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In the coronavirus vaccine race, China is a surprise frontrunner

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This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.

A little-known Chinese biotech firm’s effort to develop a COVID-19 vaccine got a big shot in the arm this week when Beijing granted the company permission to conduct large-scale human testing on Chinese soldiers.

As Grady reported Monday, Tianjin-based CanSino Biologics said in a statement to the Hong Kong stock exchange that China’s Central Military Commission has cleared the way for the People’s Liberation Army to inject soldiers with Ad5-nCoV, the company’s leading vaccine candidate, for a period of one year.

The announcement makes Ad5-nCoV, an adenoviral vector, a clear front-runner in the global race to develop a COVID-19 vaccine. CanSino conducted Phase I and Phase II clinical trials of Ad5-nCoV in Wuhan, China, in March, becoming the first drugmaker in the world to test its vaccine on people. In May, the company notched another global first by publishing a full scientific study of those tests in The Lancet medical journal, reporting that blood samples from a group of 108 vaccinated adults showed that Ad5-nCoV is safe and induces a rapid immune response.

It’s not clear how many soldiers will get an Ad5-nCoV jab, but the potential sample size is huge; with more than 2 million active-duty personnel, the PLA is the world’s largest military. Nor is it clear whether getting injected will be optional or mandatory for China’s troops. But it seems safe to guess that collaborating with the Chinese military will let CanSino streamline the myriad legal and ethical restrictions that can slow large-scale clinical testing in other countries.

CanSino has worked closely with the Academy of Military Medical Sciences, the PLA’s medical research institute, to develop Ad5-nCoV. The organizations’ COVID-19 effort reprises their previous collaboration on an Ebola vaccine, which won Chinese government approval for widespread use in 2017.

The partnership is extraordinary in many ways. CanSino, founded by a group of China-born researchers who worked for global pharmaceutical companies in Canada, is a private company listed on the Hong Kong stock exchange. Chief executive Yu Xuefeng earned his doctorate from McGill University and is the former head of vaccine research and development at Sanofi Pasteur Canada. The PLA’s medical research team is led by Chen Wei, a major general who has become something of a celebrity in China for her work on the Ebola vaccine and for developing a therapy used by Chinese health workers to combat China’s SARS outbreak in 2003.

As this excellent Bloomberg profile notes, Yu has made the most of his relationships in Canada and China even as geopolitical relations between the two countries have soured. CanSino is working with researchers at Dalhousie University’s Canadian Center for Vaccinology, to launch Phase III trials of Ad5-nCoV as early as this fall. If those tests prove successful, Canada’s National Research Council will produce the vaccine for the Canadian market at a manufacturing facility in Montreal.

CanSino has yet to generate revenue and posted a $22 million loss last year. But its nimble pivot to develop a coronavirus vaccine has lifted the company’s stock price to HK$217, up from HK$60 at the beginning of the year—boosting its market capitalization to over $6 billion.

In the global race for a vaccine, CanSino leads a pack of Chinese competitors. Among them: China National Biotec Group, which has secured approval from health authorities in the U.A.E. to conduct Phase III testing; Beijing-based Sinovac Biotech, which has signed a deal to do final tests in Brazil; and Shanghai Fosun Pharmaceutical, which is partnering with German immunotherapy company BioNTech and Pfizer to develop an mRNA vaccine.

Of the 19 coronavirus vaccines to have conducted human trials, seven involve Chinese entities, according to the New York Timescoronavirus vaccine tracker.

For years, skeptics of China’s ability to innovate have pointed to pharmaceuticals, along with semiconductors, as a sector where Chinese technology would never match that of the West. In this week’s Eastworld Spotlight interview, I asked Gary Rieschel, founding partner of Qiming Venture Partners, an early CanSino investor, his take on that. His answer: “I would suggest that anyone who’s ever competed with Chinese entrepreneurs probably has many stories on how they underestimated what they’re capable of doing.”

More Eastworld news below.

Clay Chandler
clay.chandler@fortune.com

This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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