Toru Kawanishi and Keita Mori met in Tokyo while studying biochemistry, but moved to Silicon Valley to launch their firm, betting it would be easier to bring their products to clinical trials in the U.S.

Their ideas were ambitious.

SanBio Co., founded in 2001, sought to use stem cells to restore function to people suffering from traumatic brain and spinal injuries and neurological disorders such as Alzheimer’s, Parkinson’s disease and stroke. 

Now, after 17 years and a return to Japan to take advantage of a more accommodating regulatory regime, the pair have struck it rich. On Nov. 1, SanBio disclosed results of a phase 2 clinical trial that showed patients with traumatic brain injury achieved statistically significant improvement in motor function when treated with the company’s SB623 cells compared to a control group. The news sparked a 155 percent rally for the stock and the company is now the most valuable on the Tokyo Stock Exchange’s Mothers market.

“The markets they are targeting are quite big and they are addressing a clear unmet medical need," said Praveen Kumar, a fund manager who specializes in Japanese equities at Baillie Gifford & Co. and took a stake SanBio about three years ago. He still sees “huge potential" for the shares. 

SanBio’s success has bolstered its founders’ personal fortunes. Kawanishi, now executive chairman, holds a 25 percent stake that makes him a billionaire, according to the Bloomberg Billionaires Index. Mori owns 12 percent, worth $500 million, filings show.

SanBio’s success reflects dramatic advances in genetic science and vast changes in regulation since its founding. Scientists have discovered that they can modify stem cells from a healthy donor and reintroduce them into another person, bringing the possibility of mass production to regenerative medicine. SanBio’s cells are injected into the brain and appear to spur the body to repair itself. 

Kawanishi, 51, previously co-founded CareNet Inc., which supplies medical information to healthcare suppliers online. He was also a management consultant at Boston Consulting Group. Mori, 51, had been head of product development at San Francisco-based startup Xuma and previously worked in research and manufacturing at Kirin Holdings Co. 

Kawanishi and Mori moved SanBio’s main office back to Japan in 2013, anticipating revisions to the country’s pharmaceuticals law that would create one of the most favorable regulatory regimes in the world. The company still maintains an office in Mountain View, California.

Based on the results of the clinical trial, SanBio aims to file for marketing approval in Japan by January 2020. This month, it secured a 2 billion yen ($17.8 million) loan commitment from Mitsubishi UFJ Financial Group Inc. for manufacturing, logistics and sales of the drug. 

China took a similar path last year as it announced new rules in an effort to speed up approvals of medicines and medical devices. That resulted in a rapid rise of several new billionaires. 

Kumar said he first met SanBio’s management while they were in the process of relocating to Tokyo.

“We liked the management team, their long-term vision for the company and the science behind their approach to developing this treatment," he said. “They’re focusing on developing an actual cure for a medical condition," not a treatment that just improves quality of life. 

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