Case I: 3DMed: An R&D Platform for Personalised Precision Anti-cancer Drugs

Abstract

In 2010, Xiong Lei, a Ph.D. graduate from the Institute of Biochemistry and Cell Biology, SIBCB, CAS, left his post-doctoral research in the University of Zurich to found 3DMed with five other senior professionals, aiming to substantially improve R&D efficiency and approval rates of anti-cancer drugs and deliver highly effective clinical treatment for cancer. The new company is headquartered in the Shanghai Caohejing Hi-Tech Park, where over 140 biomedical start-ups are planning their business roadmaps. The question now is how 3DMed, which had completed two rounds of financing by May 2014, will achieve the expected performance and leverage talent, marketing and capital management, as well as strategic planning, to address the challenges it faces in the early stage of business development as well as to minimise innovation risks in an emerging industry.

This case study was co-authored by Professor Zhu Xiaoming, Part-Time Research Assistant Song Yanbo and Research Associate Ni Yingzi of the China-Europe International Business School on the basis of research materials. It was written with the support of 3D Medicines Corporation. The case study is intended to stimulate classroom discussion, and not to analyse how effectively the company is managed.

In 2010, Xiong Lei, a Ph.D. graduate from the Institute of Biochemistry and Cell Biology, SIBCB, CAS, left his post-doctoral research in the University of Zurich to found 3DMed with five other senior professionals, aiming to substantially improve R&D efficiency and approval rates of anti-cancer drugs and deliver highly effective clinical treatment for cancer. The new company is headquartered in the Shanghai Caohejing Hi-Tech Park, where over 140 biomedical start-ups are planning their business roadmaps. The question now is how 3DMed, which had completed two rounds of financing by May 2014, will achieve the expected performance and leverage talent, marketing and capital management, as well as strategic planning, to address the challenges it faces in the early stage of business development as well as to minimise innovation risks in an emerging industry.

Overview of Anti-cancer Drug R&D

Malignant tumours, generally referred to as cancer, represent a major disease that can cause great harm to human health. According to global statistics published in 2011, cancer causes nearly 13% of total deaths around the world each year.¹ In 2010, there were 3.093 million new cancer cases and 1.956 million cancer-related deaths in China, according to the Chinese Cancer Registry Annual Report. With an average life expectancy of 74 years, Chinese people have a 22% cumulative risk of developing cancer.² It is therefore imperative that we place great importance on cancer prevention and treatment in modern society.

With the number of new cancer cases increasing, the global cancer treatment market in 2010 was valued at USD 59.7 billion, accounting for 10% of the total value of the global prescription drug market.³ Yet it is still an undeniable fact that cancer remains extremely difficult to cure completely. The risk of cancer metastasis and relapse after surgically removing tumours is high, and traditional anti-cancer drugs only have an average success rate of around 20%.⁴ In another perspective, 95.3% of new anti-cancer drugs developed by pharmaceutical companies cannot get approval for launch from the Food and Drug Administration (FDA) due to their failure to meet efficacy requirements,⁵ resulting in an annual loss of several billion dollars to drug R&D.⁶

History of Anti-cancer Drug R&D

Though earlier attempts to develop anti-cancer drugs are recorded in global literature, it is generally believed that systematic research on anti-cancer drugs started in the 1940s (see Fig. 1). Since then, researchers have been exploring anti-cancer drugs with experiment and projects scattered around the world. While large-scale cancer research was not possible until the 1950s when several research institutes, such as the National Cancer Institute (NCI) and the European Organisation for Research and Treatment of Cancer (EORTC), were established.⁷ With the development of molecular oncology, researchers identified uncontrolled cell cycles as the major cause of cancer. The anti-cancer drugs used for clinical treatment in the 1970s and 1980s were developed to inhibit the proliferation of cancer cells, mainly by interfering with cell division in a nonspecific way. Such traditional cytotoxic drugs, however, kill more than just cancer cells. They also destroy quickly dividing normal cells in the human body. Even though they can extend life for several months or years, many patients suffer strong adverse reactions to the drugs.

Fig. 1

The history of anti-cancer drug R&D. Source Shanghai Center of Novelty Checking and Inquiry, Chinese Academy of Sciences

Then, with the rapid development of molecular and cell biology, researchers became aware of how cancer cells grow and proliferate, as well as their cycle control mechanisms, and discovered that cancer is caused by abnormal cell proliferation resulting from genetic mutations. Genes, formerly known as Mendelian factors, are DNA sequences that carry genetic information. Genetic information is expressed via the synthesis of proteins, which controls the various characters of an organism. Human cells normally grow and die in a controlled manner. However, when gene mutations are triggered by carcinogens such as cancer-causing chemical substances, radiation or viruses, cell growth in part of a tissue can get out of control, resulting in abnormal proliferation and ultimately cancer.

On this basis, researchers gradually discovered several key enzymes that were related to the differentiation, proliferation and death of cancer cells. These enzymes work on signal transduction pathways in cancer cells and can be targeted by drugs to inhibit the growth of cancer cells in a specific way and reduce negative effects on normal cells, as well as adverse drug reactions. Therefore, since the 1990s, researchers have shifted their focus from cytotoxic drugs and broad-spectrum inhibitors of the cell cycle and DNA metabolism to more specific inhibitors of signal transduction proteins,⁸ also known as “targeted therapy drugs” (see Fig. 2). Targeted therapy drugs interfere with specific factors (mainly proto-oncogenes) needed for oncogenesis and reverse the malignant phenotype of cancer cells, thus inhibiting the growth of cancer cells and even eliminating them. They can be divided into two categories, namely “small molecule compounds” and “monoclonal antibodies”, according to different molecular weight.

Fig. 2

Mechanism of action of chemotherapy drugs and targeted therapy drugs. Source Sun Yan: The Long Development of Targeted Therapy Drugs: Handling Rationally the Negative Responses of Targeting Drugs, the website of the Chinese Anti-Cancer Association, http://www.caca.org.cn/system/2009/05/07/010023580.shtml, last view date: 3 November 2015

From R&D to Launch

Under the traditional model of drug R&D around the turn of the millennium, new drugs need to undergo four major stages from primary lab studies to commercial sale in pharmacies (see Fig. 3).

Fig. 3

Current drug R&D and launch process. Source CEIBS: 3DHTS Innovation Analysis Report

Lab studies are the first stage. Pharmaceutical companies must choose a disease condition and a mechanism of action for the new drug. After drug targets are selected, a biological model should be established to screen and evaluate promising compounds. Compounds may be produced via a range of methods, most notably including extraction from plants or animals, organic synthesis and molecular modification. The activity of the selected compounds must be optimised and then evaluated via in vivo and in vitro studies, in order to acquire compounds that are most suitable as drug candidates.

