The Back Door Way to Invest in China's Exploding Biotech Market (IMUC, EBIG, DNDN)

Look out Dendreon Corporation (NASDAQ:DNDN) and step aside ImmunoCellular Therapeutics Ltd (AMEX:IMUC). There's a new cancer-immunotherapy name coming to town, and its name is EastBridge Investment Group Corp. (PINK:EBIG)... sort of.

Investors who know of EastBridge Investment Group will also know it's not a biotech name; EBIG mostly helps Chinese companies go public in the United States. What investors may not know is that EastBridge is on the verge of a merger with a Chinese company called Cellular Biomedicine Group Inc. (CBMG) that is working on its own dendritic cell-based cancer therapies, which makes it a peer of biotech names Dendreon Corporation and aside ImmunoCellular Therapeutics Ltd. Yet, there's an advantageous twist in the rules Cellular Biomedicine Group faces, largely because it's taking aim at the Chinese biotech market.

China's pharmaceutical regulators don't view cell-specific dendritic therapies as a drug, since each of these treatment us unique to - and custom-built for - a particular patient. It's considered a medical technology, which means the biotech platform isn't required to be tested in three phases (usually for years) and then given a final yay/nay. Rather, the process for winning regulatory approval for a medical technology in China is a one-step process.

More relevant to fans and followers of EastBridge Investment Group, Cellular Biomedicine Group Inc. has two such treatments near completion... a hepatocellular carcinoma (liver cancer) therapy, and metastatic melanoma treatment. Not as far down the development road are medical technology treatments for ovarian, lung, and gastric cancers.

Broadly, these so-called autologous dendritic cell therapies cost about 1/10th the normal cost and take about 1/10th the normal time that other biotech companies such as Dendreon or aside ImmunoCellular Therapeutics Ltd would have to commit to develop a comparable therapy.

That said, CBMG also has a portfolio of drug developments that will also require the usual three-phase development process. These are all in pre-clinical or IND stages (waiting for permission from regulatory bodies to begin trials), and so will take longer to get to the market. But, these broader therapies nicely round out the patient-specific therapies the company is developing as medical technologies. All told, there are twelve specific therapies in the works, with the first of them set to hit the market this year. Between 2015 and 2017, four more should be unveiled. That's not long at all, by biotech standards.

But how does one invest in Cellular Biomedicine Group Inc.? One can't, at least not directly.... yet. But in a way, one can, right now.

As was noted, CBMG will soon be merging with EastBridge Investment Group Corp. Though Cellular Biomedicine Group has made a point of saying the maneuver isn't a reverse merger, in effect, it is. CBMG has been valued by U.S. investment banker Maxim Group as $108 million entity, versus the current market cap of $7 million for EBIG.  CBMG will also raise funds from U.S. investors once the merger is complete, and will also apply for a NASDAQ listing once the merger is complete - and once the combined company qualifies for such a listing. While the news and opportunity described above will certainly spur bullish interest in the entity after the merger, the ideal (and cheaper) way to step into Cellular Biomedicine Group may be to take on a stake in EastBridge Investment Group now.

Regardless of when an investor makes any entry, EBIG - and soon CBMG - will be one of the few ways U.S. investors can tap into the surprisingly lucrative Chinese biotech market, which is projected to be the world's second largest biotech market within a matter of years. There's opportunity there, waiting to be tapped by someone.