How Two Oncolytic Virus Orders Powered an IPO: Implications for China's CGT CDMO Industry

In March, Obio Technology was officially listed on the Shanghai Stock Exchange, becoming the first CGT CDMO (Contract Development and Manufacturing Organization for Cell and Gene Therapy) to join the STAR Market, which has attracted widespread attention within the industry.

Obio Technology was established in 2013. The company’s business has undergone three developmental stages: the gene therapy CRO phase, the gene therapy CDMO preparatory phase, and the growth phase of cell and gene therapy (CGT) CDMO services. Leveraging its CGT CDMO services in the third stage, Obio Technology successfully met the listing requirements for the STAR Market—specifically, a market capitalization of no less than RMB 1 billion and cumulative net profits of no less than RMB 50 million over the past two years.

Since 2020, Obio Technology has officially entered the growth phase of its gene therapy CDMO business, with revenue reaching RMB 255 million in 2021. As the first CGT CDMO to list on the STAR Market, what sets Obio Technology apart? In a previous article by VBInsight New Medicine (WeChat ID: biobeat1), “STAR Market Welcomes Its First CGT CDMO, Surging 70% on Debut》A detailed analysis has been conducted, in which we have identified a familiar figure—oncolytic viruses.

Whether it is ImmVira or Virogin Biotech, the top two clients of Obio Technology in the past two years have both been oncolytic virus companies. Why has a CGT CDMO’s core business focused on oncolytic viruses rather than the highly popular cell and gene therapies? Through the compilation of public information and interviews with industry experts, VCBeat New Medicine attempts to outline some key points of the oncolytic virus CDMO industry for our readers.

CGT CDMOs primarily refer to contract development and manufacturing organizations that provide services such as process development and formulation production to biotechnology companies specializing in gene therapy, cell therapy, and related fields. Representative enterprises include Obio Technology, Wujiahe Gene, Proregene Bio, and PackGene Biotech.

An analysis of the client portfolios of leading CGT CDMOs reveals that gene therapy and cell therapy companies remain their primary customer base. However, Obio Technology has distinguished itself through its oncolytic virus orders, a success far from being mere coincidence. Compared with gene and cell therapy projects, oncolytic virus manufacturing offers inherent production advantages and is underpinned by differentiated technical barriers.

From the perspectives of cell therapy and gene therapy, cell therapy is the hottest sector among emerging biotechnologies. Since the approval and launch of Kymriah, the world’s first CAR-T therapy, in the United States in 2017, the feasibility, safety, and commercialization pathways of cell therapy have been validated. Subsequently, numerous startups focused on cell therapy have emerged both domestically and internationally, creating fertile ground for the subsequent rise of CGT CDMOs.

The Chinese market has also reached a peak in the development of cell therapy. In 2020, Nanjing Legend Biotech, the first domestic CAR-T company, successfully listed on the NASDAQ. In 2021, two CAR-T cell therapy products, “Axicabtagene Ciloleucel Injection (Yikaida)” and “Relmacabtagene Autoleucel Injection (Beinuoda),” were approved for marketing in China. The booming and rapid progress of cell therapy has also stimulated the prosperity of the domestic CGT CDMO industry.

The boom in cell therapy has spurred the emergence of CGT CDMOs, yet it is insufficient to sustain China’s RMB 3.26 billion CGT CDMO market (Source: Frost & Sullivan).. Although there are many clients for cell therapy, the "precision medicine" nature of cell therapy limits the expansion of its production capacity.

Cell therapy generally refers to the administration of immune cell preparations into the body to activate or enhance specific immune responses, thereby achieving the goal of tumor treatment. Autologous CAR-T therapy, which is currently advancing rapidly, typically involves modifying a patient’s own immune cells and reinfusing them into the patient’s bloodstream. Consequently, each patient’s CAR-T therapy has unique customization requirements. This customized nature makes it less feasible for companies to leverage CGT CDMOs for mass production. Industry insiders reveal that cell therapy companies have greater outsourcing demand for localized, personalized clinical deployment through CROs.

Gene therapy CDMOs contribute an even smaller share of the market. There are only about 20 companies in China engaged in gene therapy R&D, far fewer than the nearly 100 biotech firms involved in cell therapy. Due to higher technical barriers, lower market enthusiasm compared with cell therapy, and the fact that the gene therapy industry is still in its early stages with no large-scale production demand yet emerging, the incremental market growth driven by gene therapy CDMO orders remains limited.

Beyond cell and gene therapies, oncolytic virus orders have become a “shortcut” for the growth of CGT CDMOs, a opportunity seized by Obio Technology.

