into practice, as summarized below.

Due to the safety concerns and risks caused by the immaturity of the clinical use of stem cells in China, the Ministry of Health halted the therapeutic use of such products in 2012, and ordered the industry to be completely overhauled. The long-awaited regulations this year were the first to be released after the rectification, sending an encouraging signal to the industry to promote stem cell research, said Qili Zhang, an analyst with GF Securities.

Internationally, stem cell research is being carried out at full swing and the application of stem cells in tissue engineering and regenerative medicine has made much progress. If China restricts stem cell clinical research and applications, it will inevitably lead to a greater gap with foreign countries, Zhang cautioned.

New Regulatory Approach

The latest administrative measure jointly issued by the CFDA and the NHFPC in August was China's first-ever regulation for stem cell clinical trials. Before it was issued, stem cell therapies in clinical practice were classified as Category 3 medical technologies by the NHFPC, under which they were defined as high risk and required the approval of a technical audit board before use.

Historically, the CFDA has granted authorization to companies running clinical trials for commercial stem cell therapies, and the NHFPC was responsible for the authorization of individual stem cell procedures on a patient-by-patient basis.

Under the new regulation, stem cell therapies are no longer regulated as a Category 3 medical technology, and all stem cell research will be overseen and authorized by both the CFDA and NHFPC.

“We expect the detailed approval rules for stem cell-based drugs will follow the new regulation launch, which will accelerate the development of stem cell use,” predicted Zhang.

The regulation states that only Grade III, Level A medical institutions with Good Clinical Practice (GCP) measures and ethics committee in place are qualified to conduct stem cell research. The medical institutions are the main body of responsibility for clinical study quality management, and are responsible for risk control for the whole program.

By limiting research institutions to improve the access threshold, listed companies must conduct research in collaboration with top-tier hospitals, which ensures supervision under limited conditions, Zhang noted.

In the near future, as further guidance is put forward, stem cell companies with extensive clinical research data and strong connections to hospitals will be at a greater advantage in business, he added.

Future Trends

Currently in the entire stem cell industry chain in China, the upstream sector is most competitive, including companies engaged in basic stem cell storage and collection.

But moving forward, as increasing competition in stem cell storage means declining margins, and with the further development of stem cell drugs, the focus of competition of the whole industry will shift more to the midstream activities of R&D and clinical trials with potential therapies, predicts a research report by China’s Wealthroll Investment Fund.

A-share listed companies in the midstream of the industry currently conducting stem cell culture and drug development include VCAN Bio, Guanhao Biotech, Jiangsu Sihuan Bioengineering, and PKU Healthcare.

Although the new regulation promises stricter regulatory measures, it will encourage the market as it is the first policy released after the three-year moratorium on new clinical trials, and has important significance in standardizing the industry, Zhang said.

“After the new regulation launch, relevant companies are going to enter a fast development period. Early rectification eliminated a number of unqualified enterprises, and high-quality companies will come to the fore, and now the new regulation provides a space for development of these enterprises,” he added.

“The future development of the stem cell industry will be like other industries, with 20 percent of the companies accounting for 80 percent of the market,” said Xiaochun Xu, president of Boyalife Stem Cell Industrial Group.

Boyalife’s stem cell banks have received accreditation by the American Association of Blood Banks and meet Foundation for the Accreditation of Cellular Therapy standards. The company also applies international standards to stem cell clinical trial protocols, trial design, compliance and other procedures, in order to file future drug applications with the US Food and Drug Administration, Xu added.

Research Initiatives

Boyalife and more than 30 Chinese research and academic institutes jointly established the National Consortium of GPCR (G protein-coupled receptors) Research (NCGR) to conduct related early discovery projects in March 2012.

GPCRs are thought to be closely linked to stem cell development and maintenance of functions.

Under the consortium, Boyalife has not signed a strategic alliance or full-scale framework agreements, though it has worked with Merck & Co. Inc. in primate animal trials, as well as with AstraZeneca PLC and Roche Diagnostics Corp., Xu added.

Under the R&D framework, Boyalife hopes to build a global pharma alliance under a benefit-sharing model, he said. Alliance therapeutic areas include cardiovascular and metabolic diseases, neurological disorders, autoimmune diseases and neoplastic diseases.

In August this year, Hong Kong-listed Mega Medical Technology and Shenzhen BGI Technology’s wholly-owned subsidiary, Shenzhen BGI Clinical Laboratories Center, entered into a legally-binding cooperation framework agreement in relation to the preservation and application of dental pulp stem cells, as well as the application of tooth regeneration technology.

According to the US National Institutes of Health, there were 164 stem cell clinical trials taking place in China during 2014, second only in number to the US and Europe.

“It remains to be seen whether implementation of the new regulation will simplify and expedite the approval of stem cell trials and whether China will remain a prime destination for international companies to conduct such trials,” said Alison Wong, a partner at Bird & Bird law firm.