The next stage is preclinical research. Pharmaceutical companies need to conduct lab studies and animal testing to identify the effects of drug candidates on the biological activity of tumour tissues, as well as to evaluate drug safety. It takes about three years to complete all of these studies.⁹ After preclinical research, pharmaceutical companies should submit their Investigational New Drug (IND) Applications to the FDA for approval before beginning clinical trials.¹⁰

Clinical trials can also be divided into three phases with different scales and goals. Phase I lasts about one year, and requires 10–100 healthy volunteers. It focuses on drug safety issues such as safe dosage ranges and identifies the absorption, distribution, metabolism and excretion processes of an anti-cancer drug in the human body, as well as the duration of drug action. Phase II lasts about two years and needs 100–500 cancer patients to participate in case-control studies in order to evaluate drug effects. Phase III needs about three years, and usually involves 400-5000 patients in hospital. Doctors monitor the status of patients to identify drug effects and adverse reactions.¹¹ Then pharmaceutical companies need to analyse all the data acquired from clinical trials. If this data can prove the safety and effectiveness of the new drug, they can submit a New Drug Application (NDA) to the FDA. A typical set of NDA documents consists of 100,000 or more pages, and the review process usually takes 1–2 years. In the end, less than 10% of new drugs are able to get approval and enter the market.

There is also a fourth stage called post-market safety monitoring, during which pharmaceutical companies regularly submit reports to the FDA, including all reports on adverse reactions and certain quality control records. The FDA may require further research on some certain drugs to evaluate their long-term effects.

According to Roche, developing a new drug from primary lab studies to commercial sale in pharmacies takes 12 years, 6587 trials, 423 participating researchers,¹² and R&D expenses of USD 1.2 billion¹³ on average. Among the new drugs in development around the world, nearly a third of those at the preclinical stage and undergoing phase I clinical trials are anti-cancer drugs,¹⁴ but these only account for 9% of drugs in later phases (see Fig. 4). This data illustrates the great difficulty of developing anti-cancer drugs.

Fig. 4

2013 statistics of new anti-cancer drugs in development around the world. Source IMS: Global oncology trend report

The Biopharmaceutical Industry Chain

From the perspective of drug product development, the anti-cancer drug industry chain is composed of upstream, midstream and downstream players. Upstream players focus on technological innovation and development; midstream players involve material separation and product processing; while downstream ones cover marketing and planning, channel building and feedback system development. Due to strict technological requirements and numerous lab studies, the early-stage R&D expenses of anti-cancer drugs can be much higher than the direct cost of production. Therefore, the R&D departments of leading pharmaceutical companies, along with biotechnology companies, have become the core of the industry chain.¹⁵

In order to meet investment needs and reduce risk, multinational pharmaceutical enterprises, biotechnology companies and small-scale pharma firms usually build business alliances to provide joint investment for drug R&D. A common model is to put a small biotechnology company with strong professional skills in charge of technological development and innovation. Through cooperative development, the company can acquire the technologies to produce biological medicines, or the right of production. Pharmaceutical companies may also cooperate with competent contract research organisations (CRO) and subcontract studies that require advanced technologies to them, so as to reduce cost and ensure professional and efficient operation.

Analysis of Global Market Potential

As anti-cancer drug R&D has high requirements in terms of funding and technology, most branded drugs are produced by multinational pharmaceutical companies such as Roche, Novartis, AstraZeneca, Sanofi and Pfizer. The top ten anti-cancer drug producers accounted for 81% of the global market in 2010, and Roche, with its rich product range, contributed 42% of their total sales value.¹⁶

Multinational pharmaceutical companies are also increasing their investment in drug R&D. According to the Pharmaceutical Research and Manufacturers of America (PhRMA), R&D investment by American biopharmaceutical companies reached USD 67.4 billion in 2010. PhRMA members also increased their R&D investment by 6.5% and the ratio of R&D investment to sales value to 20.5%, which had remained around 19% from 2000 to 2010.¹⁷

Analysis of Chinese Market Potential

According to the Blue Book on Chinese Pharmaceutical Market Development, in 2010, Chinese hospitals consumed drugs worth a total of RMB 452 billion with a year-on-year growth of 22.5%, the retail pharmacy market was valued at RMB 173.9 billion with a year-on-year growth of 17%, and the community hospital and rural clinic markets were valued at RMB 129.7 billion with a year-on-year growth of 27.9%. Due to population ageing, a new universal health care system, and the improved comprehensive payment capacity of Chinese people, China is expected to become the second-largest pharmaceutical market in the world by 2020.¹⁸

Driven by the huge Chinese market potential, multinational pharmaceutical companies have been increasing their investment in China. In March 2007, AstraZeneca announced the establishment of its Innovation Center China in Shanghai, focused on developing drugs for the most common diseases in Asia such as liver, stomach and lung cancers.¹⁹ In October 2007, Roche opened its Pharma Development Center China in Shanghai. This is the first comprehensive clinical trial centre in China, and is able to meet all requirements for clinical trials. It also works with Chinese experts, scholars and professionals to explore innovative therapies.²⁰ In October 2008, Lilly launched its China R&D Headquarters in Shanghai to work on scientific research management and venture capital investment, and seek cooperation with Chinese research institutes and scientists.²¹ In April 2009, Johnson & Johnson established an R&D centre in Shanghai as its Asia Pacific R&D Headquarters. The new centre pays special attention to developing drugs for common cancers, infectious diseases and metabolic disorders in Asia, and promotes open innovation by cooperating with colleges, universities and research institutes.²² In November 2009, Novartis announced an investment of USD 1 billion over the next five years to establish the China Novartis Institute for BioMedical Research in Shanghai, which focuses on developing drugs for the most common cancers (such as stomach and liver cancers) and liver diseases (such as hepatitis and hepatic fibrosis) in Asian countries, including China.²³

This means that local pharmaceutical companies in China now face greater pressure from an increasing number of their global counterparts entering the Chinese market. Due to their small scale and limited R&D investment, they mainly produce generic anti-cancer drugs, making them less competitive when facing imported brand-name drugs. According to Ding Jian, Academician of the Chinese Academy of Engineering and Director of the Shanghai Institute of Materia Medica, foreign pharmaceutical companies usually use 20% of their sales revenues for new drug development; however, this number is less than 2% on average in China.²⁴ One reason is that, China’s regulated drug pricing system has reduced the profits of local pharmaceutical companies, making them unable to bear the risk of drug development failure. The other reason is that, the drug review process in China is time-consuming, which has negative effects on the innovation practice of local companies. In short, multiple factors, such as limited technology capacity and uneven industry development, have constrained the drug R&D capacity of local pharmaceutical companies in China. They cannot even compete with their global counterparts in terms of the quality of their generic drugs. To address this challenge, the China Food and Drug Administration (CFDA) began a quality consistency evaluation for 75 generic drugs in July 2013 in an effort to significantly improve drug quality and safety.²⁵ With this evaluation, as well as policies to encourage the development of first-time generic drugs, a range of low-quality and repetitive generic drugs will be phased out of the market, and local pharmaceutical companies will have to shift their focus to improved generic drugs and independent R&D.