First,Oncolytic viruses are off-the-shelf therapeutic agents. The treatment formulations for specific cancer types do not exhibit personalized variations; they are primarily administered in combination with other anticancer therapies. As the requirements for the oncolytic viruses themselves are consistent, it is highly feasible to leverage CGT CDMOs for quality control and capacity expansion.

Secondly,The market for oncolytic viruses in solid tumors is enormous. Solid tumors account for more than 90% of all cancers, and they compete in a differentiated manner with cell therapies centered on hematologic malignancies. This substantial market demand further drives the expansion of oncolytic virus production capacity.

Finally,Clinical quality control measures for oncolytic viruses are more stringent; companies often require specialized CDMOs to address product compliance issues and meet regulatory requirements for the quality and safety of viral products.

Of the 42 CDMO orders currently being executed by Obio Technology, 22 are for oncolytic viruses, with a total contract value exceeding RMB 220 million. This suggests that CGT CDMOs do receive cell therapy and gene therapy orders; however, large-scale contracts predominantly come from oncolytic virus companies, which has become a key driver of their explosive growth in the short term.

Securing Hundreds of Millions in Oncolytic Virus Orders, Obio Technology Claims the Title of “First CGT CDMO on the STAR Market”—Why Did Two Leading Oncolytic Virus Pharmaceutical Companies Choose Obio Technology? VCBeat New Medicine (WeChat ID: biobeat1) reached out toMs. Zhou Guoying, Chairwoman and CEO of ImmVira, conducted one-on-one interviews to uncover the “serendipitous factors” behind multi-million-dollar orders.

According to the public information in Obio Technology's prospectus, ImmVira Pharmaceuticals in 2020 and the first half of 2021,Generated collaborations worth RMB 26.46 million and RMB 19.12 million with Obio Technology, accounting for nearly 20% of Obio Technology’s total revenue during the period.。

ImmVira, founded in 2015, is a platform-based biotechnology company focused on the development of original anti-tumor drug delivery vectors. It is dedicated to researching and developing next-generation replicating and non-replicating herpesvirus vectors, exosome delivery vectors, and anti-tumor vaccines by leveraging the intrinsic anti-tumor mechanisms of drugs and modulating the tumor microenvironment. The company boasts a robust product pipeline covering solid tumors and hematologic malignancies, catering to patients at various stages of cancer, as well as those with immunotherapy-refractory or rare tumors. Its administration routes range from intratumoral injection, intravenous infusion, to intracavitary delivery, supporting both monotherapy and combination regimens with immunotherapies, cell therapies, and small-molecule drugs.

As of today, the Company’s first three oncolytic virus products are undergoing a total of five Phase I and Phase II clinical trials in China and the United States, including studies of both monotherapy and combination therapy. Among them,ImmVira’s most advanced product, the intratumoral injection MVR-T3011-IT, is currently being developed and manufactured by Obio Technology under contract.。

VCBeat New Medicine: As ImmVira advances its oncolytic virus pipeline, will it choose to build its own manufacturing facilities to meet production needs, or will it continue to outsource production to CGT CDMOs in the long term? What are the reasons behind this choice?

Ms. Zhou Guoying:Companies face different strategic choices at various stages of development. Since the establishment of ImmVira in 2015, our core strength has lain in our product pipeline continuously developed on the OvPEBS platform. Currently, we are simultaneously advancing five pipeline assets at different clinical stages across China and the United States. Therefore, our immediate priority is to focus our efforts on conducting clinical studies and preclinical research.

From a timeline perspective, the company’s overall layout for oncolytic virus manufacturing processes is relatively lagging. MVR-T3011 and MVR-C5252, which we are developing in collaboration with Obio Technology, are our most advanced products. While the core process technologies are proprietary to us, Obio Technology has made significant improvements, ultimately establishing a complete manufacturing process that has contributed substantially to our production capabilities.

In 2020, the company began constructing its own pilot-scale GMP facility, which has already been put into production. By the end of 2023, we will also establish our own clinical and commercial manufacturing facilities in Suzhou.The advancement of our other pipeline candidates will be conducted at our own manufacturing facilities.

Therefore, at present, we will continue to collaborate with Obio Technology for the production of MVR-T3011 and MVR-C5252, while simultaneously advancing the development of our own manufacturing facilities to handle subsequent oncolytic virus product production. This dual-pronged approach reflects ImmVira’s strategy of combining contract manufacturing with in-house production, leveraging our extensive pipeline.

VCBeat New Medicine: Why did ImmVira choose Yuan Biologics to execute its CDMO services, and why was the production of MVR-T3011-IT exclusively entrusted to them?

