Riding the BD Wave: Chinese Innovative Biopharma Firms Unlock Greater Value
Amid the capital winter of the past two years, tightened IPO regulations, and limited payment capacity, strategies such as license-out, NewCo formation, and mergers and acquisitions have emerged.BD Method, has become a Chinese innovative pharmaceutical companyGenerating Cash Flowa significant source. Chinese innovative pharmaceutical companies'Mainstream Business Models, accelerating its transition from "pipeline in-licensing + commercialization" to "in-house R&D + out-licensing,"BD has become one of the key pathways for innovative pharmaceutical companies in China to generate cash flow, accelerate pipeline progress, and even achieve profitability.
According to relevant data, in 2024, the total upfront payments from license-out deals in China’s biopharmaceutical industry ($4.94 billion) exceeded innovation drug R&D financing ($3.77 billion) for the first time. The rapid momentum of business development (BD) transactions among Chinese innovative pharmaceutical companies is the result of collaborative efforts across multiple stakeholders in the industrial chain and reflects a consensus on values within the sector. BD not only brings pharmaceutical companiesCash Flow, and also forMNCs (Multinational Pharmaceutical Companies) and Investorsprovided aWindow for Discovering High-Potential Projects, while also providing support for numerous high-quality projectsBuilt a bridge to the capital markets, is a completely“Premium Assets” and “Capable Buyers”: A Precise Match.
In recent years, Panlin’s biopharmaceutical portfolio has also successively achieved licensing partnerships and generated cash flow,Verified its own asset quality, forming a collective with other innovative Chinese pharmaceutical companies“Chinese Biopharmaceutical Companies Translating Technological Innovation into Business Growth”grand narrative. We have reason to believe that in the future, as business development (BD) becomes a prevailing trend, China’s innovative pharmaceutical industry will continue to give rise toMore Key Moments, andThe overall value and vitality of China’s innovative drugs will also be maximized.
To this end, on May 10, under the theme ofPanlin Capital’s Special Forum on Post-Investment Empowerment in Biomedicine: “Achieving High-Quality Vitality! The Path to Diversified Development for China’s Innovative Pharmaceutical Companies”above,Mr. Li Yuhui, Founding Managing Partner of Panlin CapitalandFounder of Panlin Series Innovative Drug R&D Enterprises、MNC RepresentativeA Circle Around“BD Momentum: Chinese Innovative Pharmaceutical Companies Continue to Unlock Greater Value”Agenda: In-depth Discussion.
Introduction to Panelists and Key Insights:
Li Yuhui
Panlin Capital, Founding Managing Partner
“At present, Chinese professionals—whether in their understanding of life sciences or in the development and application of biotechnology—are highly capable. This group includes Chinese nationals as well as overseas Chinese, such as Dr. Liu, Professor Liang, Mr. Lv, and Professor Zhou, who have returned to China from abroad. They have effectively applied the scientific and technical expertise they accumulated overseas or in academia to the practical realm of new drug development, a success that has also been bolstered by the support of many multinational corporations (MNCs).”
Professor Zicai Liang
Founder of Ribo Life Science
“Establishing a partnership empowers both buyers and sellers,"Differing Positions and Needs Lead to Differing Values". For instance, a deal may represent a monumental step for small and medium-sized enterprises (SMEs), whereas for multinational corporations (MNCs) or large pharmaceutical companies, it isOne of Many Options and Growth Points. The prerequisite isThis product convinces MNCs of its significant scalability potential in the future.。”
Dr. Chen Liu
Yafei Bio Founder
“For BD,Pharmaceutical Companies Must Adopt an Open Stance. The key needs of enterprises lie inFunding Acquisition, Platform Validation; meanwhile, it is also possible to derive from itUnderstanding the Needs of PartnersFor instance, they face pain points in drug development and need to leverage our platform to explore novel molecular design approaches. Furthermore, transaction terms should be flexible across all aspects, balancing the interests of all parties to ultimately achieve a win-win outcome.”
Li Hongmei
Danqing Pharma COO
“Under the current ecological environment, BD is a very important means to support the further survival and development of enterprises. To do BD work well,”First, biotech companies themselves must possess the forward-looking vision to identify “high-potential assets.”(e.g., to replace existing therapies, address unmet clinical needs, offer cost advantages, and improve patient accessibility and convenience); secondly,Achieve ultra-high efficiency in transforming “good things”(with rapid industry output capability under strict QC); finally,Maintain a mindset of “openness and win-win cooperation”，and proactively connect with collaborative resources。Of course, IP moats are also extremely important.。”
Dr. Shen Haige
GenFleet Therapeutics, Senior Vice President of Clinical Development
“For biotech companies,”BD is not a stopgap measure, but an integral part of pipeline advancement and risk control, as well as a key component of the company’s development strategy.。”
Below is the edited transcript of the panel discussion.