The Start-Up Decision

The Early Years: Accumulating Knowledge

Dr. Xiong Lei studied at the Institute of Biochemistry and Cell Biology, SIBCB, CAS, and began researching oncogenesis mechanisms in 2000. After receiving his doctoral degree, he joined the newly founded company Abmart as the first manager of its Business Development Department. Abmart was founded in Shanghai, China in 2006 by Dr. Meng Xun, a biologist studied in the USA, and Dr. Chen Changzheng, a Stanford professor. The company specialises in the development and production of monoclonal antibodies. After Dr. Xiong Lei joined the company, he took charge of customer services, technical support, sales and marketing, and led his team to increase the sales volume by 150% during his time there.

Nevertheless, Xiong Lei wanted to get more involved in scientific research, so he left Abmart in 2008 after a short time working there, and began his postdoctoral research at the University of Zurich in Switzerland. There he focused on high-throughput target screening with RNA interference (RNAi) technology, engaging in drug target development and verification guided by a strategy of “systems biology”. During his studies in Switzerland, Xiong Lei also completed a short-term MBA training course at the Swiss Federal Institute of Technology in Lausanne.

Forecast of Market Trends

In 2009, during his postdoctoral research in Switzerland, Dr. Xiong Lei came across a report from Applied Biosystems (ABI) by chance. Based on analysis, the report predicted that the cost of human whole genome sequencing (WGS) for an individual would drop to USD 1000 over the next five years, while Xiong Lei’s research institute was spending around EUR 100,000 on procurement at the time. Although this prediction was not inconceivable to Xiong Lei, as he had heard about such targets during his doctoral research in 2006 and was in regular communication with friends who worked in related areas, with the continuing development of computing and storage technology, Xiong Lei and his friends eventually believed that “precision treatment” supported by big data would come true. “Because researchers should look to the future, not to the past or the present. As businesspeople we should sometimes cater to present needs, but as researchers we should be forward-looking and focus on cutting-edge topics. Being trained to look to the future, we began to wonder what would happen if the genome sequencing cost were to drop to USD 1000 in five or six years’ time, and how it could change the world. It was very exciting to think about it.”

Meanwhile, Xiong Lei saw huge potential in the Chinese market. He was deeply inspired by the book China’s Megatrends,²⁶ by John Naisbitt, and even bought his friends copies of the book in order to share this inspiration with them. The book predicted that China would become the world’s largest economy—a truly developed country—and analysed the reasons for such a trend in detail.

After some discussion, Xiong Lei and his friends came to the conclusion that the pharmaceutical sector would follow the same trend: “When China transforms into a highly developed country, the situation of its pharmaceutical sector will change correspondingly. A stronger China will not end up producing generic drugs all the time and relying exclusively on technologies developed by other countries. Things simply cannot happen that way. Innovative enterprises will be founded. If not by us, then others will do it. We are probably among the first batches to step forward and strive to ride the trend. Though we don’t know yet whether or not we can keep the leading position, we will not regret our decision.”

Back to the Homeland

On Christmas Eve, 24 December 2009, Dr. Xiong Lei made up his mind to start up his own business back in China. He wanted to fully leverage the rich clinical cancer resources available in China and establish a personalised drug development platform using systems biology, setting milestones for Chinese drug development.

Xiong Lei spent a year organising his team based on genome information guided drug development industry chain, through which he gathered resources for complete drug target screening as well as gene function research, and prepared for the creation of biological and medical databases.

On 26 November 2010, Xiong Lei stopped his postdoctoral research and went back to China to start up his own business.

The Start-Up’s Focus

Individualised Precision Treatment

In traditional anti-cancer drug treatment, chemotherapy remedies are chosen based on where the cancer appeared. However, as cancer is caused by gene mutation, and where the mutated site occurs is random and selected through evolution, mutation types vary from individual to individual.²⁷ Therefore, even when the same amount and same kinds of targeted drugs and the same therapy are used for cancer of the same tissue, clinical effects and adverse drug reactions may vary greatly. This is believed to be the main reason that the effectiveness of anti-cancer drugs is less than 30%.²⁸

Since the human genome was mapped in 2003,²⁹ people have gradually formed a deeper understanding of genes, and paid more attention to pharmacogenomics, which studies the role of gene mutation in drug response.³⁰ But traditional pharmacogenomics research mainly studies how genetic polymorphism in the blood influences the efficiency of drug metabolism in different individuals. For cancer, however, the tissue consists of unique somatic cell genomes where mutation may occur at any sites, so it is necessary to study how somatic mutation within the cancer genomes influences drug response.

Dr. Xiong Lei and other researchers began to contemplate whether it was possible to tailor medicine therapy based on the pathogenic genes of different patients, in other words, to achieve “personalised precision therapy”.³¹

Large-Scale Drug Screening Model

To achieve “personalised precision therapy”, the range of types of anti-cancer drugs on the market ought to be greatly expanded. However, under the traditional drug development mechanism, phase II clinical trials are carried out randomly on cancer patients with various genotypes and as a result, anti-cancer drugs targeting a small group of genotypes (for example, 5% of patients) cannot achieve a 20% effective rate, and thus cannot be approved by FDA to enter the market. Therefore, pharmaceutical companies need to search for target cancer patients as trial subjects for their drugs before large-scale clinical trials in order to significantly increase the efficiency of the clinical trials. For example, if a lung cancer drug is estimated to have an effect in 5% of patients, and 100 subjects are required for a phase II clinical trial, it is recommended to first select 100 people from 5000 through clinical diagnostic tests, an approach which is accepted and promoted by FDA. The FDA even expedited pathways for this kind of clinical trials with regard to potentially high effectiveness drugs, or for “breakthrough therapy”³²—once a drug is designated as a breakthrough therapy, its clinical trial will be put on a pathway to accelerated approval.

To match cancer patients with the appropriate drugs, a cancer drug screening model is needed to identify the “gene-drug interaction”. This is also a core process in initial drug development. Cancer cell lines are used to identify genetic biomarkers, but creating them is originally an extremely difficult process with a low success rate. This means that a large number of cancer samples are wasted, resulting in cost issues even for multinational pharmaceutical companies. However, there are rich clinical cancer resources in China, and if they are fully exploited, cadaver tissue banks can be transformed into cell banks, allowing for high-throughput drug screening and the accumulation of huge amounts of “drug-gene” data, thus providing first-hand big data for drug biomarkers (matching drugs to genes).

