Innovent Biologics successfully listed on the Hong Kong Stock Exchange on October 31, 2018. As the founding investor of the Chinese biotech company, Eight Road’s managing partner Daniel Auerbach tells the story of building a forward-looking business over the course of a decade.
Q: How did you come up with the idea of incubating Innovent?
The journey of incubating Innovent began more than ten years ago.
Back in 2005, we invested in Wuxi App Tech, a company which changed the biologics game both in China and globally, became a phenomenal success from an investment point of view, and still stands as one of our landmark investments.
Wuxi App Tech provided a lens through which to view the global development of the pharmaceutical industry, as well as the potential for China to become the manufacturer of choice for high quality biologics. It enabled us to see that there was a need to deliver the right medication at affordable prices to a mass population suffering increasing rates of cancer, cardiovascular disease, and autoimmune disease. To create a sustainable solution, we realised the need to build a biologics company in China with control over its manufacturing, methodology and the selection of products. We needed to develop a portfolio of products over time, and create a classic portfolio and pipeline approach for the long-term, similar to any world-class pharmaceutical company. We needed to attract the best scientists, talent, partners and alliances.
Once we had the conviction to establish Innovent, we set our standard very high. We started by identifying the leadership - Dr. Michael Yu. We found a location for the facility, Suzhou Bio Bay, which was friendly to our aspiration in every sense. And finally, in 2011 we funded US$5m, split between F-Prime and Eight Roads, to solidify all of these building blocks.
Innovent is the best example Eight Roads has of building businesses in China. It is a great demonstration of our entrepreneurial spirit, a reflection of patience and hard work, our desire and willingness to imagine things, roll up our sleeves, and make imagination a reality.
Q. How did Innovent set the standard in the field of biologics in China?
Innovent was always about setting a high-quality standard in science, talent and the manufacturing process, while delivering a promise of good quality products to the broader Chinese population.
As we stayed true to our vision, we had an opportunity to work with Eli Lilly, the global pharmaceutical company. The team there understood our aspiration, our execution and our products and signed the largest licensing partnership deal of its kind with Innovent in 2015.
Q. What did the Eli Lilly partnership represent?
It was a landmark moment for Innovent where everything we had worked towards, in terms of quality, was recognised. It had never been done before by any native China pharmaceutical company at such scale and size, ever.
It marks a defining moment of our journey as the founding investor that we are incredibly proud of. And it represented far more than money, resources, people, expertise, trust, exchange, knowledge transfer, intellectual property transfer, but the whole package. It was a stamp on Innovent’s singular focus on quality across all dimensions.
Q. What was its biggest challenge and how did we overcome it?
When you set the standard, everybody else decides to pile on competitively.
Besides, it could be challenging to manage the changing tone of government policy. The major direction was unchanged, but the day-to-day priorities often shifted. Myself and the Innovent board needed to throw our time, effort and concerns around this, in partnership with Michael Yu and the management team.
There were existential moments, which happen in the life of any company. When the wind quickly shifts, when competition comes in, and when real talents of the highest quality are being sort after by everybody.
Q. What were the lesson learnt in this investment?
Understand the environment in which you are working in. Do not come with preconceived notions and templates of how to build a business, especially in China.
Work consistently and faithfully, and in a transparent way with the senior management team, fellow investors, and always always always put the company and stakeholders first.
This was our behaviour at every step on the way, I hope we will be remembered for that above and beyond everything else. For having a commitment to those standards as we took Innovent from birth, through childhood, to seeing it grow all the way through to IPO.
That’s what Eight Roads stands for, that’s what we create legacy, meaning, purpose in what we do, what we do on behalf of those who are the broader beneficiaries of our success.
Building businesses is time-intensive, but it fits entirely to what we believe in philosophically. It speaks to our heritage at Eight Roads, we want to be business builders first and foremost, it speaks to our commitment to outlast because of the nature of our capital.
Q. How does the Innovent story inspire other entrepreneurs, especially those in the healthcare industry?
Surround yourself with the right people, who stick with you through thick and thin, who will be your partners as well as your advisors, as well as your counsellors, who are prepared to work side by side and provide a lot more than just money.