By Clarence Leong

Amid the worst U.S.-China trade clash in modern history, Michelle Xia thinks she has something Chinese that Americans will want.

It isn't a $3 T-shirt or an electronic gadget. It is a cancer drug her company discovered -- one that has made her the face of a rising pharmaceutical star.

When Xia founded her company with three colleagues in 2012, China had few labs capable of finding drugs on their own, while U.S. companies filled their research departments with Chinese scientists. Xia, born in China's northwestern province of Gansu, had been one of them: She did cancer research at the University of Louisville and worked in the U.S. for companies including Bayer.

It nagged at her that her home country had little to match the modern medical feats achieved in the West.

"The driver was very simple. I thought: Why isn't there innovation in China?" said Xia, 58 years old, in an interview.

Today, innovation has arrived -- and not just at Xia's company. In the past few years, a handful of drugs that originated in China have won approval from U.S. regulators. Many more have been licensed out and are in the pipeline at companies like Roche and Novo Nordisk.

Xia's drug could be the biggest of them all, if its promise can be confirmed in U.S. trials. It is an injected therapy called ivonescimab that has shown favorable results versus Merck's $29.5-billion-a-year cancer treatment Keytruda in a Phase 3 trial.

Planting the seed

Xia caught the medicine bug in her early teens when she visited a hospital to see her uncle after minor surgery. That inspired the idea of becoming a doctor, but her mother dissuaded her, not wanting to see death and sickness constantly weigh on her daughter's mind.

So Xia went into medical research instead, earning a doctorate from Newcastle University in the U.K. After nearly two decades abroad, with stints in Kentucky and California, she was assigned by her then-employer, California-based Crown Bioscience, in 2008 to set up shop in China to offer services to other drugmakers.

She dived into the Chinese pharmaceutical market and saw how innovative drugs from overseas would take eight to 10 years to reach Chinese patients.

She then hatched "the dream of making the world's most advanced new drugs available to Chinese cancer patients," she said in a speech last year at her undergraduate alma mater, Sun Yat-sen University in the southern city of Guangzhou.

China at the time was just beginning to develop the ingredients that have turned the U.S. into the world's biotech hub: venture capitalists willing to take risks on companies likely to fail, a well-regulated system for conducting clinical trials and a government ready to fund basic research.

The population was growing richer and older, spelling opportunity. Xia's three co-founders all had lengthy experience in the U.S., including Baiyong Li, who spent 12 years at Pfizer leading development of immune-therapy drugs for cancer. They founded Akeso in 2012 in the southern Chinese city of Zhongshan, about 50 miles west of Hong Kong.

Akeso started with a little less than $3 million in venture-capital funding. It rented an office and brought on researchers with undergraduate degrees. The founders didn't receive salaries.

Three years later, it won a licensing deal with Merck, which bought the worldwide rights to develop and commercialize a cancer-treatment antibody from Akeso. (The antibody, quavonlimab, is still in human trials at Merck, which declined to comment.) That deal offered Akeso credibility that helped land more deals. It went public in Hong Kong in 2020, raising $330 million.

For a long time, Chinese companies only made copycats of Western drugs, but Akeso's rise highlights a coming-of-age for drug innovation in China. While they still have a way to go to challenge the dominance of Western drugs, in some cases, Chinese biotechs have found ways to make drugs faster and better, just like the surprise sprung by Chinese artificial-intelligence upstart DeepSeek.

Today, Akeso's headquarters in southern China's Guangdong province is a sprawling campus with spacious factories making dozens of drugs on the market in China or in clinical trials. It has a staff of more than 3,000 and a stock-market value of about $9.5 billion.

Xia eschews many industry conferences and generally maintains a low profile, but ivonescimab has recently put the company and its leader in the spotlight.

A mythological healer

Ivonescimab is called a bispecific antibody because it targets two proteins, hitting one to unleash the immune system to kill cancer cells and a second with the goal of starving tumors of their blood supply. Akeso is developing more than a dozen other bispecific antibodies. Traditional cancer drugs, such as Keytruda, typically target one protein.

A study released last September found lung-cancer patients on ivonescimab on average lasted almost twice as long without the disease progressing as patients on Keytruda. The study was conducted only on Chinese patients.

"From the data presented so far, it seems the benefit is real," said Gilberto Lopes, chief of medical oncology at the University of Miami's Sylvester Comprehensive Cancer Center. "But we need additional data from other parts of the world to see if the results hold outside China, and whether there's an overall survival benefit as well."

Xia's company -- named Akeso, after a Greek goddess of healing -- licensed the drug to U.S.-based Summit Therapeutics, which is testing it in the U.S. and will sell it there and in several other markets if it gets regulators' approval.

Such U.S.-China deals are common practice for pharmaceutical companies, a rare example of collaboration when barriers are rising in other industries. That's in part because it is hard to see how a cancer treatment could put American security at risk.

Other medical areas are more sensitive -- for example, the American reliance on China for pharmaceutical ingredients or the potential for biotech expertise to be applied to bioweapons. This week, a congressional commission urged the U.S. to invest in biotech research or risk falling behind, and to bar work with Chinese companies that threaten national security.

The tensions make Xia nervous. "The fire of geopolitics shouldn't spread to the area of human health," she said.

Beyond China

Just as she wanted China to stand on its own feet, she wants her own company to keep some control over its inventions -- which explains how the deal to license ivonescimab to lesser-known Summit Therapeutics came together.

Xia wasn't "someone to throw the molecule over the fence and only meet once or twice a year afterward," said Dave Gancarz, Summit's head of business and strategy. Instead, she wanted a close partnership and the right to co-brand the drug, setting the stage for Akeso to grow.

Pan Pan, Akeso's director of business development at the time, said the Chinese team was uncertain about working with Summit, which was founded in 2003 and had only $75 million in cash on the books at the time of the deal talks. Xia flew to California and bonded with Summit's co-CEOs, meeting almost daily in the weeks before the deal closed.

Pan said Xia spurned his initial suggestion for how much money to seek in the Summit licensing deal, confident that Akeso deserved more. In late 2022, Summit struck a deal to develop and commercialize ivonescimab in the U.S. and other countries, paying $500 million upfront and potentially up to $5 billion if milestones are met. It was the biggest deal involving a Chinese biotech at the time, validating Akeso and putting an exclamation mark on how advanced Chinese biotech has become. Xia now serves on Summit's board.

The drug is approved and available to treat a type of lung cancer in China, and Xia said she hoped it would win Food and Drug Administration approval in the next year or two.

Akeso has four drugs approved in China, and a lengthy pipeline of others under study for cancer, immune disorders and high cholesterol. Xia's ambition is to be CEO of a world-leading pharmaceutical company, but more important, she said, is "making good drugs."

"Becoming big pharma is a consequence of that," she said, "and not the goal."

Write to Clarence Leong at clarence.leong@wsj.com

(END) Dow Jones Newswires

April 11, 2025 20:00 ET (00:00 GMT)

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