Next-Generation Sequencing (NGS)

Undeniably, even if there are enough cancer cell samples, it is not easy to match drugs to genes due to the relatively large amount of data. Human somatic cells have 23 pairs of chromosomes, with a number of genes linearly arranged on each chromosome.³³ Preliminary analysis of the human genome map, conducted by scientists from many different countries, has revealed that humans have around 20,000–25,000 genes in total.³⁴ Supposing the total number of genes is 25,000, this makes for over 300 million potential combinations of two genes, and over 2.6 trillion combinations of three, so finding the correlation between genes and diseases is like finding the power switch in a complex circuit diagram³⁵ (see Fig. 5).

Fig. 5

The difficulty of identifying drug-disease relationships. Source 3DMed internal materials

As a result, it usually takes years of research and enormous capital to identify a group of cancer biomarkers. Six countries spent USD 3 billion on the first genome sequencing in human history, and it took about ten years. Even after 454 Life Sciences released a next-generation sequencing (NGS) instrument at the end of 2005, the cost of personalised genome sequencing was only reduced to several million RMB.

With global biotechnology developing, NGS technology has revolutionised genome sequencing, bringing many benefits compared to the first generation sequencing methods. NGS technology is characterised by large-scale and high-throughput sequencing capabilities compared to traditional antimicrobial susceptibility testing technology. By virtue of automated operation systems, sensitive and fast detection instruments as well as high-speed data analysis computers, NGS technology allows hundreds of thousands to millions of DNA molecules to be sequenced simultaneously,³⁶ dramatically driving down labour and material costs.

Big Data Processing

High-throughput instruments can detect specific changes in DNA molecules in a short time and produce a large amount of information. For example, the Illumina HiSeq 2500 whole genome sequencing instrument can completely sequence an entire genome in just one day. It can produce 120 GB data in 27 h, or 600 GB data during one time of standard operation, which is far higher than the average sequencing output a few years ago.³⁷ High-throughput methods generate huge amounts of “big data”, and the capability to process such data is thereupon needed. In short, drug-gene relations can only be revealed by integrating cancer genome data with high-throughput drug data.

Around 2010, with the emergence of cloud computing and cloud storage technologies, people have become able to process massive amounts of information. Thus, Dr. Xiong Lei planned to integrate oncogenomics, complex data computing platforms and high-throughput drug screening technology to solve problems in personalised precision anti-cancer drug R&D (see Fig. 6).

Fig. 6

Biomedical science big data flowchart. Source 3DMed internal materials

The Start-Up Process

Founding the Company

After integrating all the thoughts and ideas, Xiong Lei registered and founded 3D Medicines Corporation in 2011, using all of his savings—RMB 500,000. The “3D” in the company’s name stands for the three Ds of Diagnostics, Drugs and Development.

Due to limited funding, the company could not afford to set up its own lab to begin with, and had to rent a lab in Jinshan District, 10 kilometres away from the Shanghai urban area. Every week, employees had to commute from Jinshan to the city to do business. The company made its first significant profit within half a year by providing outsourced science and research services. In July 2011, it rented a 150 m² factory in Shanghai Juke Biotech Park in the Xuhui District, where it established its own lab and started to purchase instruments and facilities. After two years of development, the company expanded its scale and moved to Pujiang Hi-Tech Park, an extension of Shanghai Caohejing Hi-Tech Park with energy, electronic information and biomedicine as its core industries. 3DMed occupies a 2400 m² lab within this industrial park.

The Entrepreneurial Team

Right after the company was founded, the entrepreneurial team consisted of eight members (see Fig. 7). With a similar academic background of CEO Dr. Xiong Lei, two other members of the management team—Technical Director Dr. Andy Xie and Gene Function Manager Dr. Li Fengqing—also graduated from the Institute of Biochemistry and Cell Biology, SIBCB, CAS. Database Business Unit Manager Zhang Qingzhou graduated from the University of Manchester, and had worked at Abmart before he entered 3DMed, while Sales Manager Dr. Li Huaguang and Business Development Department Manager Dr. Fang Qiangyi graduated from the CAS-MPG lab and the Shanghai Research Center of Biotechnology of CAS respectively. The team was later joined by An Yinghui and Li Xiaofang. An Yinghui graduated from East China Normal University, and had previously worked in sales at Abmart under Dr. Xiong Lei, while Li Xiaofang had graduated from CAS and followed Xiong Lei in scientific research.

Fig. 7

The 3DMed team during the company’s initial start-up phase (2011–2012). Source 3DMed internal materials

Core team (significantly changed already)

Dr. Xiong Lei, Chief Executive Officer. Graduate from Institute of Biochemistry and Cell Biology, SIBS, CAS, with a doctoral degree, majoring in cancer drug resistance and signal pathway; 14 years of experience in oncogenesis; appointed as the first business development manager in Abmart, responsible for customer services, technical support, sales and marketing, successfully led the team to achieve a 150% sales volume increase; engaged in high throughput screening (HTS) during his postdoctoral years in University of Zurich, where he mastered HTS RNAi screening technology, mainly in systemic cell apoptosis, autophagy, endocytosis, and ageing; also finished a short-term MBA training course at the Swiss Federal Institute of Technology in Lausanne. Responsible for defining strategies, creating corporate culture, designing genetics-related database products, and daily operations management during the initial phase of 3DMed.

Dr. Xie Zhenghua, Chief Technology Officer. Graduate from Institute of Biochemistry and Cell Biology, SIBS, CAS, with a doctoral degree, majoring in epigenetics. Spent postdoctoral years at the University of Rochester, where he mastered transgenic mice and gene knock-out mice technology and successfully applied this technology to diabetes model research. Responsible for building HT libraries, HTS, as well as building transgenic mice animal model platforms based on shRNA libraries during the initial phase of 3DMed. Currently responsible for building the company’s cell model construction platforms.

Dr. Li Fengqing, Gene Function Manager. Graduate from Institute of Biochemistry and Cell Biology, SIBS, CAS, with a doctoral degree, majoring on control of gene expression, mentored by Hong Guofan (a member of Chinese Academy of Sciences). Spent postdoctoral years at the Institute for Nutritional Sciences, SIBS, CAS, majoring on animal models of metabolic diseases; 10 years of experience in molecular biology and gene functions, especially in control of gene expression. Responsible for annotating information in the genetic association database as well as conducting research on gene expression during the initial phase of 3DMed.