Li Yuhui (Host): In recent years, business development (BD) has represented cash flow for early-stage companies, while for more mature companies, it signifies the pathway toward commercialization. Could you please provide a brief overview of the out-licensing status of your respective products? Additionally, based on current BD practices within your organizations, please share any emerging trends and characteristics observed in the BD landscape. Furthermore, what preparations must pharmaceutical or biotech companies make to successfully close a deal?
Shen Haige (GenFleet Therapeutics): Over the past seven years since its establishment, GenFleet Therapeutics has been actively engaged in external collaborations, continuously exploring and experimenting with various partnership models, which has becomeA Key Component in Advancing and Developing GenFleet’s Pipeline. For BD,GenFang’s principle is not to treat it as a stopgap measure, but rather as an integral component of the company’s product advancement, R&D progress, and risk control, as well as a crucial part of its corporate strategy.。
GenFang'sThe First Major CollaborationYesCollaboration with Innovent Biologics on fulzerasib reached in September 2021. This product was independently developed by GenFleet.Core Products, with a large number of competing products under development at the time, the company faced significant competitive challenges. The GenFleet team completed the Investigational New Drug (IND) application submission and advanced to the clinical trial phase, initiating studies at multiple clinical research centers.Quickly reached a collaboration agreement with Innovent, granting it the rights for the Greater China region.. As a highly outstanding company, they demonstrated strong execution capabilities. Following the collaboration, clinical development progressed rapidly, ultimately bringing this product to market and achieving success.Ranked No. 1 in China and No. 3 Globally for KRAS G12C Inhibitors, Achieving Win-Win Cooperation. As a startup, GenFleet faced an intensely competitive landscape; by choosing this type of collaboration, we achieved the number one position in China and simultaneously accelerated the refinement of our end-to-end R&D system, which for us represents aA Highly Successful Case。
Another collaboration isGenFleet and SELLAS Life Sciences Group (NASDAQ: SLS)Regarding Jinfang's earlier-stage productsOverseas Licensing of CDK9 Inhibitors. In this collaboration, our principle is that the partner must make sufficient investment in our product. This company possesses professional clinical development capabilities and excellent project execution expertise in the fields of AML, other hematologic malignancies, and solid tumors. Upon acquiring this product, they will advance it as their core asset.
Another collaboration isGenFleet and Verastem Oncology Reach Agreement on Overseas Licensing and Early-Stage Project Collaboration for GenFleet’s GFH375. At that time, GFH375 was still in the pre-PCC stage. In fact, these two collaborations played a pioneering role in Jinfang's internationalization.
Therefore, overall, we believe thatBD is not a stopgap measure, but an integral part of the company’s overall strategy。
Liu Chen (Yafei Bio): Yafei Bio is built upon a globally innovative platform. This platform has extensive applications in the field of antitumor drugs. Since nearly all antitumor drugs involve issues of toxicity, thereforeValidandToxicThis is an area where our platform can make a difference, leveraging this opportunity toEstablish a robust pipeline。
As a global innovation platform, we need to use data to demonstrate that our platform can deliver on its intended capabilities, which is developing in parallel with our internal R&D efforts.
Therefore, from the perspective of enterprises operating on a "platform + product" model, in factThere are numerous potential forms of BD.. For example, we have already conductedBD’s Platform Technology Licensing, currently, some domestic and international pharmaceutical companies are discussing with us how to collaborate on sales after the drug is launched. We also have many clinical products that are being developedCombination Therapy, Combined Clinical PracticeTherefore, our BD activities are diverse and vibrant.
For BD,Pharmaceutical Companies Must Adopt an Open Stance. The enterprise's key requirements lie inFunding Acquisition, Platform Validation; meanwhile, it is also possible toUnderstanding Partner Needs, for instance, they encounter pain points in drug development and need to leverage our platform to explore novel molecular design approaches. Additionally, the transaction terms should be flexible across all aspects, balancing the interests of all parties involved; in short, it is essential toAchieve a win-win outcome。
Li Hongmei (Danqing Pharmaceutical): As a newly established company, Danqing Pharmaceuticals’ products are in the early stages of clinical development. However, our company’s strategy isDrive Differentiated Incremental Innovation, this is the mission ingrained in every R&D professional’s heart. Our business development (BD) efforts have advanced in tandem with each step of our R&D progress. Last year, we established deep BD collaborations with relevant companies in Europe and the United States, and the company also completed a new round of financing. Therefore, with the unanimous consent of shareholders and the founding team, we havePipeline further advanced to the clinical stage, to amplify its BD value.
