Why Phase Scientific, a biotech start-up backed by Bill Gates, chose Hong Kong over Silicon Valley as a launch pad for its global ambitions
A medical diagnostics start-up which is about to launch a US$10 tooth decay risk detection kit has chosen to locate its global headquarters to Hong Kong in the hope of gaining better access to China’s growing health care market.
Phase Scientific International, founded six years ago by Hong Kong-born chairman Ricky Chiu Yin-to, says cross-border opportunities have played a role in its decision to choose Hong Kong, even as the city has yet to be internationally recognised as a major biotechnology hub.
“Hong Kong is our base for developing the mainland market and the rest of the world outside the US,” Chiu, who is also CEO, said in an interview with the Post from his office in Kwun Tong. “Applying a US government endorsed technology in China, the world’s most populous market, is a compelling business opportunity.”
Phase Scientific has raised more than US$10 million from backers that include the Bill and Melinda Gates Foundation, US governmental agencies National Science Foundation and National Institute of Health, as well as Joseph Tam, founder and chairman of DiagCor Bioscience.
Phase Scientific is seeking to commercialise a patented sample preparation methodology that improves the accuracy of biological diagnostic tests by concentrating and purifying target molecules.
Chiu say the company is about to release its first diagnostic product – a tooth decay risk detection kit that can be used “any time, anywhere, without the need for trained personnel or power source”.
Chiu, a Hongkonger who moved to the US to pursue advanced studies in bioengineering, founded the company while a PhD student at University of California in Los Angeles.
After three years and six unsuccessful applications for a government research grant, he won his first round of funding approval in 2014.
Although the US biotechnology scene is more mature, with a large pool of venture capital and sophisticated investors, Chiu said the prospects for securing funding in China were a factor in deciding to headquarter in Hong Kong, where there’s less competition from rival biotechnology companies.
“In China, the funding pool could potentially be even bigger but there is a shortage of quality projects. I believe we are in a more advantageous position for fundraising here,” he said.
Phase Scientific aims to obtain European and Hong Kong regulatory approval to market by year-end a test kit that warns users of tooth decay risks, through the detection of the concentration of a bacteria that plays a key role in causing dental degeneration.
Chiu said a US dental insurer had pushed for the development of the kit to help stem dental treatment costs.
With a suggested retail price of HK$79 (US$10.06) per test, the kit – with recommended usage frequency of two to four times a year – is expected to be sold in Hong Kong pharmacies.
Chiu is hoping to attract at least HK$100 million of new funding to support clinical efficacy and safety studies on similar test kits that screen for sexually-transmitted diseases, malaria and the flu.
“We aim to provide tests that are faster, cheaper, simpler than laboratory tests,” Chiu said. “The more widely-used and accessible they are, the more people can detect them and get treatment earlier, or change their behaviour to prevent getting diseases such as tooth decay.”
It will cost US$3 million to US$5 million to conduct clinical studies and obtain regulatory approval for test kits in each market, he added.
The company plans to double its headcount in Hong Kong to 40 within two years. It currently employs 20 staff in Orange County, California, half of which are involved in research and development.
Phase Scientific is also looking to opportunities in the lab-based diagnostic market, and has set up a unit in Suzhou, Jiangsu province for sampling and analysis of non-solid biological tissue, Chiu said.
The company is also seeking to collaborate with DNA sequencing and molecular diagnostic firms to deploy its sample preparation methodology and develop more accurate and cheaper cancer screening and non-invasive prenatal DNA tests.