Zhang Qingzhou, Database BU Manager. Graduate from the University of Manchester with a master’s degree, majoring on bioinformatics; built first database for production management and customer relations at Abmart; built and released an online database of protease cleavage sites during postgraduate studies (NickPred Database). Responsible for building gene expression database and gene-disease association database during the initial phase of 3DMed.

Dr. Li Guanghua, Sales Manager. Graduate from CAS Max Planck Institute (jointly created by China and Germany), with a doctoral degree, majoring on epigenetics; rich experience in RNAi mechanism of action; first discovered epigenetics changes caused by RNAi in drosophila; spent postdoctoral years at the Institute of Biochemistry and Cell Biology, SIBS, CAS, mentored by Liu Xinheng (a member of Chinese Academy of Sciences), majoring on cancer gene therapy, mainly regarding how to use RNAi technology to inhibit gene expression in cancer treatment. Responsible for expansion of sales and marketing in HTS-related scientific research business during the initial phase of 3DMed.

Dr. Fang Qiangyi, Manager of Business Development. Graduate from Bioengineering Research Center of the Chinese Academy of Sciences, Shanghai, with a doctoral degree, majoring on large-scale expression of eukaryotic recombinant proteins in mammalian cells; experience in the expression of several dozen large-scale eukaryotic proteins; consecutively responsible for leading technical polyclonal and monoclonal antibody R&D in Abmart, development of polyclonal antibody products, and sales of these products to industrial customers; rich experience in development of technologies for mass production. Responsible for project management and assisting in the management of library production.

By August 2011, the 3DMed team had grown from eight members to 20, after which it remained more or less the same size for a time. In 2012, the team was expanded to about 40 members, with more employees hired for shRNA library creation, drug target screening and sales forces. They did some basic work for outsourcing of science and research services, which contributed to the company’s capital accumulation.

Accumulating Resources

After analysing the competitiveness of 3DMed, Xiong Lei found that the company faced two main problems in its initial stage: a lack of funding and a lack of cancer sample resources.

To accumulate funds initially, 3DMed adopted a “group buying” model for technical services, and bought in large numbers of research-related service contracts at relatively low prices. Afterwards, under the conditions of big contracts, 3DMed negotiated with upstream suppliers, winning the terms of purchasing the raw materials and equipment at RMB 9 million with one-year payment cycle. Since 3DMed was allowed to pay by instalments, it could perform service contracts as non-core business using the instruments and raw materials to bring in cash, which was then used to pay for the instruments. In this way, it leveraged the accumulated fixed assets of merely RMB 1 million to launch a shRNA library creation business worth RMB 10 million. A shRNA library is a commercial application based on large-scale RNAi screening technology. Researchers can simply search for the shRNA of a specific gene in the library, saving them the trouble of siRNA design, synthesis and verification processes (see Table 1). This kind of service business bought Xiong Lei time to devise a strategy to ensure the start-up’s survival and the ability to finance its development.

Table 1 3DMed libraries in the early stages (2011–2012, before A-round financing)

As for cancer sample resources, he decided to cooperate with hospitals by providing them with shRNA services for a year or two. During this period, 3DMed mainly cooperated with research hospitals that specialised in translational medicine research, such as Zhongshan Hospital, affiliated to Fudan University, and Renji Hospital, affiliated to the School of Medicine of Shanghai Jiao Tong University. Translational medicine research deals with how basic research findings can be applied to clinical practice. For example, the “targeted drug susceptibility testing” offered by 3DMed can enable the personalised application of drugs, and its “drug target research” contributes to reveal new anti-cancer drug targets and guide drug development.

Though these technologies earned 3DMed some revenue and data resources, Xiong Lei wanted to focus on more than just these fields, saying that “These are common technologies, and our implementations are only slightly more complex than those of other companies”. At that time, 3DMed was struggling for survival. “We have to wait and build up our networks, and turn to personalised anti-cancer R&D as soon as we have raised a large amount of initial capital.”

Angel Round of Financing

According to Xiong Lei’s original plan, 3DMed would attract investment after it accomplished the expected profit goal in the first three years after its founding. However, it accomplished the goal sooner than expected. Thus, the year 2012 became a milestone in Xiong Lei’s career and the development of 3DMed. In May 2012, Xiong Lei joined the “1st Future Leaders’ Boot Camp” Leadership Development Programme at the China-Europe International Business School (CEIBS). In August 2012, 3DMed completed its first round of financing and raised RMB 10 million in angel funding.

As soon as the financing arrived, Xiong Lei began implementing his plan. According to the plan, 3DMed aimed to create cancer cell line models on a large scale in cooperation with hospitals and integrate genome sequencing data with high-throughput drug screening data for personalised drug development (see Fig. 8).

Fig. 8

3DMed’s capital plan after A-round financing (after A-round financing in 2012). Source 3DMed internal materials

Technological Innovation

Though there are hardly any direct competitors in China at the time, and it could earn high profits from conducting precision diagnostics business with drug susceptibility sequencing technology, after receiving the angle round of financing, the 3DMed management team decided to upgrade its equipment to NGS technology. This required a huge input of capital and talent, and would cause high R&D costs in the initial phase. But once the technology was upgraded, a clearer, modular process would lead to a decrease in marginal costs, from RMB 100,000 down to just RMB 15,000. Though some profit margins might be sacrificed, the 3DMed management team believed in the long-term strategic value that such a technological upgrade would bring. As 3DMed Public Relations Director Li Yishi said, “The upgrade would expand our target customer segment and raise the technical barrier for potential competitors. At the same time, we believe that we are in the era of big data, where collecting user information is more important than gaining short-term profit. Only by collecting massive amounts of cancer genome data, can we unleash the potential of future business operations.”

Their strategic direction was recognised by angel investors.

The Business Value of 3DMed

Providing New Drug R&D Services

In the second half of 2012, 3DMed’s core service shifted from the RNAi library service to drug marker screening and R&D using NGS technology.

3DMed cultured cancer cells in vitro and developed cell models for preclinical trials of anti-cancer drugs to figure out the genotypes that the drugs could apply to. Analysis of the association between genotypes and efficacy of drugs, using large amounts of data, could demonstrate whether the drug was specific to a certain genotype. Preclinical screening of patients helped pharmaceutical companies find people specific to the drug who could participate in the trial, greatly increasing the trial efficiency (see Fig. 9). It also helped pharmaceutical companies reduce costs significantly, because although the cost of gene sequencing had fallen to USD 1000 per capita, the cost of clinical trials could be as high as USD 100,000–200,000 per patient. And what’s more, without genetic biomarkers, most clinical trials failed anyway.

