A miracle drug sold for 15.2 billion.

A significant merger and acquisition has emerged in the biomedical field.

On March 24th, Ouro Medicines, a collaborative NewCo enterprise of CanSino Biologics, signed a merger and acquisition agreement with Gilead. The latter will complete the acquisition with an upfront payment of $1.675 billion and milestone payments of up to $500 million, with the total consideration reaching up to $2.175 billion (15.2 billion yuan), setting a record for the upfront payment in Chinese NewCo transactions.

As an investor in the Series A round of Ouro Medicines, Jiangyuan Investment also witnessed the merger and acquisition exit of the project one year after the investment, achieving a remarkable Homerun - level return.

Such cases are not without precedent. In the past few years, Chinese innovative drug companies have used the NewCo model. They have not only achieved capital return and risk dispersion but also gradually shifted from single - asset output to participating in the construction of a global platform, with their roles in the industrial chain continuously evolving. We have had a detailed discussion on the risks and challenges of this new model and whether it can work in China. For more details, see "An Investor Told Me His 'Three No - Investments'".

In essence, the innovative drug industry is a "high - risk, high - investment" track. However, in the past two years, the situation of Chinese innovative drug companies seems to have improved, and the wave of going global has been surging. In 2026, in just over a month, the total amount of external licensing transactions of Chinese innovative drugs has exceeded $33.28 billion, and the scale of upfront payments has even exceeded the peak of a single quarter in 2025.

Under the high - profile situation, differentiation is also brewing: Does the high valuation have a clinical and commercial realization basis? Will the intensive transactions give rise to a structural bubble? Although capital, technology, and transaction structures are constantly advancing, clinical demand remains the real test.

The Highest Upfront Payment in a Chinese NewCo Acquisition Case

Let's rewind the clock to 2024 when NewCo emerged in China, and CanSino Biologics officially embarked on the NewCo - mode path to go global.

In this year, CanSino Biologics signed an exclusive license agreement with Ouro Medicines, authorizing the latter to conduct the R & D, production, registration, and commercialization of CM336/OM336 globally (excluding the Chinese mainland, Hong Kong, Macau, and Taiwan). This product is an innovative T - cell engager (TCE) bispecific antibody drug independently developed by CanSino Biologics and was the only core product of Ouro Medicines at that time.

Ouro Medicines was jointly incubated by Monograph Capital and GlaxoSmithKline (GSK). It is a biotech company that develops immunological re - treatment therapies for patients with chronic immune - mediated diseases. Its name is derived from the "ouroboros" (the snake biting its own tail), symbolizing rebirth, with the implication of "resetting" the immune system through T - cell engagers (TCE) to end the "endless cycle" of immunosuppressive drugs for patients with autoimmune diseases.

Since CanSino Biologics holds approximately 15% of the equity in Ouro Medicines, with Gilead's acquisition of Ouro Medicines, CanSino Biologics will receive an upfront payment of approximately $250 million and contingent milestone payments of no more than approximately $70 million, with the total amount reaching up to approximately $320 million, making it one of the cases with the highest upfront payment scale in current Chinese NewCo transactions.

This transaction is of great financial significance to CanSino Biologics. By comparison, CanSino Biologics' total annual revenue in 2024 was 428 million yuan, and its total revenue in the first half of 2025 was 499 million yuan. As of June 30, 2025, CanSino Biologics had a total cash balance of 2.796 billion yuan on its books, including 942 million yuan in cash and cash equivalents.

After the transaction is completed, CanSino Biologics will no longer hold equity in Ouro Medicines, but the exclusive license agreement signed in November 2024 remains valid. CanSino Biologics still retains the exclusive rights to the R & D, production, registration, and commercialization of CM336/OM336 in the Greater China region (the Chinese mainland, Hong Kong, Macau, and Taiwan).

Structurally, this case follows the typical path of the NewCo model: Domestic biotech companies usually take out the non - Greater China rights of one of their pipelines as consideration to authorize a newly established overseas company, i.e., NewCo, to obtain upfront payments, milestone payments, etc. from BD transactions and a partial equity stake in the NewCo company. This investment - like form has attracted the interest of many venture capital institutions, and a single product pipeline can achieve independent financing.

