How a Start-up with Nearly RMB 300 Million in Series A Funding Carved a Niche in the Booming CDMO Market

Recently, topics related to Contract Development and Manufacturing Organizations (CDMOs) have gained significant traction. In addition to established traditional CDMO companies, numerous domestic biotech firms have also entered the CDMO sector. Leading Chinese biopharmaceutical companies, including Innovent Biologics, Henlius, 3SBio, TopAlliance Biosciences, and Transcenta Holding, have all made strategic moves in this area.

Will this lead to hyper-competition within the industry? How much room remains for startup CDMOs?

Dr. Liu Wei, Co-founder and CEO of CytoNiche, an emerging CDMO company, stated: “By adopting a product- and technology-driven approach to enter niche segments of the CDMO market, we can avoid direct, cutthroat competition with traditional CDMOs in saturated markets; indeed, traditional CDMO companies may even become our clients.”

As a startup CDMO, CytoNiche entered the CGT CDMO arena with a focus on high-barrier technologies and products, launching a series of offerings and achieving sales revenue in the tens of millions of yuan.Over the four years since its establishment, CytoNiche has in totalCompleted four rounds of financing,In the latest round of financing, CytoNiche secured nearly RMB 300 million in funding support.

In this issue’s CXO special feature, VCBeat New Medicine interviewed Dr. Liu Wei, Co-founder and CEO of CytoNiche, and Dr. Sun Yanxun, Head of the CDMO Platform.

Unlike typical CDMO companies, CytoNiche has a unique development model.

Most CDMOs in China provide products and services related to contract development and manufacturing across the entire drug development lifecycle. These companies excel in establishing drug development systems and handling regulatory submissions, with a significant proportion having prior experience in drug registration before entering the CDMO sector.

This development model is related to the historical development of China's biopharmaceutical industry and the focus on biological drug development."In the early stages of industry development, the primary concern was how to successfully develop a drug.", how to successfully advance a drug from early-stage development through IND approval for clinical trials to final commercial-scale manufacturing—thereby establishing an end-to-end drug development pipeline. As the industry matures, increasing attention is being paid to every detail of drug development, such as: what raw materials, excipients, reagents, and equipment are required for a given drug, and what exactly constitutes its manufacturing process? However, for most newly marketed drugs currently available, their manufacturing processes, production tools, and raw materials/excipients/reagents remain heavily dependent on imports.

Based on this shift in pharmaceutical development mindset, a series of young yet scientifically grounded enterprises, such as CytoNiche, have emerged to develop original Chinese biopharmaceutical tools, products, technologies, and processes.

Through extensive research on internationally renowned upstream life sciences tool suppliers such as Thermo Fisher Scientific and Cytiva, CytoNiche has found that, unlike traditional CDMOs that derive services around the entire drug development process,These life sciences giants are more focused on the research, development, and production of tools and consumables essential to the drug development process, and their core technology products all feature independently developed process systems or service frameworks.

“However, this long-validated development model has only begun to emerge in China in recent years and has not yet been widely adopted.”Dr. Liu Wei believes that “enterprises should not only focus on how to develop and successfully launch a drug, but also clarify the approach to drug development—specifically, what tools and innovative technologies can be leveraged to optimize the process.”

As a company with an innovative development model, CytoNiche believes that there is no shortage of CDMO enterprises in China capable of providing full-process services for drug development and commercialization; therefore, CytoNiche will not directly compete with traditional CDMO companies.“Technology- and product-driven, we offer a more differentiated service.”

CytoNiche with 3D FloTrix^®Leveraging its cell CDMO technology platform, the company has developed a fully automated system for large-scale 3D cell production using biodegradable microcarriers. According to reports, compared with traditional manual 2D cell culture processes, CytoNiche’s 3D cell large-scale “intelligent manufacturing” system can help enterprises reduce production space by approximately 90%, labor costs by 90%, reagent and consumable usage by 60%, and time costs by 60%.

CytoNiche leverages its core 3D scalable cell culture technology to foster tighter integration across the upstream and downstream segments of the industry chain:Traditional CDMOsIt is possible to develop and upgrade the entire process workflow based on existing two-dimensional cell culture techniques, and integrate new technologies into the client projects they support.Emerging CGT Pharmaceutical Companies3D cell culture processes can also be adopted to reduce costs and improve efficiency, meeting the demands of future commercial-scale production.

Dr. Liu Wei emphasized, “Our relationship with existing CDMOs is not one of cutthroat competition; rather, it is a collaborative partnership focused on introducing new technologies and working together to accelerate the rapid development of CGT.”

This July, CytoNiche’s 3D Cell Intelligent Manufacturing and Regenerative Medicine Center, 3D FloTrix^®Cell Technology Platform Officially Put into Use.

3D FloTrix^®The core of the cell technology platform lies in CytoNiche's biodegradable microcarrier technology.3D TableTrix^®Microcarriers (microcarriers) are an independently developed, innovative, first-of-its-kind pharmaceutical-grade microcarrier suitable for cell-based drug development. They have obtained pharmaceutical excipient qualifications from the U.S. FDA Drug Master File (DMF) and China’s National Medical Products Administration (NMPA). Cell manufacturing companies or regenerative cell therapy enterprises using DMF-filed products can directly reference the existing filed documentation during drug application submissions, thereby avoiding cumbersome procedures in the drug approval process and significantly reducing submission costs.

On this basis, CytoNiche has expanded the application scope of microcarriers.CytoNiche can customize the development of microcarriers with specific parameters for different application scenarios and cell types.“Because different types of cells have varying requirements for microcarrier pore size and cell matrix materials.”