Ms. Zhou Guoying:There are many types of oncolytic viruses,The manufacturing processes for different viruses vary significantly, making it impossible to generalize from one case to another., and relatively speaking,The purification process for herpesviruses is more challenging.。

At the inception of ImmVira, the oncolytic virus industry had not yet fully matured, and most CGT CROs were only capable of producing adenoviruses or AAVs. We initially approached several candidate CGT CDMO companies, but only one managed to achieve the basic yield and titer requirements.

After our product MVR-T3011 entered clinical trials, the company officially began its collaboration with Obio Technology, which has continued to this day.

GMP is not merely a matter of hardware facilities,Most importantly, it must comply with international manufacturing regulations., which is also one of the key reasons for our decision to partner with Obio Technology. The Company’s first clinical product, MVR-T3011, is manufactured under contract by Obio Technology, and we maintain an ongoing collaboration. As we advance through subsequent Phase III clinical trials and commercialization, the scale of our partnership with Obio Technology will continue to expand.

VCBeat New Medicine: Given the greater development challenges associated with herpes simplex virus (HSV)-based oncolytic viruses, why have leading companies in the field chosen HSV as the template for their development? Furthermore, what are the differences in their manufacturing process strategies?

Ms. Zhou Guoying:There are many types of viruses worldwide, with more than a dozen major and minor viruses being developed as oncolytic viruses, butCurrently, only herpesvirus has received conditional approval from the U.S. FDA and Japan.. Although there have been many clinical studies on adenoviruses, none has yet been approved as a drug internationally.

Second, whether it is ImmVira, BinHui Bio, or FonoGene, a common characteristic is that the founders of these companies have conducted scientific research on herpesviruses for many years. The biological characteristics and anti-tumor mechanisms vary significantly among different viruses. Without years of scientific accumulation and in-depth expertise in virology, it is impossible to enter the field of oncolytic virus drug development, which has a high barrier to entry.

Returning to the second question, ImmVira, BinHui Biologics, and Funuo Jian, as leading domestic oncolytic virus companies, each possess distinct advantages, resulting in differentiated manufacturing strategies. WeThe first pipeline is being advanced through a CGT CDMO partnership, with subsequent pipelines to be propelled by self-built production facilities.。

It is evident that biotechnology companies and CGT CDMOs mutually benefit from one another. This is exemplified by the relationship between ImmVira and Obio Technology: ImmVira secured a CDMO capable of meeting its clinical needs, while Obio Technology gradually established a complete production line for oncolytic herpes simplex virus from scratch, driven by ImmVira’s demands.

Gene therapy and cell therapy, collectively referred to as CGT, have long been prioritized by the Chinese government as frontier areas for innovative biopharmaceutical development, receiving a series of supportive policies at both national and local levels in recent years. The introduction of industrial support policies—such as the 13th Five-Year Plan for National Science and Technology Innovation, the 13th Five-Year Plan for Bioindustry Development, the Implementation Plan for Promoting the Specialized Development of Biopharmaceutical Industrial Parks, and Several Opinions on Promoting the High-Quality Development of the Municipal Biopharmaceutical Industry—has created favorable opportunities for high-end biopharmaceuticals, including gene and cell therapies, as well as for the growth of the CMO and CDMO sectors.

Bolstered by favorable policies, this sector still faces pressing challenges, most notably a scarcity of specialized talent and a gap in industrialization levels compared to Europe and the United States. The collaboration between Obio Technology and ImmVira illustrates that, when confronted with orders characterized by high technical barriers and stringent process requirements, there are limited CGT CDMO options available in China. In this regard, our country againLong-term shortage of high-end process engineering talent, which also confirms the shortage of relevant technical talent in China behind ImmVira’s “passive choice.”The shortage of talent has further hindered the industry’s ability to catch up with Europe and the United States in the short term.。

Currently,The outsourcing penetration rate for CGT CDMOs has reached 65%, significantly higher than the 35% for large-molecule drugs., high technical barriers have spurred strong demand, but only those who, like Obio Technology, possess the genuine strength and capability to develop products that meet clinical requirements and deliver proven results will find the ultimate path forward for CGT CDMOs.

As the gene therapy and cell therapy industries continue to evolve, it is undeniable that market demand for CGT CDMO services will also shift. Oncolytic virus therapies have reached a critical phase of large-scale clinical development, from which Obio Technology has reaped significant benefits. As UCAR-T and gene therapies advance to a stage comparable to that of oncolytic viruses, will new opportunities emerge and give rise to the next Obio Technology? This is equally worth anticipating.