Fig. 9

3DMed “drug-gene” matching association study (after A-round financing). Source CEIBS: 3DHTS Innovation Analysis Report

Screening drug biomarkers not only greatly increased the chance of new drugs being approved by FDA, but also enabled drugs whose clinical trials had failed to find specific target patients and be redeveloped. In terms of specific cooperation, 3DMed firstly aimed to sign agreements with large innovative global pharmaceutical companies (such as Roche, Novartis, Johnson & Johnson, and Eli Lilly) to redevelop their drugs whose clinical trials failed by finding the precise target patients and restarting clinical trials. Secondly, 3DMed was able to find specific biomarkers using platform screening, and jointly developed personalised precision drugs with other new drug development companies.

Building a Drug R&D Platform

3DMed’s goal was not simply to provide CRO services for new drugs. Instead, 3DMed aimed to build an R&D platform for precision anti-cancer drugs.

3DMed started with liver cancer, one of the most prevalent cancers in China, by collecting samples of cancer cells from various top-tier (class 3A) hospitals and culturing these cells in laboratories. Once the number of cancer cell samples of one genotype exceeded a certain amount, 3DMed could develop personalised precision drugs with specific biomarkers. Within three years of its founding, 3DMed had established the largest database of liver cancer cells in the world, and the amount of data continued to increase. Xiong Lei aimed to increase the number of samples to 10,000 and develop a favourable business ecosystem in the biomedical industry by opening up data source.

Changing Clinical Diagnostics Models

Innovations in the drug R&D model would spurr the launch of more and more anti-cancer drugs in the future. Xiong Lei predicted that in the coming 10–20 years, “Theoretically, there will be 20–30 precision drugs focusing on different targets for each type of cancer, maybe even 50 drugs for one cancer”. By then, patients were able to undergo WGS to identify their specific genotype, so as to determine the appropriate drug to realise personalised precision therapy.

Therefore, 3DMed not only applied drug R&D technologies, but also had an effect on the clinical diagnostic model in the downstream value chain. Traditional “companion diagnostics” only diagnosed a single gene and cost RMB 2000 in China, so diagnosing 10 genes cost RMB 20,000 in sum. The new WGS technology adopted by 3DMed, on the other hand, would only cost RMB 5000–6000 in future.

As the number of drug types increased, single-gene sequencing technology could not meet large-scale diagnosis needs. Xiong Lei believed that traditional single-gene sequencing would be phased out in the future, with significant consequences for the whole industry. “Big data changed the models of medication, diagnostics, and drug R&D. It served as a source that facilitated a series of chain reactions and changed different things in different phases. It changed drug R&D first and will change diagnostics models in the future. It has already changed diagnostics to some extent, with several new drugs put into clinical practice, but this only covers a few genes. For instance, there are currently only two to three drugs for one specific type of cancer. Patients might therefore think that adopting WGS is a bad deal, because single-gene sequencing technology only costs RMB 5000–6000 for two or three genes, while the WGS technology also costs RMB 5000–6000. If just one more drug became available, things would be different. The old sequencing technology will be phased out if one more drug appears for some cancers, because the old technology cannot save cost, while the new technology saves more and more as the number of genes involved increases. The cost remains the same for 10 genes, 20 genes, or even 200 genes.”

By guiding personalised medication and charging fees for tests and evaluations, 3DMed had expanded its business scope from drug R&D to personalised precise diagnostics by 2013, and it planned to gradually get involved in the entire industry chain as time went on.

Future Challenges Facing 3DMed

Guided by its strategy blueprint, 3DMed began to follow its anticipated development path. But was it the right moment? What difficulties needed to be addressed? After reflecting and thinking over these questions, the management team of 3DMed concluded that there were three main aspects that posed challenges.

Sustainable and High R&D Investment

How to gain recognition from the capital market is often the first challenge faced by innovative start-ups in emerging industries. In May 2014, 3DMed completed A-round financing, receiving over 10 million RMB from six institutes. Two investors engaged in the angel round also invested in the A-round, mainly in the form of medical fund. 3DMed used this capital to purchase equipment and facilities, expand its primary cell line platform, and recruit more staff. Given the huge cost of R&D, Xiong Lei believed that 3DMed needed to obtain more resources in the future.

Undeniably, it’s difficult to precisely predict 3DMed’s future cash flow situation, because it is in an emerging industry with few mature enterprises to learn from. Additionally, most investors are tending to be profit driven. Therefore, 3DMed must address the challenges of attracting angel investors and venture capital firms, and maintaining a sound financial position despite high R&D costs.

Putting a Team Together After Strategic Transformation

In light of 3DMed’s strategic transformation, its middle and senior management needed to have leadership competency as well as expertise in various subjects, including biology, new drug development, clinical medicine and information technology. However, as 3DMed aimed to innovate in an area that had been seldom explored in China, there was little suitable talent to be found in the market that matched the company’s requirements. Xiong Lei said that 3DMed found it very difficult to recruit talented team members in the beginning. “Even headhunters specialising in biology related field couldn’t select a single resume that met our basic requirements within six months. This may be unthinkable in other industries, but innovative enterprises always face this challenge.”

Because such interdisciplinary talent was so hard to find, 3DMed turned to internal training. However, even doctoral and master students from top colleges both within China and abroad often found the training to be too intense for them. More than 60% of 3DMed’s original team members left the company within two years of its founding. What’s more, after completing A-round financing in May, 2014, 3DMed started to build a gene sequencing and anti-cancer precision drug platform. Some members of the management team could not adapt to the “re-start-up”, both in terms of mindset and capability, and three core members left 3DMed. 3DMed summarised the features of these employees and improved its requirements for middle and senior management as well as technicians. They did not just expected to have the relevant expertise and learning capacity – they also needed to have some achievements in the field already under their belts, and share the entrepreneurial dream. 3DMed stuck to the principle of “attracting top talent with a promising vision and excellent wealth sharing mechanism” and offered stock options as an incentive. It aimed to become a company carrying out employee stock ownership plan.

In addition to operation management and research teams, there were also some process-oriented manufacturing departments (see Fig. 10). Routine tasks such as cell model production required process stability. So 3DMed cooperated with vocational-technical schools for campus recruiting. In the beginning, up to 60–70% of recruited students were ultimately dropped due to their lack of technical skills, resulting in a significant waste of R&D investment. Later, 3DMed changed its recruiting model and pre-screened students just as it pre-screened drugs. “We offer a targeted training course, and I will teach the students in the sophomore year monthly. I will tell them what challenges they are going to encounter in 3DMed, both mentally and physically: ‘It’s going to be hard, but it’s a good opportunity to learn. Your job will be focused on research and trials, so you have to really love this kind of work.’ Most students are eliminated in the initial stage, while only 20 out 100 stay. But the turnover rate is only 10–20% once these 20 students are working as interns in 3DMed. After students start full-time work with 3DMed, they seldom resign. This is a valuable lesson that over two years of experience has taught us. It’s similar to big data analytics. We have to carefully select certain data, or students, in the beginning in order to get the results we want.”