It is worth mentioning that in May 2024, Hengrui Medicine cooperated with Bain Capital to establish an overseas company, Hercules, and authorized its GLP - 1 product portfolio to the latter. Hengrui will obtain a 19.9% equity stake in the company, related payments of up to over $6 billion, and a certain percentage of sales commissions.

This transaction provided a model for domestic NewCo to go global at that time. CanSino Biologics also completed multiple NewCo global expansions following this model: In July, it authorized the global rights outside the Greater China region of two bispecific antibodies, CM512 and CM536, to Belenos Biosciences; in November, it authorized the global rights outside the Greater China region of the BCMA/CD3 bispecific antibody CM336 to Platina Medicines Ltd (PML). In January 2025, it authorized the global rights outside the Greater China region of the humanized monoclonal antibody CM313 targeting CD38 to Timberlyne Therapeutics, and the rights to the development, registration, production, and commercialization of the CD20×CD3 bispecific antibody CM355 (ICP - B02) in non - oncology fields globally and oncology fields outside Asia to Prolium Bioscience.

Achieving a Homerun - Level Return One Year After Investment

In the past two years, the popularity of the NewCo model is essentially the result of the resonance between supply and demand.

On the one hand, from the perspective of innovative drug companies, this can undoubtedly generate good cash flow, prevent the dispersion of energy, and allow them to continue investing in their main pipelines. Selling the pipeline also means a new start. On the other hand, for capital, this is a rare get - rich - quick game in the biomedical field. Once a project is acquired by a large pharmaceutical company, investors can exit and realize returns in a relatively short period, forming a return structure similar to "fast turnover".

Take the CanSino Biologics - Ouro Medicines case as an example. In early 2025, Ouro completed a $120 million Series A financing round and introduced first - tier institutions such as TPG, NEA, Norwest, and Jiangyuan Investment. In less than two years, the company was acquired, and early investors were able to exit, obtaining substantial returns.

As an investor in the Series A round of Ouro Medicines, Jiangyuan Investment witnessed the merger and acquisition exit of the project one year after the investment, achieving a remarkable Homerun - level return.

A similar path has been verified multiple times recently. In December 2025, Jinsai Pharmaceutical authorized the TSH receptor antagonist GenSci098 to the overseas NewCo Yarrow Bioscience. Just two days later, the company went public on the NASDAQ through a reverse merger with VYNE Therapeutics.

This "lightning operation" achieved a win - win situation for all parties: Jinsai received an upfront payment of $120 million and milestone consideration of up to $1.365 billion; VYNE completed asset restructuring and got rid of the delisting pressure; Yarrow went public through a reverse takeover and, with approximately $200 million in capital injection from institutions such as RTW and OrbiMed, quickly completed capitalization.

However, the NewCo model is not a "sure - win" strategy. In November last year, China Venture Capital Network held a salon on innovative drugs. Xu Qian, the managing partner of Danlu Capital, pointed out that although NewCo is one of the development directions, there are still many issues to note in actual operation. The most prominent one is "team ability". The biggest problem faced by the NewCo model is not the number of assets but the team management ability. Disagreements among institutions also focus on this. "Can the new company be managed well? Can the pipeline progress be carried out as planned? Will there be problems in overseas expansion? Entrepreneurs are usually optimistic and think they can handle everything, but investors are more cautious because once there are problems in team management, the entire project may fail."

In the screening of the entire project or supply - chain management, the core issue of "pipeline value" cannot be avoided. As an industry insider who has been involved in such transactions said, "No matter how the transaction level is designed, it ultimately depends on whether the innovative drug project is good enough and meets the demand. If there is demand and the project is good, large foreign pharmaceutical companies are willing to pay a high price. If the project is not good, no matter how much effort is made, it won't sell at a high price."

On this basis, some more "industrial - oriented" NewCo paths have also begun to emerge. In February this year, Sequoia China announced the official completion of the global acquisition of the relevant business and assets of moxifloxacin, a globally well - known antibiotic, and simultaneously established a new biomedical platform - Hangzhou Shanze Biomedical Co., Ltd. and its parent company Ascenda Pte.Ltd.