Currently, our company’s products are also focused on business development (BD), including the out-licensing of overseas rights and co-development of products. Additionally, in the second half of this year, we will haveA product has achieved remarkable progress in business development (BD).。
In the current ecological environment,Business development (BD) is a critical means to support the continued survival and growth of enterprises. To excel in BD, biotech companies must first possess the foresight to identify high-potential assets.(e.g., to replace existing therapies, address unmet clinical needs, offer cost advantages, and improve patient convenience and accessibility); secondly,Achieve Ultra-High Efficiency in Translating “Good Things”(Rapid industrial output capability with strict QC); finally,Adopt a mindset of “openness and win-win cooperation,” and proactively connect with collaborative resources. Of course, building an IP moat is also critically important.。
Li Yuhui (Host): The value added by a successful transaction differs for the buyer and the seller. What value-added benefits does such a transaction bring? We invite Mr. Liang from Raibo and Mr. Hu from Eli Lilly to share their perspectives on the value enhancement brought by their collaboration, from the viewpoints of the buyer and the seller, respectively.
Liang Zicai (Ribo Life Science): I will answer this question from the underlying logic of Ribo's BD.
Rui Bo YouTwo DimensionsThe logic: From one perspective, as a platform technology, small nucleic acids have a very prominent characteristic: if the technological platform cannot be broken through, not even a single drug candidate can be developed; however, once the breakthrough is achieved, a batch of drug candidates can be rapidly developed. This leads to aStrategyQuestion, isShould one choose to independently advance a select few product varieties, or leverage the platform’s advantages to develop a broader range of products?. If too much is undertaken without comprehensive coordination and advancement, it will result in a waste of resources. Therefore, in order toWe aim to leverage the platform’s advantages while avoiding resource waste. Our strategy is to rapidly develop a portfolio of candidates, out-license a portion to generate cash flow, and then reinvest those proceeds to advance other candidates.。Another Dimension, we are inLiverSignificant breakthroughs have already been achieved in this indication, establishing it as a mature platform. Meanwhile, we aim to make further advances in the kidneys, central nervous system, and lungs. To this end, we are leveraging the technical development capabilities established through our earlier work on the liver to extend our efforts to the kidneys, central nervous system, lungs, and other areas.Develop products tailored to specific indications, or collaborate with enterprises that hold competitive advantages in these areas, to achieve mutual success.。
Therefore, establishing a partnership benefits both buyers and sellers."Divergent positions and needs lead to differing values.". For instance, a deal may represent a significant milestone for small and medium-sized enterprises, whereas for multinational corporations (MNCs) or large pharmaceutical companies, it isOne of the Many Options and Growth Drivers, of course, it must be that this product has convinced MNCs of its significant scalability in the future.
Li Yuhui (Host): Dr. Shen mentioned the collaboration with Innovent, which has been meaningful for both parties. From the perspective of corporate development strategy, what adjustments or steadfast commitments has business development (BD) brought about?
Shen Haige (Genfleet Therapeutics): To close a deal, whether it ultimately succeeds depends on having a win-win starting point,Enable both parties to anticipate sufficient future benefits, which is the key to further advancing the product; therefore, a thorough evaluation is required.
Li Yuhui (Moderator): Since last year, “NewCo” transactions have occurred frequently in China’s innovative drug sector. How do you view the NewCo model, which is still in its early stages of development domestically? Do any of the founders present have such plans? How can Chinese innovative pharmaceutical companies earn the trust of top-tier overseas funds? How can they gain greater leverage at the negotiating table? What type of pipeline is more suitable for business development (BD), and what type is better suited for the NewCo model?
Shen Haige (GenFleet Therapeutics): Following successful collaborations with companies such as Innovent, the company has establishedA highly efficient system spanning project initiation, preclinical development, clinical trials, and CMC.. Regarding BD, from the perspective of our company at present,Preferred partners are MNCs.. NewCo may not be our preferred option at this stage, but we do not rule out the possibility that it could serve as a viable pathway for product development within specific competitive landscapes under certain circumstances.
Liu Chen (Yafei Bio)：We accept all forms of business development (BD).. For pharmaceutical companies,The primary consideration is how to execute the project effectively., project collaboration requires different instruments, whether through co-development, platform licensing, or the establishment of a NewCo; these are all viable mechanisms for collaborative development. For instance, in our partnership with Eli Lilly, they showed strong interest in an early-stage asset on our platform. However, we lacked the capital to advance this early-stage project to a stage that would meet their requirements. In such a scenario, forming a NewCo proved to be an highly effective instrument, allowing us toLeverage external funding to develop these projects, which is helpful to existing companies.