Fig. 10

3DMed organisational chart (2013). Source 3DMed internal materials

The number of employees working at 3DMed has grown to more than 100, and Xiong Lei hopes that the number will reach 500–1000 in the next few years, and that 3DMed will build a marketing team covering the business fields of precision therapy and diagnostics. Will such recruiting and training models let 3DMed build its dream team? Can 3DMed’s organisational structure and management model adapt to such goals? Time will tell.

Cultivating Customers in a Changing Industry

Pioneers in an industry not only need to grasp early opportunities, but also must bear the brunt of risks. Xiong Lei once said that “personalised medication moves too many people’s cheese”, alluding to the famous motivational parable by Spencer Johnson.

Traditional pharmaceutical companies have a mixed attitude towards personalised therapy. When a drug developed by such companies manages to obtain FDA approval, the companies often want this drug to be applicable to a broader range of people. They may find personalised therapy undesirable because it does not bring in as much profit. However, when the drug R&D fails, companies desperately hope that personalised therapy can help to identify specific target patients for the drug, so that they can continue to conduct clinical trials and launch the drug again. But once the drug is launched, companies hope that more patients will buy it, which goes against the intention of personalised therapy. To strike the right balance between precision therapy and business interests, drugs targeting 6–7% of the whole population are already appearing on international market and selling well. 3DMed, however, wants to develop precision drugs that target over 1–2% of the whole population, in line with the conclusions of relevant research by MIT.³⁸

For doctors in hospitals and other medical units, personalised therapy may completely change disease diagnostics and medication. Are doctors willing to break with their reliance on old therapy methods, and adopt more complex but more precise therapies? Xiong Lei was optimistic in this regard. “During exploration of new therapy methods, we found that there will always be some doctors who care about patients’ health above all else. They chose the old therapy because they had no choice; when we offered them the new therapy, they were uncertain whether to use it. Different doctors reacted differently, and we felt their hesitation. But I believe that this was a good phenomenon in itself, because they did not even have anything to be hesitant about before.” As the personalised medical industry gradually matures, Xiong Lei expects that the price of personalised gene sequencing will reduce to RMB 10,000 in the future, which is affordable for individual consumers.

As the reform of China’s health care system deepens, 3DMed must grasp the opportunity of moving away from traditional therapy towards personalised therapy, sticking to its business values while facing various new challenges. This is not a simple task. With A-round funding in place, 3DMed will enter a new stage of development. Are Xiong Lei and his team ready for this? How can 3DMed develop its precision therapy business model based on WGS big data?

Case Analysis I

• Grasp Consumer Demand, Stick to Innovative Ideas

Fan Xiaojun

Fan Xiaojun, Professor, Doctoral Advisor, and Director of Department of Business Administration, School of Management, Shanghai University.

“Precision”, “personalised”, “customised”, “targeted (therapy)”… Most oncologists are very familiar with these terms, which are often used to describe the management model of developing a treatment plan based on the patient’s individual features and the genetic characteristics of the tumour. Precision therapy in the medical industry is enabled by technological development and the application of big data.

This case clearly shows that enterprises must truly understand and grasp market demand in order to develop products and conduct marketing activities. To identify and grasp consumer demand, enterprises must conduct comprehensive and scientific market research. Anti-cancer drugs are now a hot spot for innovative drug R&D both domestically and abroad. Substantial capital is flowing into cancer research, and numerous new products are entering the clinical trial stage. Most domestic R&D staff has been engaged in development of generic drugs for a long time, while little effort has gone into the clinical development of innovative drugs. However, relevant research has helped 3DMed and Xiong Lei realise the great potential of this area. Xiong Lei conducts research on personalised precision therapy based on his own expertise and research experience, and manages to meet consumer demand by reducing the cost and sale price of the therapy, so that consumers can afford it and are willing to pay for it. 3DMed always strives to gain an in-depth understanding of consumer demand, and adapt to this demand when developing personalised anti-cancer precision drugs. This fully demonstrates the essence of modern marketing, i.e. “providing appropriate products to appropriate consumers at an appropriate price, at the appropriate time and place”, as well as the fundamental spirit of modern marketing, namely focusing on consumer demand and striving to earn long-term and reasonable profit while meeting this demand.

A good business model can seamlessly integrate technological innovation, product innovation, and service innovation, bind the interests of various links in the industrial chain together, and continuously promote development of the industrial competition model and progress of the economy. During this process, technological innovation and business model innovation complement each other and achieve coordinated development. In a sense, technological innovation is a prerequisite for business model innovation. More advanced technology enables changes in the profit model and source of profit. In terms of the drug development process, the upstream part of the anti-cancer drug industrial chain involves key technological innovation and development, while the midstream involves “substance separation” and “product processing”. Xiong Lei and his team’s efforts in technological R&D lay a solid foundation for business model innovation in the future. But technological innovation usually faces the challenges of high cost, scarce supporting resources, and low market recognition. So technological innovation is likely to fail if not accompanied by corresponding business model innovation. Especially for emerging industries and transformational technologies, the promotion and application of technologies and products is extremely difficult due to immature technology, high R&D costs, and a lack of supporting facilities. Therefore, effectively reducing cost through business model innovation is an important means for new technologies and new products to enter the market. This applies particularly to emerging industries, because their technological model and business model are still under exploration, and active business model innovation is needed to promote technology application. 3DMed cooperates with hospitals to adopt the “group buying model” for technical services, and signs research-related service contracts at lower prices. Then it cooperates with upstream suppliers with large service contracts, which enables technological R&D along with the angel financing obtained by 3DMed.

Though 3DMed faces challenges, including sustainable and high R&D investment, putting a team together after its strategic transformation, and cultivating customers in a changing industry, 3DMed lays a solid foundation for creating a positive enterprise and brand image, with a business philosophy focusing on social marketing, including providing new drug R&D services, building a drug R&D platform, and changing clinical diagnostics models. With this philosophy, as long as 3DMed can better satisfy customers than its competitors by following innovative ideas and adjusting its product portfolio and marketing portfolio strategies based on changes in the market, as well as protecting consumers’ interests and enhancing social welfare, 3DMed can definitely achieve long-term and sustainable development.

Case Analysis II

• Change Always Works

Lian Minling

Lian Minling, EMBA 2014 student at CEIBS and Chairman of Shanghai Longly Venture Capital Co., Ltd.