Different from the early pipeline - oriented NewCo, what "Shanze Biotech" and its parent company undertake is obviously a mature business. In terms of the target, moxifloxacin is a mature product that has been verified in the global market. After its original - research drug was approved for marketing in 1999, it was approved for sale in over 100 countries and has a complete system of drug registration certificates, intellectual property rights, and commercial contracts.

This acquisition is far more than just about moxifloxacin. It uses Shanze Biotech as the starting point of the overall strategy to create a globally competitive product portfolio through the unique business model of "mature product operation + innovative R & D introduction". Simply put, on the one hand, relying on the mature product moxifloxacin, it provides stable cash flow and commercial infrastructure; on the other hand, Shanze Biotech continuously introduces late - stage clinical innovative products to build a long - term competitive R & D pipeline.

Some investors have commented that this model not only avoids the great uncertainty of early - stage R & D but also retains long - term growth potential, which is a typical "industrial - type investment" thinking.

The 'Sputnik Moment' of Innovative Drugs

For people in the biomedical field, the past two years have been much better.

Looking at the data, in 2024, the overseas licensing transaction amount of Chinese innovative drugs reached $51.9 billion, exceeding that of the United States for the first time. After entering 2025, large - scale BD transactions have occurred frequently, and the transaction amount in the first half of the year alone exceeded that of the whole of last year. In 2026, the situation is even more promising. In just over a month since the beginning of the year, the total amount of external licensing transactions of Chinese innovative drugs has exceeded $33.28 billion, and the scale of upfront payments has exceeded the highest level of a single quarter in 2025.

Therefore, we believe that the current situation can be regarded as the "Sputnik moment" of innovative drugs, and the theme of the previous China Venture Capital Network salon was also based on this.

In 1957, the Soviet Union launched the world's first artificial satellite, "Sputnik 1". Realizing that it was lagging behind the Soviet Union in the aerospace field, the United States began to comprehensively adjust its science and technology policy, which also led to the establishment of NASA. From the perspective of the United States, the "Sputnik moment" is used to describe a state of "being surpassed, feeling threatened, and vowing to fight back". For the Soviet Union at that time, the "Sputnik moment" meant surpassing others.

Borrowing this concept, the current rise of Chinese innovative drugs is more like a "re - calibration" of the global pattern.

So, what opportunities in Chinese innovative drugs are worth paying attention to at this stage?

Firstly, more and more Chinese local innovative pharmaceutical companies are shifting from simple "license - in" to active "license - out". From a macro perspective, the global pharmaceutical industry is under the pressure of the "patent cliff", and multinational pharmaceutical companies urgently need to supplement their innovative pipelines through external introductions. At the same time, China's advantages in R & D efficiency, clinical resources, and policy support are gradually forming a synergy: the engineer dividend reduces R & D costs, the large patient base improves clinical progress efficiency, and the policy environment continuously encourages innovation. This "golden triangle" is being re - priced by the global market. In 2025, the total amount of Chinese innovative drug License - out transactions reached $140.274 billion, accounting for nearly half of the global share.

Secondly, there is a leap in "quality". In the past, Chinese pharmaceutical companies mainly went global with early - stage projects, which was vividly described as "selling young seedlings". Now, the scale of single - transaction deals has increased significantly, and cases with upfront payments exceeding $100 million and total amounts exceeding $1 billion have occurred frequently. The transaction forms are also evolving, from single - product licensing to platform - technology output and global joint development, marking that Chinese innovative drugs are moving from "following" to "outputting".

Correspondingly, there is a change in the role of Chinese pharmaceutical companies in the global division of labor. In the past, the emphasis was on "riding on others' boats to go global", which essentially meant handing over products to multinational pharmaceutical companies for promotion. Chinese companies mainly played the role of technology suppliers and were less involved in subsequent decision - making and value distribution. Under the NewCo model, Chinese pharmaceutical companies are starting to participate in the construction of global platforms as shareholders, transforming from simple intellectual - property transferors to co - builders and benefit - sharers.

Therefore, the so - called "Sputnik moment" of Chinese innovative drugs does not mean that China has surpassed anyone. It means that our innovative drugs have truly entered the "global competition" track with their strength, and this is not the end.

This article is from the WeChat official account "Dongshisi Tiao Capital" (ID: DsstCapital), written by Wei Xianghui and published by 36Kr with authorization.