To date, CytoNiche’s products and services have been widely applied in upstream process development for the production of gene and cell therapies, extracellular vesicles, vaccines, and protein-based products. Meanwhile, they hold broad application prospects in the fields of regenerative medicine, organoids, and food technology (such as cultured meat). Since its inception, CytoNiche has served over 100 industry-leading clients in sectors including stem cells, vaccines, gene therapy, and immunotherapy, and has established strategic cooperative partnerships with numerous medical institutions and research universities.

In terms of services, CytoNiche offers CDMO solutions that are distinctly different from existing CGT cell manufacturing processes, providing technical research, process development, and GMP production services for the large-scale production of mesenchymal stem cells (MSCs) from various tissue sources, exosomes, and viruses, thereby facilitating the translation of innovative achievements into commercial products and clinical applications.

Technologies and products with practical application value will naturally attract capital interest.Since its inception, CytoNiche, as a startup, has garnered confidence from renowned investment institutions such as Gaorong Capital, CICC Qide, CICC Qiyuan, Bencao Capital, DT Capital Partners, Guoke Jiahe, Sinovac, and CNBG, as well as from a certain internationally renowned life sciences industry group.Amount of the Latest Funding RoundNearly 300 million yuan.

In each round of financing, existing shareholders from the previous round typically participate again in follow-on investments. This trend further demonstrates investors’ continued confidence in CytoNiche’s focused sector and their recognition of the company’s execution capabilities.

“After securing financing, we still aim to allocate funds where they will have the greatest impact,” said Liu Wei. Regarding future strategic planning, CytoNiche will pursue a dual approach: advancing domestic upgrade and import substitution, while simultaneously expanding marketing and promotion overseas. Whether developing new products or services, valuable new technologies constitute the core competitiveness of an enterprise. Therefore, CytoNiche will continuously innovate and iterate based on customer needs, addressing the “complex and challenging issues” faced by downstream biopharmaceutical companies, and delivering solutions that genuinely reduce costs and enhance efficiency in the CGT field.

Starting from new technologies and new products, CytoNiche hopes to promote these emerging innovations to more CGT process systems that require large-scale culture, helping the industry upgrade its 2D culture processes to 3D large-scale culture. HoweverPromoting new technologies presents numerous challenges: on one hand, this requires CytoNiche’s processes to meet the needs of different pharmaceutical companies and various cell types; on the other hand, the transition from traditional 2D culture to 3D culture involves a cognitive learning curve for enterprises.

Dr. Liu Wei, building on nearly a decade of prior basic research and leveraging Tsinghua University’s platform for scientific and technological translation, co-founded CytoNiche in 2018 together with Professor Ya’nan Du and Dr. Xiaojun Yan from Tsinghua University.

From the perspective of scientific research commercialization, scientists who start businesses indeed need to bear certain risks. However, after conducting preliminary research on the CGT market and analyzing the development history of biomedicine, Dr. Liu Wei believes that “the future will be the era of cell therapy drugs. But if our published papers remain merely as academic publications, they may at best yield some impact factors, without truly being translated into products that serve the public.”

To facilitate product commercialization, CytoNiche has assembled a high-caliber, interdisciplinary team of experts spanning cell biology, medicine, pharmacy, and engineering, with members possessing complementary skill sets.

Dr. Sun Yanxun is an interdisciplinary partner who has transitioned from the downstream pharmaceutical industry to the upstream sector of technical products and CDMO services.

Previously, Dr. Sun Yanxun focused on the clinical translation and therapeutic applications of stem cell-based drugs. He served as a principal investigator, participating throughout the preclinical studies and Investigational New Drug (IND) application process for human dental pulp mesenchymal stem cells (hDPSCs) in the treatment of chronic periodontitis. Additionally, he was responsible for designing and developing scalable manufacturing processes for mesenchymal stem cells from various tissue sources, as well as establishing and validating quality standards for large-scale stem cell culture.

Based on the actual needs of downstream cell therapy companies, Dr. Sun Yanxun analyzed that, although no stem cell drug has been approved for market launch in China yet, under the dual-track regulatory policy for stem cell clinical research, there are currently 100 filed stem cell clinical research projects in China. Clinical trial applications for 47 stem cell products from 34 companies have been accepted, and 34 stem cell drugs from 25 companies have been approved to enter clinical trials (IND) through new drug registration submissions.

Whether for filing of clinical research projects on stem cells (Non-IND) or for Investigational New Drug (IND) application, it is only a matter of time before domestically developed stem cell therapeutic products enter commercial-scale production.

Given that cell therapies possess numerous distinct characteristics compared to traditional small-molecule drugs and biologics in terms of required process technologies, instrumentation, and personnel qualifications, contract development and manufacturing organization (CDMO) services for cell therapies exhibit unique attributes. There are substantial differences in process and production standards, while the regulatory policies and regulations governing these products are being continuously refined and adjusted in tandem with technological advancements.

The development and provision of cell therapy products in China should, on the one hand, be based on a thorough understanding and awareness of current Chinese regulations and guidelines for cell therapy products; on the other hand, it should focus on the direction of process development. Fully automated, closed-cell processing systems are the primary solutions for scaling up production and standardizing quality of cell therapy products. Traditional two-dimensional cell culture processes struggle to meet the demands of commercial manufacturing regarding GMP-compliant scale-up and quality uniformity.

With the rise of the industry, the barriers to process development for cell therapy products are gradually increasing and becoming more standardized, while cell culture technologies continue to iterate. The CDMO sector in the CGT field is also undergoing continuous refinement, giving rise to many next-generation CDMO companies similar to CytoNiche.

“If we fail to make the necessary preparations in the early stages, it will be too late to position ourselves only after products in this field have truly gained market traction,” remarked Dr. Sun Yanxun. He noted that although the CGT industry still faces numerous pain points, the current phase presents a favorable opportunity for companies with disruptive technologies, such as CytoNiche, to enter the CGT CDMO sector.