3DMed is a typical example of technological team-based entrepreneurship. Its story was just like the first half of a Hollywood blockbuster. Once upon a time, there was a smart young man who dreamed of finding treasure. By chance, he heard of a castle where tremendous riches were hidden, and he immediately decided to give up his cosy and comfy life. He rethought his goals, and set off in search of the treasure. On his way to the castle, he went through an existential crisis, and a few of once-loyal partners left him. He finally met a powerful nobleman, who gave him a magic sword which enhanced his abilities and enabled him to journey even faster towards the treasure. However, the questions remained in his head: just how far away is the castle? Which road should I take? Is the treasure guarded by a fearsome dragon? Meanwhile, some of his companions continued to abandon the journey due to disagreement, for no one could prove that the castle even existed, nor could anyone say for sure how valuable the treasure might be. What should the young hero do next? For the whole story, please wait for the second half.

In the real life story, the smart young man is Xiong Lei, founder of 3D Med. When he was studying for his Ph.D., he accidentally found the treasure, the personalised anti-cancer drugs that many people were searching for. The investor is the powerful nobleman, and capital is the magic sword. Like most entrepreneurs, Xiong Lei also went through the following phases. The first was survival. In order to survive, he temporarily set aside his goals and started out with small-scale business. He knew that he had to build a financial base before making further growth, so he began with building an RNAi library to sustain his team. However, the spark of his dream kept shining, and whenever the chance arose for him to follow it, he would take up the challenge and hit the road without hesitation. Therefore, after finishing funding, he decided to initiate a strategic transformation of the company, shifting away from the existing profitable business toward precision therapy. He would have great difficulties in carrying out this transformation, facing challenges in R&D and competition with those who had vested interests in the existing medical system. So although his dream was big, the reality he faced was cruel. Failing to understand the transformation, three core members of the founding team chose to quit, which made Xiong Lei’s challenge even bigger.

At that time, he faced a critical test, a test for both himself and the whole 3DMed team. First to be tested was Xiong Lei’s change management capability, because strategic transformation is a vital issue, and failure to carry it out effectively could cause huge damage. On the one hand, losing founding members must have been a heavy blow to Xiong Lei’s company, and on the other hand, being in a highly specialised industry, it was hard for him to find existing qualified talent in the job market. The founding members that left did so partly for their own reasons, but partly due to Xiong Lei. Technical leaders often do not pay enough attention to interpersonal communication. If they cannot form a common goal with their team and make the members believe that the transformation is the right and wise thing to do, this will have a strong negative influence. Most start-ups have the problem that founding members can work together to overcome hardship, but they cannot share happiness—they can work together for a certain period of time, but they often break apart in times of change.

Although Xiong Lei took some measures to fill the personnel shortage arising from the changes in team members, it seems that he paid a relatively high price for it, because the transformation slowed down. This turn of events illustrates well the truth in the saying “more haste, less speed”. Indeed, had Xiong Lei paid more attention to the potential resistance, the transformation process might have been less bumpy. Generally speaking, change management comprises three steps: early communication, gradual adjustment and timely reflection.

Firstly, it is recommended that early communication should be carried out progressively, to explain the reasons for the transformation to each organisation and department. This process may include communication within formal organisations, as well as more emotional communication by way of opinion leaders in informal organisations. The objective is to crystallise the reasons for transformation, rebuild the company’s vision, and reduce resistance.

Secondly, instead of setting a tight transformation schedule, set monthly adjustment goals to make steady progress while avoiding sudden major changes that may disrupt personnel.

Thirdly, provide a timely summary of successful experience and set role models to inspire other employees. Small achievements made in steps can be more motivating than a single major achievement that takes a long time to accomplish.

In fact, there is a saying in management that the more you fear something, the more likely it is to happen. My understanding of this paradox is that the fear of a negative result can cause people to get nervous and act more passively in the hope of avoiding it. However, this usually makes things worse, and may be more likely to bring about the result that caused the worry in the first place. So if you can confront and tackle upcoming problems immediately, you can avoid the situation described by the saying. The fate of 3D Med is in Xiong Lei’s hands, and his moves will have a direct effect on the future development of the company, which has so far been just like the plot of a Hollywood blockbuster. We hope, of course, that Xiong Lei can make the transformation a success, and ensure a happy ending in true Hollywood style.

Case Analysis III

• Focus on Entrepreneurship Challenges from Precision Medicine

Sun Zikui

Sun Zikui, EMBA 2015 student at CEIBS, Chairman and General Manager of Shanghai Personal Biotechnology Co., Ltd.

After the completion of the Human Genome Project (HGP) and with the development of high-throughput DNA sequencing technology, more associations between diseases and genes have been discovered, and genetic diagnosis and treatment will therefore undoubtedly create a huge market. According to the World Cancer Report 2014, the number of registered new cancer cases and deaths in China was 3.065 million and 2.205 million respectively in 2012, accounting for around 1/5 of the world’s new cancer cases and around 1/4 of cancer deaths globally. The 5-year survival rate of cancer patients in the US was 85%, but that of Chinese patients was only 25%. Against this background, personalised cancer therapy based on individual genetic testing has become a trend, which means that 3DMed entered the market at the right time.

Most people start a business based on their own specialist area, and so did Dr. Xiong L. In the very beginning, 3DMed aimed to provide services for building an RNAi library, after all, this was Xiong Lei’s speciality. However, the market size was small and filled with fierce competition, so it was hard to develop a differentiated competitive edge. In light of this, 3DMed moved on to drug marker screening using NGS. By building tumour cell models, it used genetic sequencing technology to screen targeted drugs, in other words, to find appropriate drug biomarkers to support the R&D of new drugs. This is part of the field of precision medicine. This will be the future trend in disease diagnosis and treatment, so there is a huge market potential for such services. However, the biggest challenge facing precision medicine is the uncertainty of associations between genes and diseases. This is especially true of cancer. Even for the same type of lung cancer patients, their genetic mutation may be quite different, which makes it hard to accurately identify the association between the gene and the corresponding disease. It is therefore necessary to collect a large pool of samples, carry out genome-wide or exome and even transcriptome sequencing on these samples, and use big data analysis to define the type of gene mutation. This means that a huge amount of capital is a must. For a start-up, capital is a major challenge. Collecting samples can also prove difficult.

Besides, I disagree with that view mentioned in the case that “traditional single-gene testing will become a thing of the past”, and here are two of my arguments.

Firstly, the total price of a single-gene test could be up to RMB 2000 due to high clinical application fees, but the cost of actually performing the test is no more than RMB 100, which means that there is huge potential for cutting down the price.

Secondly, some diseases are caused by point mutations in single genes. For example, in most cases, hereditary hearing loss is caused by a single gene, so using high-throughput screening technology to test for this kind of disease is unnecessary.³⁹