As for,From the perspective of shareholders, it is essential to adopt a dialectical approach., while not denying that the structure of NewCo may require significant sacrifices from existing shareholders, if stakeholders place a high valuation on this deal or if the external environment is unfavorable, many shareholders would actually embrace NewCo; therefore, it all depends on the specific circumstances.
Li Hongmei (Danqing Pharma): For disruptive platforms and very early-stage technologies, the level of inclusivity and the environment differ for large corporations or across different capital markets,NewCo Has Its Reason for Existence。
Furthermore, from a pharmacoeconomic perspective, the financial pressure has been significant in recent years. For products at a very early stage that carry high risks but possess disruptive potential, establishing alternative pathways to support their continued development—distinct from traditional models—is also a viable option. From a corporate standpoint, companies must focus on their core strengths and capabilities; leveraging a NewCo structure can serve as an effective strategy to facilitate breakthroughs for our flagship products.
Li Yuhui (Moderator): Therefore, this is actually an issue of corporate development strategy,At which stage should one focus on which market and adopt what strategy?. After all, resources are limited, whether it be talent teams, clinical resources, or funding; they must be focused on the core pipeline. For certain initiatives that may incur substantial costs, collaborations structured through a NewCo model will be pursued, and shareholders will support such arrangements.
Liang Zicai (Ribo Life Science): We are interested in NewCo, so I specifically consulted a friend who works at NewCo, including about his fund and related operations: the most basic point isNewCo’s profit comes from the price differential between your company and the MNC.Of course, if you can secure a deal with an MNC directly, there is no need to let intermediaries capture the margin. However, if engaging an MNC proves unsuitable for various reasons, having a NewCo facilitate the transaction and capture that value represents another viable development strategy.
Li Yuhui (Host): Currently, some companies listed on the STAR Market and in Hong Kong, as well as major pharmaceutical firms such as Hengrui Medicine, are frequently engaging in business development (BD) activities. How do you view the development of Chinese pharmaceutical companies in the BD market?
Liang Zicai (Ribo Life Science): As we have been engaged in various business development negotiations, our perception has been quite direct:The market's pursuit of new products remains highly competitive., of course, price is an important consideration from a domestic perspective. From an international perspective,This interaction is already mature and frequent.。
Liu Chen (Yafei Bio): CurrentlyDomestic BD is already very active，The down payment amount is also showing an upward trend.. Behind this, some companies are being forced to transform due to shifts in commercial logic, while others face the reality of their drugs being included in centralized volume-based procurement; thus, there is an urgent need for new drugs with significant sales potential.
Currently, we have drugs that have completed Phase III clinical trials. Domestic listed companies with sales capabilities are eagerly pursuing products like ours; this is the business logic.
Li Hongmei (Danqing Pharma): Chinese domestic pharmaceutical companies have been increasingly taking the initiative to engage in recent years, with some of them establishing funds and investment departments to focus on the early-stage development of products in China.
Due to Chinese pharmaceutical companiesInherent High Efficiency and Technology Transfer Capability, and ourCost Leadership Strategy, so in the near future, the market willSeller's Marketas the main focus, but domestic pharmaceutical companies may leverageInvestmentWaitParticipate through equity investment. As the internationalization capabilities and capital strength of domestic large pharmaceutical companies improve, they will alsoFrom equity participation to collaboration, and even mergers and acquisitions, such a trend of development.
Shen Haige (GenFleet Therapeutics): Over the past few years, GenFleet has engaged with numerous large domestic pharmaceutical companies. Our experience suggests that there is undoubtedly strong interest in innovative assets; however, finalizing a deal requires strategic alignment between both parties and is also subject to various external constraints. Therefore, concerted efforts from multiple stakeholders are needed, along with further adjustments in the future, to facilitate greater participation from more large pharmaceutical companies in China.
Li Yuhui (Moderator): As far as I know, listed companies in China, especially those in the innovative drug sector, are very enthusiastic about business development (BD) and have invested significant resources in related scouting efforts.
Indeed, business development (BD) has become a prevailing trend. For instance, Panlin’s biopharmaceutical portfolio has in recent years successively achieved licensing-out deals and generated cash flow, thereby validating the quality of its assets and, together with other Chinese innovative pharmaceutical companies, constituting“Chinese Biopharmaceutical Companies Convert Technological Innovation into Business Growth”of the grand narrative. We have reason to believe that,As BD Becomes the Trend, Chinese Innovative Drugs Will Witness More Milestone Moments, and the overall value and vitality of China’s innovative drugs will be maximally unleashed. Many thanks to the panelists for their insightful sharing, and thank you all for your time!