By TRACEY DRURY
tdrury@bizjournals.com | 716-541-1609

The $5 million investment in Photolitec LLC represents the third local deal for a Chinese pharmaceutical company - and growing recognition that the Buffalo market represents vast opportunities.

Photolitec, a spin-off of Roswell Park Cancer Institute, signed a five-year deal March 23 with officials of Zhejiang Hisun Pharmaceutical Co. Ltd, a leading pharmaceutical group based in Zhejiang, China.

Hisun has separate licensing agreements in place with Roswell Park and Cleveland BioLabs Inc., also located on the downtown medical campus. A year ago, the company opened a U.S. headquarters office in Princeton, N.J., under the name Hisun Pharmaceuticals USA Inc. The Princeton office represents the first international wholly owned subsidiary.

A Buffalo office is also a possibility.

Bai Hua, president and CEO of the Chinese company, was in Buffalo to sign the deal. He touted not only Photolitec but researchers from throughout the region. Speaking through an interpreter, he said the company has been impressed by the region's breadth of talent and research capabilities.

"We are here because of this particular technology and firm, but we realize the support of the environment here," Bai said. "We understand this is a great place that can cultivate all these top-notch, world-leader technologies. More important is the system and the processes and the investment policies that attract us here. That's really the basis for how these companies can grow."

He said the partnership with Photolitec is another step in making Hisun a truly global company. He stressed that the ultimate goal is to provide the best oncological treatment opportunities for patients, meeting its social responsibilities and creating value for shareholders.

"We are very impressed by these scientists' knowledge, experience and expertise," he said. "We want to combine the innovative technology of scientists in Buffalo and Photolitec with Hisun's product development and manufacturing strength in China and commercialize this technology."

Western New York is filled with such companies ripe for commercialization, says Ken Tramposch, University at Buffalo associate vice president for research. That's attractive not only to companies in China but around the world in countries where governments don't have billions to spend on research, like in the United States

"It's a very ripe territory now for foreign companies to acquire very early-stage technology that are really the stock and trade of Buffalo companies," Tramposch said. "I think it's a model that should be exploited not just with China but with other countries."

And as Hisun develops more relationships here in the region, it stands to reason the company will identify additional opportunities - resulting in more venture capital-type funding for more companies, he said.

"Once they get a foothold, they're looking for all kinds of opportunities," he said.

Photolitec develops photosensitizing compounds used in photodynamic therapy to identify cancer through medical imaging and to treat the disease.

The deal with Hisun includes an initial investment of $2 million - with $1 million in each of the next four years - with additional funding likely based on performance.

"It will depend on how good the products are, but in the lab they look fantastic," said Ravindra Pandey, founder and chief scientific officer.

The Hisun deal also gives the company 30 percent equity in a new joint-venture company to be developed in China. In return for its investment, Hisun gets first right of refusal on Photolitec's products.

Hisun has indicated an interest in setting up a Buffalo office to remain closely connected with Photolitec, but it also continue to look at other opportunities here, Pandey said.

"They want to use Photolitec as their window for the world," he said. "If we can develop interests with each other, the sky's the limit."

Bai said the company is open to new opportunities here.

"Hisun is open-minded. We always seek new opportunities, new technology and new innovative delivery methods that can benefit our patients around the world," he said. "If there are any opportunities that ultimately can benefit the patients, we are interested."

The deal with Photolitec, which now covers worldwide rights, expands a previous licensing agreement between Hisun and Roswell Park, which gave the Chinese company product development rights in China. Plans call for using the funding to hire four to five research personnel and administrative support staff to advance company research, develop new products and get Phase One clinical trials off the ground while meeting all guidelines of the U.S. Food & Drug Administration.

The deal also benefits Roswell Park, which is an equity partner along with UB and the University of Michigan, as well as about 50 angel investors locally.

Richard Matner, director of technology transfer and commercial development at Roswell Park, said more companies in China are interested in signing similar deals. In the past three years, Roswell Park has signed licensing deals with three different Chinese pharmaceutical companies.

And though the deals are unlikely to result in hundreds of jobs created, the investment dollars mean companies here can focus their energies on research and development without worrying as much about how to pay for it, he said.

This region has definitely made a name for itself in China, he added.